10/30/2019
Effective as of last September 20, Law 13.874/2019 (also known as Law of Economic Freedom) introduced a few changes in the legislation in terms of corporate, tax and labor matters, the main purpose of which was to put an end to the bureaucracy that prevents the Brazilian economy from growing.
In labor matters, object of this communication, the main changes involve: (i) E-Employment Records Booklet; (ii) Time card; (iii) Exceptional Card Punching; (iv) Replacement of the “eSocial”.
According to the new Law, in order to be on equal footing with technology progresses applicable to labor relationships, the e-Employment Records Booklet was created as the document in which one registers all information of the employment agreement, replacing the old paperback model, which will still be valid. The main change to this regard for employers is the time to register the employment agreement which went from forty-eight (48) hours to five (5) business days.
Another important provision of the Law is related to the time card, for companies will be obliged to adopt means to control the hours of their employees only when they have over twenty (20) employees, not ten (10) as before. It is, however, important to stress that the despite the fact that the control will be required only for companies with more than twenty (20) employees, that does not mean that the other ones will be exempted from paying overtime for hours worked in addition to the limit provided by Law.
A change that has long been longed for by companies is the Exceptional Card Punching, such name being adopted to define time control only in extraordinary occasions such as absences, delays, overtime, etc., which shall become a legal practice recognized by the legal system.
Certain conventions and collective agreements already provided for the possibility of the Exceptional Card Punching, but some decisions made by Labor Courts vacating that provision caused legal insecurity in adopting such practice.
As the Law is enacted, the companies that choose to adopt the Exceptional Card Punching will be allowed to do so under a collective agreement with the Union or if there is a collective convention clause that sets forth the corresponding requirements.
The replacement of the “eSocial” has also been handled, and even with companies having invested, not long ago, high amounts in systems that would comply with the requirements of the previous legislation, which caused a great commotion and polemics for HR managers, there will be a reform for a simplified system to digitally record social security, labor and tax obligations – which will be regulated by supplementary normative acts to be issued by the Special Office of Social Security and Employment and the Special Office of the Federal Revenue Service.
Finally, one thing that is provided for in corporate matters, but which may cause impact on labor relationships, especially in cases of labor claims, is that of the disregard of the corporate entity. According to the Law, a corporate entity will only be disregarded in case of abuse, which requires (i) deviation of purpose; or (ii) confusion of assets.
Moreover, the Law determined more specific parameters for such disregard, setting forth that this event be an exception, not authorizing the measure by virtue of mere expansion or deviation from the original purpose, as well as due to the simple existence of an economic group, which is exactly what had happened until then, particularly in labor relations.
Therefore, it is expected that the changes made by Law 13.874/2019 in labor matters may contribute to putting an end to bureaucracy in companies, however, it is prudent that managers be at all times in sync with their legal counsels so the new rules to be implemented internally be effective in issues taken to Courts.
