Terceirização de Mão de Obra

Understading Labor Laws in Brazil


In keeping with most modern economies around the world today, outsourcing has become established as a widely-used and accepted tool by the great majority of Brazilian companies.

At first, outsourcing was restricted mainly to peripheral activities such as equipment maintenance, cleaning, security, transport and catering.

However, over the years it has come more and more to be used as part of the productive process itself, within the factory or other areas occupied by the contracting company. The effect is that more and more companies are contracting out the simpler parts of their products.

Thanks to globalization, Brazil’s complex labor legislation (see Chapter 3) and the strategic need for a company to focus on its core business, companies have sought alternatives for managing their labor force or have transferred part of their production to other companies as a way of reducing costs, better administering the overall production process and maintaining a competitive position.

The result has been the growth of companies that specialize in supplying services, particularly in the following manners:

  • Outsourcing services.

  • Temporary workers.

  • Self-employed workers.

  • Comparatives.

In Brazil, the federal government’s small-company support agency SEBRAE has built a nationwide data base of companies that supply outsourced services (see Chapter 5). The Internet address is: http://www.bolsa.sebrae.com.br.

Brazilian labor law imposes certain constraints and special circumstance on outsourcing. Specifically, outsource suppliers who work inside the factory of the client company represent a greater degree of labor-law risk to the client company. However, it must be noted that Brazilian labor law is largely based on a structure of laws known collectively as the Consolidated Labor Law — CLT — which dates back to the middle of the 20
th Century. This legislation has been modernized recently, seeking to reduce the degree of State interference in the relationship between employers and employees, its sources are the labor laws existing in Italy and France, but Brazil is still a long way from enjoying the level of deregulation pertaining in the United States.

It is by no means unknown in Brazil for employees of companies that supply outsourced services to take legal action against the companies that contract these services, alleging a de facto employee-employer relationship with the client company and seeking formalization of a labor contract (it should be noted that in Brazil, labor contracts are individual legal documents, rather than collective contracts). Brazilian law also recognizes the principles of “Solidarity” and “Subsidiary Responsibility”, under which the contracting company may be held liable for labor rights and benefits that were left unpaid by the outsourcing service supplier (see Chapter 2, and topic 3.2).

The government of President Luiz Inácio Lula da Silva (mandate, Jan. 2002 — Jan. 2010), not evolved as the brazilian labor market. So, companies with unions determine the employees, the enlargement or reduction rights and benefits, beyond the basics contained in the Constitution Federal.

Brazil is already moving towards new forms of structuring the employer-employee relationship. Congress recently approved a Temporary Work Contract, with reduced payroll charges (see topic 4.2), and a Temporary Lay Off law which provides for workers to be suspended on partial pay during economic slow-downs, with a guaranteed job at the end of a specified period. There has also been growth in collective negotiation involving entire categories of workers, or major groups or conglomerates.

1.1 Specific characteristics of outsourcing in Brazil

In countries such as the United States, it is common to outsource activities or functions for a pre-determined time, which can range from a few hours to months or years. In Brazil, the contractual situation is more complex and very short contracts — for example, a few hours — would be unlikely. Moreover, the concept of the formal employment relationship is different. In the United States all employers can contract employees for pre-determined or indeterminate periods, while under Brazilian law only companies authorized by law 6019/74 can contract and provide temporary labor and even so for a maximum of six months (see topic 4.2).

Another fundamental difference is that in many countries the outsourced worker may opt to receive a greater or lesser salary, according to his degree of interest in working for a specific company. In Brazil, however, an industry negotiating group comprising the labor unions and representatives of the employees — normally dominated by the larger companies — sets base salaries for each professional category.

No employee who falls into that category may be paid less than the base, irrespective of what the real cost for a contracting company might be of an outsourced worker compared to a regular, permanent hire.

1.2 Regional differences.

Brazil is the world’s fifth-largest country. It is bigger than the continental United States and has enormous regional differences. Labor and commercial law are federal, and as such are the same in all states.

