The controversial Brazilian labor union fees and Provisional Measure No. 873

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The controversial Brazilian labor union fees and Provisional Measure No. 873

The controversial Brazilian labor union fees and Provisional Measure No. 873
According to Provisional Measure No. 873, companies are no longer required to deduct labor union fees from their employees’ payroll;Employees must individually and expressly authorize their personal contribution;Contributions must be made by bank-issued invoice or equivalent, directly addressed to workers.

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Prior to the 2017 Labor-Law Reform, it was (practically) unquestionable that companies based in Brazil had to deduct labor union and/or welfare contributions from their employees and pass them on to their respective unions.

After the Reform, the mandatory contribution was put to an end. The new legislation provided for the need for each employee’s express authorization to make the relevant deductions. However, it did not make it clear as to: (a) which should be the valid legal procedure to unequivocally qualify this authorization by the employee; and (b) how this contribution should be passed on.

However, without (a’) the legal definition of the valid legal form through which employees authorize their contribution ― as well as the (b’) appropriate financial operation to do so ―, labor unions leveraged this gap to impose a forced «contribution» on workers through ― implied and generic ― collective authorization of the terms of the collective rules of each professional category, according to which the contribution would remain implied.

In other words, the 2017 Labor-Law Reform did not stop labor unions from obtaining a generic authorization from workers to keep deducting compulsory contributions through collective rules, showing, in this particular matter, a weakness in Law No. 13467, of 2017.

While the labor unions’ ploy to ensure their source (of enrichment?) by reviewing collective rules spread throughout the country’s labor unions, the Brazilian Supreme Court (STF) was bombarded by dozens of direct actions for the declaration of unconstitutionality by labor unions against the update made by the Reform, reclaiming the recognition of its unconstitutionality to the Federal Supreme Court.

On June 29, 2018, STF finally recognized the Reform’s constitutionality regarding the non-enforcement of the employees’ contribution to their labor unions without their unequivocal authorization.

However, recognition of constitutionality of this part of the Reform was still not enough. It was necessary to determine what would be the legally perfect way to ensure validity of the workers’ authorization and how to make labor union contributions.

These are precisely the topics covered in Provisional Measure No. 873, of March 1, 2019.

With the addition of Article 582-A to the Brazilian Consolidation of Labor Laws (CLT) through Provisional Measure No. 873, payment of employees’ contributions to their respective labor unions must be made by bank-issued invoices or equivalent, directly sent to the employee’s residential address. Should an employee not be able to receive it at home, it can be sent to the company upon prior and express authorization.

According to Provisional Measure No. 873, the logic process through which labor unions should administratively proceed is to: (1) identify the employees who really want to contribute; (2) identify the type(s) of contribution each employee wants to make; (3) obtain their prior formal ― and necessarily individual ― authorization; (4) issue bank-issued invoices; and (5) send them to the respective employee’s residential address or, should it not be possible, work address.

This new system not only prohibits employees’ generic and indirect authorization by means of a collective rule, convention, or any type of meeting or group of people, but also frees companies from having to manage the financial operation of payroll deduction.

Therefore, in theory, companies are totally exempt from deducting labor union contributions as of the date of publication of Provisional Measure No. 873, March 1, 2019.

VAZ DE ALMEIDA ADVOGADOSLabor Relations team is ready and diligent to provide further clarification and appropriate legal consultancy to clients upon request.

VAZ DE ALMEIDA ADVOGADOS is a comprehensive law firm, dedicated to excellence of service for businesses and their principal executives, exceeding conventional law practice standards by providing an uncommon experience in technical quality and customer relations.

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