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23 March 2012
Under Law 7064/1982, Brazilian employees transferred to parent companies abroad remain entitled to certain local statutory rights. Based on the provisions of the law, the Superior Labour Court recently held a company liable for payment of costs of transfer, plus annual leave and bonuses, during the international assignment of a Brazilian employee. (1)
In its defence, the company argued that the international assignment was negotiated on a permanent basis, and that the employee had agreed to be compensated based on the law of the host country for the duration of the period that he was performing activities abroad.
The company further argued that under Article 444 of the Labour Code, the international assignment signed between the parties should be considered a valid legal act. Article 444 provides for the enforceability of employment agreements on condition that they do not breach statutory labour rights.
Regardless of the fact that the employee had agreed to the conditions offered for his international assignment, the court ruled that it would be illegal to withhold his local mandatory rights during an international transfer between companies belonging to the same economic group. The court further ruled that the employee was entitled to additional transfer payments, equal to 25% above his monthly salary, since his transfer was only temporary. Accordingly, when his period abroad ended, it would be in the employer's interest for the employee to reassume his previous position in Brazil.
In regard to annual leave and bonuses, the court ruled that such benefits are statutory rights provided by the Constitution and the Labour Code; the employee therefore maintained his entitlement to such payments during his international assignment.
The court's decision was fully consistent with Law 7062/84, which establishes that employees who perform work in Brazil are limited by the principles of unity and continuity of the employment relationship, thus preventing companies from withholding local statutory rights during international assignments. Special care should be taken by Brazilian companies when they decide to design and implement expatriation policies in order to ensure that the territorial application of foreign law is combined with the minimum guarantees provided by Brazilian labour law.
Law 7062/84 applies to all Brazilian employees who are:
Under the law, employees acquire specific rights (eg, to additional transfer payments, annual leave in Brazil, guarantees of return, life insurance and medical and social assistance), but also remain subject to Brazilian legislation on social security, statutory severance payment contributions and revenue tax. The law also guarantees the enforcement of Brazilian labour protection when it is more favourable than that available under the applicable foreign law.
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 (email@example.com or firstname.lastname@example.org).
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Cassio Mesquita Barros
Nadia Demoliner Lacerda