However, in addition to federal taxes there are some variable-rate taxes levied by state and municipal governments. Companies may thus face some fiscal variation in different parts of the country.

Among examples of regional differences are the state-level tax on circulation of goods and services (ICMS — Imposto Sobre Circulação de Mercadorias e Serviços) which is akin to a value added tax, and the municipal-level tax on services (ISS — Imposto Sobre Serviços) and real-

estate tax (IPTU — Imposto Predial e Territorial Urbano). It is not uncommon for states and municipalities to offer rebates or grace periods on the taxes under their jurisdiction in order to attract key investments.

With the exception of some mining and agribusiness companies, most multinationals choose to set up their head offices in the South-Southeast of Brazil. The Greater São Paulo area and nearby cities such as Campinas are a strong first choice while Rio de Janeiro, Belo Horizonte, Curitiba and Porto Alegre also attract significant investments.

Outsourcing is common in these major centers and tends to be a relatively simple operation, whereas in some smaller upstate towns it may be more complicated and therefore represent less of a cost-benefit advantage. In general, the major centers offer a much greater variety of specialized companies ready and available to assume outsourced functions.

2. Strategic aspects of outsourcing

Two factors are fundamental for the success of an outsourcing operation in Brazil: a thorough knowledge of the company that will supply specific goods or services; and a 100% commitment by your chosen partner to achieve the agreed targets and results. When one company selects another to substitute a internal department or to perform specific functions, it is essential that the outsource supplier really does have the capacity, capability, tradition and quality needed to integrate fully into the operations of the client company. In this respect potential contractors of outsource services should be aware of the high mortality rate among small-company start-ups in Brazil.

2.1 Capacity of potential outsource suppliers.

Generally speaking, company seeking a supplier of outsourced products or services should seek the following basic proficiencies:

  • Appropriate know-how.

  • Competitive quality and cost.

  • Compatible infrastructure and logistics.

  • Administrative practices that facilitate auditing.

To this end, the potential contractor should check out and, where appropriate, request documentary evidence of, the following items relating to a proposed outsource supplier:

  • The original deed of incorporation, and all subsequent alterations.

  • Ownership structure — check recent balance sheets.

  • Legal and contractual responsibility of company partners and-or share- holders. Insurance for work-place accidents.

  • Registered and paid-up capital of a level compatible with billing.

  • Relationship with financial institutions (check at least the previous two years).

  • Real estate pledged against potentially adverse law suits.

  • Career record of senior executives and other first-line staff.

  • Other clients currently or recently supplied with similar goods or services. Commercial and financial information.

  • Breakdown of the monthly wage bill.

  • Forms and reports used for compiling the monthly wage bill.

  • Date and payment method of monthly wages and other benefits.

  • Standard individual contracts.

  • Standard inter-company contract for supply of services or production of goods.

  • The most recent applicable collective bargaining agreements.

  • Any recent court decisions impacting the company, including but not limited to Labor Court decisions.

  • Lawyers serving the company (house lawyers and advisors).

  • Relevant administrative rulings, from both labor and welfare authorities.

  • Proof of deposit into the FGTS (retirement and lay-off guarantee fund).

  • Register of employees.

  • Proof of technical capability.

  • Labor Ministry authorization, in cases where temporary labor is involved.

In cases where the outsourcing contract relates to goods to produced outside of the contracting company’s premises, the contracting company should also ask to see:

  • Proof of technical capability of the labor to be involved.

  • Identity of raw material suppliers.

  • Supply schedule for raw materials.

  • Federal and state tax receipts.

  • Proof of whether or not the potential supplier currently supplies outsourced services or produces goods for any other client in the same line of business.

  • Capacity, age and technology of equipment to be used.

2.2 Quality in the outsource contracting process.

The first step in ensuring a high quality of outsourced goods or services is to bring quality into the selection and contracting process.

