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07 October 2011
When transferring abroad from a local company to either its subsidiary or another company belonging to the same economic group on a temporary work assignment, most skilled employees are entitled to keep some of their Brazilian statutory employment rights. Under Law 7064/82, such rights were initially applied only to workers employed by the engineering, construction and assembly sectors.
However, with the introduction of Law 11962/2009, the provisions of Law 7064/82 have been extended to workers employed in all economic segments. The new law also provides for the maintenance of Brazilian labour laws during the transfer where they seem more favourable than those of the host country. In addition, the local employer must comply with the Brazilian social security and tax legislation over the entire global compensation package.
For a long time, these provisions have been challenged by a conflicting interpretation under Precedent 207 of the Superior Labour Court, which applies the host country's law during the period worked abroad. Despite this, judges have repeatedly denied the application of the precedent in concrete cases, as in the following decisions:
This divergent understanding has led to major legal uncertainty when ensuring the Brazilian statutory rights of workers employed in Brazil and then transferred abroad. Therefore, in September 2011 during the judgment of a related lawsuit, Subsection I of the Superior Tribunal (which specialises in individual lawsuits) proposed that the court review Precedent 207.
Further regulation by the Superior Court is expected to recognise that employees transferred abroad to temporary work assignments are entitled to keep some Brazilian statutory employment rights.
However, cases still remain where Precedent 207 continues to be enforceable. For example, workers hired by a 'foreign company' to render services abroad are bound by Article 12(III) of Law 7064/82, which applies only the law of the host country (ie, exactly in line with the Precedent 207 provisions).
In light of the above, the term 'foreign company' should arguably interpreted as under Articles 1.134 to 1.141 of the Civil Code - that is, a company organised under the laws of another country, with its headquarters based outside Brazil. Moreover, the foreign company must provide proof that it is a "foreign company of [which] at least 5% of its shares belongs to a legal entity based in Brazil", as under Article 13(III) of Law 7064/82.
Only when this is confirmed can such foreign companies hire a Brazilian worker or a locally based employee to render services abroad (by authorisation of the Ministry of Labour and Employment) through an employment contract that is exclusively governed by the law of the host country.
The participation of a Brazilian company in the foreign capital of a foreign company (where it is not a subsidiary or affiliated company) is therefore the connecting element that justifies hiring a Brazilian worker to render services abroad and legitimises the parties entering into an employment agreement governed only by the law of the host country. Otherwise, if the international transfer is carried out from a Brazilian company to an affiliated company or subsidiary based abroad, employees will be entitled to continue to benefit from Brazilian statutory rights.
For further information on this topic please contact Cassio Mesquita Barros or Nadia Demoliner Lacerda at Mesquita Barros Advogados by telephone (+55 11 4502 4144), fax (+55 11 3289 6488) or email (firstname.lastname@example.org or email@example.com).
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Cassio Mesquita Barros
Nadia Demoliner Lacerda