Ideally, a contracting company should invite bids from at least three contenders, all of whom have passed the basic vetting procedure detailed in item 2.1 above. The contracting company might also choose to personally visit the short-listed contenders on their own premises and meet directly with their human resources, legal and production staff, as appropriate, to get a better feel for the relative competence of each. It is also advisable to seek the opinions of companies that are using or have used the services of the various short-listed contenders, provided of course that these are not direct competitors of the potential contracting company.

In critical cases a potential outsource contractor may also choose to discuss the proponent companies’ short-term and long-term planning, and their basic company philosophy.

Time spent during the selection process will lead naturally to identification of the best candidate, and should be amply repaid later by reduced risks in the outsource operation.

2.3 Relations with labor unions.

Brazilian labor legislation determines that, for the purposes of union membership, a worker shall be defined by his or her specific professional category, and not by the line of business of the employing company. Thus, for example, a journalist employed full-time by an engineering company to produce an in-house bulletin would be represented by the Journalists’ Union and not by the Engineering Workers’ Union. This means that companies supplying outsourced services must be particularly attentive to labor legislation regarding specific categories of workers, and to the details of collective wage and benefit negotiations in many different professional sectors.

During the first rush of outsourcing in Brazil, many companies closed down complete departments and forced the employees to set up their own service companies. These then continued to sell exactly the same services to the contracting company, without — at least in theory — the same labor obligations for the contracting company.

In many cases these purpose-built outsource suppliers worked only for the parent company, and after some time the employees of the service supplier felt themselves to be de facto employees of the parent company. They consequently sought legal action to demand the same rights and benefits that they would have had if they had remained full employees. In many cases labor court judges have found for the plaintiffs, implying obvious financial loss for the contracting company. This risk can be minimized if the outsource supplier works for more than one company. Recently, however, court cases of this type have been less frequent.

Service supply companies in Brazil have traditionally been represented by the commercial associations and federations — organizations that represent general commercial activities — and even pay the compulsory membership fee. This creates a certain difficulty for outsource companies to break away and set up their own representative bodies. However, outsourcers are gradually organizing their own unions or other forms of trade associations to ensure that their own rights are observed, and also to offer potential contractors a greater degree of tranquility (see Chapter 5).

The 1999 — 2002 administration of President Fernando Henrique Cardoso has made a public commitment to modernizing labor legislation, and this intention was placed in the general clauses of the financial assistance agreement signed early 1999 with the International Monetary Fund. One essential step in modernizing the union representation system is an end to the prohibition on having more than one union allowed to represent the same group of workers in any given geographical region. The current enforced monopoly of representation requires workers and companies in a specific category to be represented by specific labor and employers’ unions, even if these have little to do with the real activities of the company.

2.4 Specialized labor judiciary.

The Labor Judiciary is a specialized and largely independent branch of the general judiciary. It acts as moderator in questions arising between employers and employees. The system is structured with three levels:

  • First Instance — Municipal-level conciliation and judgement courts.

  • Second Instance — Regional courts in major cities.

  • Final Instance — Superior Labor Court (TST) in Brasília.

The principal attributions of the Labor Judiciary, as defined by Article 114 of the 1988 Federal Constitution, are:

  • To hear and rule on formal complaints, mainly initiated by employees.

  • To act as mediator in collective agreements between employee and employer unions, when required.

  • To hear public civil actions initiated by the Public Prosecutor (Ministério Público).

In judicial questions, including bankruptcy, labor rights take precedence over federal fiscal rights, legal costs, mortgages, debentures, promissory notes and other commercial rights. This makes it doubly important that outsourcing contracts do not resort to ambiguity as an artifice to try to reduce payroll and/or benefit costs.

Neither should they leave space for an accumulation of potential labor suits against the client company for nonpayment of labor contributions by the outsource supplier (see item 3.2).

With the exception of these two specific items, outsourcing contracts are government by general commercial law.

2.5 Weekend work.

Brazilian culture is rooted in Roman Catholicism, and even though active practicing Catholics are in a minority, there is nevertheless a general prejudice against weekend work and in favor of spending that time with family.

Brazilian law requires additional payment for weekend work, small outsource suppliers of services such as maintenance and cleaning do not normally make any additional payment in this respect. Moreover, most client companies are reluctant to pay extra for services performed on a weekend or public holiday.

It should be noted that workers assigned to weekend work without appropriate payment may have grounds for later court action. As is made clear in 3.2 below, that may imply a liability for the client company in an outsourcing arrangement.

3. Labor relations in outsourcing

3.1 Obligations.

In Brazil, relations between employers and employees are governed by:

  • The Consolidated Labor Laws (CLT — Consolidações das Leis Trabalhistas);

  • The 1988 Federal Constitution (including a specific article on labor rights);

  • A number of individual laws; and Government decrees (portarias).

A majority of legal experts today are of the opinion that the CLT imposed a paternalistic and protectionist relation ship between employee and employer, seeking to benefit the worker who is seen as the weaker party. Among labor rights that reflect this stance are:

  • Maternity leave — 120 days.

  • Paternity leave — 5 days.

  • Annual vacation — 30 days as of year one, paid at time-and-a-third.

  • Additional monthly wage in December, called the “13th salary”.

  • 30 days pay in lieu of notice, on dismissal.

  • Lay-off guarantee fund “FGTS” — employer pays 8% addition to monthly wage bill.

  • Minimum wage for each category.

  • Dirty work compensation (depending on category).

  • Dangerous work compensation (depending on category).

  • Limit of eight hours a day, 44 hours a week.

  • Paid weekly rest-period (normally weekends).

  • Overtime at a minimum of time and a half, from the first additional hour.

In addition, there are numerous addons that maybe be agreed during collective negotiations. These include:

  • Lunch vouchers

  • Supermarket vouchers.

  • Medical plans.

  • Group life insurance.

  • Additional retirement plans.

  • Public transport vouchers (this is an obligatory benefit).

These non-wage benefits have specific legislative provisions for corporate tax deduction. For example, the cost of public transport vouchers and super market vouchers may be deducted to a maximum of 8% of income tax due. The public transport vouchers are designed to cover the cost of a worker’s travel between home and the workplace, and they cannot be given in monetary equivalent. The worker contributes to a maximum of 6% of his monthly wage.

The majority of these non-wage benefits are regulated by collective agreements signed between employers and labor unions.

3.2 Concepts of Solidarity and Subsidiary Responsibility.

Companies contracting outsourced products and/or services to be supplied within the client company’s own production facilities must be doubly careful about the hiring process, given that Brazilian labor legislation contains two longstanding principles that may cause problems in such circumstances:

SOLIDARITY — This principle specifies that the client company and supplier company in an outsourcing arrangement shall be jointly and equally responsible for labor obligations arising from the contract. The labor law understands that a legal relationship exists between the two companies, which are therefore jointly responsible for payments due. If either company is found guilty of a labor infringement, the verdict applies equally to both companies. Common courts will adopt a similar policy in labor cases that come before them, for example when awarding material and/or moral damages after an industrial accident, or even assigning criminal responsibility.

SUBSIDIARY RESPONSIBILITY – This principal establishes that the client company shall be responsible for labor obligations that are not met by the supplying company in an outsourcing relationship. The client company is not liable under this principle until the supplying company has failed to meet its own obligations.

The difference between Solidarity and Subsidiary Responsibility is that in the former, both companies are equally responsible, while in the latter, the client company will only be notified if and when the supplier company fails to meet its obligations. The Brazilian judicial system is in the process of migrating from the concept of Solidarity to that of Subsidiary Responsibility, and at the present time The logic of this situation is that client companies must demand regular documentary proof that the outsource supplier is meeting all its labor obligations, so avoiding accumulation of any liability.

The key point in the relationship between the client company, the outsource supplier and the workers involved is to safeguard the interests of the client company in the outsourcing contract. This document must require the supplier to comply with all relevant Brazilian legislation and to agree to accept any and all labor obligations falling on the client company as a result of the contractual arrangement established.

It cannot be stressed enough that the labor issue is the principal problem in outsourcing in Brazil, because it is the most difficult to pin down and one that might not become immediately apparent once the contract is operational. Some labor issues might not become apparent for as much as a decade after the start of the contract.

3.3 Changes in the legislation.

The principal social welfare contribution* that an outsourcing company is required to pay with respect to its labor force is for the National Institute of Social Security (INSS — Instituto Nacional de Seguridade Social). Nonpayment of this contribution will normally prompt court action by the government.

* Note that Brazilian law divides obligatory levies into ‘’taxes” and ‘‘contributions” — the latter normally destined to a specific social or welfare purpose, with parts payable by the employer and the employee.

Client companies and outsource suppliers have for some time been advocating a change in the law so that each company may be held solely responsible for its own taxes and contributions. This would make it unnecessary for one company to have to police the other to check on tax and contribution payments.

Law 9711/98 altered Article 31 of Law 8212/9 1, eliminating the principles of Solidarity and Subsidiary Responsibility specifically with respect to INSS contributions on certain types of outsource labor supply. According to this new law the client company becomes responsible for withholding this contribution and remitting it to the federal government. For these purposes the levy is set at 11% of the gross value of the bill for the outsourced service. The client company deducts 11% from the bill and remits it to the government, paying the supplier 89% of the billed amount. This liquidates responsibility for INSS payments and avoids future claims against the client company in this respect.

This change, effective February 01, 1999, was designed to reduce payment evasion and encourage proper contracting of outsourced services.

It should be noted that this provision relates principally to the supply of services that use large volumes of lower-qualified workers, for example cleaning and security, and excludes contracts for the outsourced supply of professional service, for example consulting.

3.4 Concept of “Secondary Activities” and “Core Activities”.

Unlike countries where outsourcing has a longer history and is more established within the business culture and the judicial structure, in Brazil there are still discussions about the labor implications of outsourcing services within the physical environment of the client company. Basic activities such as cleaning, security and catering are today outsourced in thousands of companies, but nevertheless some labor law experts continue to argue that regulations prohibit subcontracting of “core activities” — those relating to the production of the goods or services that represent the company’s core business. Such arguments are based on a reading of Interpretation 331 from the Supreme Labor Court (TST Enunciado 331) and Instruction 3/98 from the Ministry of Labor (MTE Portaria 3/98). The one notable exception is the outsourced supply of temporary labor which is specifically covered in Law 6.019/74 (see Chapter 4).

This ambiguity has led some large companies to be fined by the Labor and Welfare ministries or even taken to court by employees of the outsource supplying company. Many cases continue to arise, but there is a slowly forming body of opinion among labor judges that it is not correct to ignore the existence of an outsourcing contract in such circumstances. The result is gradually accumulating jurisprudence that will shortly allow outsourcing to make headway on the question of labor responsibilities.

In fact, Brazilian law does not specifically allow for or prohibit outsourcing of “core activities”. The question is therefore likely to be the subject of ongoing debate until such time as specific legislation is enacted.

Be that as it may, in a new Interpretation of Article 31 of Law 2812/91 issued by the TRT, which regulates collection of INSS contributions (see topic 3.3) the expression “continuous services, related or not to the normal activities of the company” has been changed to “continuous services, related or not to the Core Activities of the company”.

At the time of publishing, for legal purposes in outsourcing questions “core activities” have normally been deemed to be those defined in the articles of incorporation (“contrato social”) of the outsource supplying company.

Labor judges have tended to reject intermediate outsourcing contracts, except in temporary work (law 6019/74), whereby a client company contracts another to supply and outsourced service, and this in turn outsources the work to a third company. Jurisprudence is still developing in this area.

4. Labor contracts in outsourcing

The traditional labor relationship in Brazil is an individual contract, signed directly between employer and employee and valid for an indefinite time. However, labor law offers various alternatives. Companies that supply outsourced services may choose to offer workers the following contractual styles:

4.1 Fixed-length, indeterminate length, rural and defined service.

These four types of contract have certain features in common:

4.1.1 Fixed-length contract.

A contract is deemed to be of fixed length when its length of validity depends on a specific pre-fixed term, or the completion of specified services, or the realization of a specified event whose duration or time-scale can be forecast with some degree of precision.

To be valid, a fixed-length contract must meet one of the following conditions:

(a) It relates to services whose nature or temporary duration justify the prior establishment of a term;

(b) It relates to business activities of a transitory nature: or

(c) It is a work experience contract.

A fixed-term contract may not be for a period greater than two years, but it may be renewed once to make a total of four years. If a fixed-length contract is officially or unofficially extended more than once, it shall be deemed to have become a contract of indefinite duration.

4.1.2 Indefinite-length contract.

A contract of an indefinite length of time is one in which the parties do not set a finishing date. This type of contract is fully regulated under the terms of the CLT.

Given that the contract does not specify a duration, the party that decides to terminate it must advise the other at least 30 days in advance.

The CLT (Consolidated Labor Laws) also classes as an indeterminate-length contract one which succeeds a fixed-length contract within a period of six months, unless the expiration of the fixed-length contract was dependent on the execution of specialized services or the occurrence of determined events.

4.1.3 Contract for a defined service.

This is similar to a fixed-length contract, but the time-span is determined by the conclusion of a specified service — for example, construction of a wall or house. Such a contract is governed by Law 2,959, of 17 November, 1956. There are four differences between a contract for a defined service and one for a fixed length:

(a) The defined-service contract does not specify a fixed length of time, but rather the completion of a defined service, and employees work until that goal is achieved.

(b) The employee’s official work register (“carteira profissional”) must be annotated to the effect that he or she has been contracted under a defined-service contract. Details of the nature of the service to be performed and a description of the project itself should also be noted in the employee’s work register. Should this procedure be performed inadequately, and so rise to doubts about the nature of the service, the contract will be deemed to be for an indeterminate length.

(c) If the contract is rescinded on completion of the specified work and with completion of at least 12 months of service, then the employee has the right to receive an indemnity payment proportion to the length of time worked, as specified in Article 478 of the CLT.

(d) If the specified work is completed in less than 12 months, then the employee has the right to withdraw his or her unemployment fund (FGTS) from the bank, but without payment of any additional fine by the employer.

4.2 Temporary contract.

Companies may feel the need to hire temporary workers during peak periods, for example Christmas period work in stores, to cover for regular employees during vacations, sickness, maternity leave, or to participate in specific projects or promotions. However, companies are advised that Brazilian legislation does not allow ordinary companies to directly hire temporary labor. This must be done via the services of companies that have been so authorized by the Labor Ministry. (Temps Agency)

Law 6019/74 requires that companies interested in offering temporary labor must include that as one of their proposed activities in their articles of incorporation (“contrato social”). They must then seek formal authorization from the Secretariat for Employment and Wages, a branch of the Labor Ministry. The Secretariat will issue Certification as a Provider of Temporary Labor. No client company should hire temporary workers from a temporary agency that does not hold current certification of this nature.

The same law specifies that temporary contracts shall be for 90 days, renew able to 180 days provided the Labor Ministry is notified. This law is being modernized by MTE – Labor Ministry, which increases the maximum term to nine months.

Item 4.6 below explains how payroll charges for social benefits are lower on a temporary contract than on a permanent, indefinite-length contract. However, the law requires that a temporary worker receive the same salary as a permanent employee of the same category in the same client company — in other words, a company cannot use temporary labor as an artifice to pay lower wages. The final cost to the client company of a temporary worker tends to be roughly double the worker’s base salary.

The ranks of companies holding Certification as Providers of Temporary Labor today include locally owned companies and subsidiaries or franchises of international service providers. In either case a European, American or Japanese company will normally be able to choose between various outsource providers that offer the same level of service and quality they are used to demanding at home.

4.3 Autonomous labor.

A company is not required to use the services of a Certified Provider of Temporary Labor when hiring independent or “autonomous” workers, independent of the period of the contract. The autonomous worker administers his own service and the effective accomplishment of tasks, and is responsible for paying his own social contributions, municipal service tax and federal income tax.

Technically speaking the autonomous worker receives a professional fee rather than a salary. He provides the client company with one of two accounting documents:

A official receipt for the payment of a service. This comes in two versions, RPA and RPB, and is the controlling document for the levy of the municipal tax on services (ISS).

A private services fiscal receipt — essentially a federal income tax control document.

The choice of which receipt to use is detailed in law.

The worker who frequently supplies autonomous services must register with the municipal authorities (Cadastro de Contribuinte Municipal —CCM). This applies mainly to professional persons such as private teachers, lawyers, journalists, engineers and others supplying services over short periods, for example taxi drivers, house painters, truckers, etc.

4.4 Cooperative labor

Cooperatives have been around for decades in the Brazilian farming community, for example offering bulk purchase of crops or seeds. However, in recent years there has been significant growth of urban labor cooperatives, in which a group of workers within a specific category reduce their tax and social contribution obligations by becoming part of what is nominally a collective operation. The down side of the arrangement for the workers involved is that they cease to receive full coverage of social benefits. Taxi drivers, doctors and lawyers are among groups that have experienced a great increase in cooperatives in recent years.

Labor cooperatives are not viewed favorably by the federal government, in particular ones that comprise mainly poor and less well-educated workers where there may be a de facto attempt by an entrepreneur to use a cooperative structure as a guise for cheap labor, employing people who are not always fully aware of the long-term impact of renouncing basic social benefits. Inspectors from the labor, welfare and justice authorities have kept a very close eye on such operations and labor prosecutors have taken action against companies hiring the services of such organizations.

Brazilian labor law is imprecise in this area, a fact which has led to a large increase in the potential for labor and welfare actions. Various hiring companies have been prosecuted, and the situation is likely to remain hazy until and unless Congress legislates to remove doubts, or until a more substantial body of jurisprudence accumulates.

4.5 Rural labor and harvest help

A harvest contract is one pegged to seasonal cycles in agriculture, and covered by Law 5,889/73. The hiring company is required to make new contracts for each harvest, and these normally run until the end of the harvest of the year in question.

The harvest contract format is not restricted to agricultural activity, and can be used in general industry as well. However, to be valid the harvest contract must relate specifically to a product that displays distinct seasonal variation, and one that requires significantly different volumes of manpower at different moments of the cycle, for example right after the harvest to avoid product loss.

4.6 Comparative costs of different labor contracts

The facing table illustrates the comparative costs of hiring a worker under two contractual alternatives:

(a) Permanent contract of indefinite duration, government by regular CLT rights and obligations.

(b) Temporary hire as governed by Law 6,019/74, for a maximum period of six months (shortly to be increased to nine months, as explained in item 4.2 above.

The table is based on data supplied by ASSERTTEM, the National Federation of Companies Involved in Service Supply, Labor Placement and Administration, Human Resource Services and Temporary Labor.

5 – Organization dealing with outsoursing

5.1 Class associations

As indicated in item 2.3 above, the class associations active in the outsourcing area in Brazil are still relatively new. They are not widely known and do not have 100% cover age of the national territory. However, they are growing and gradually gaining a firm foothold within the sector. Relevant organizations include:

ASSERTTEM – Brazilian Association of Outsourcing Companies and Temporary Work

Av. São Luis, 258 – 12º andar – conjunto 1208 – Centro | São Paulo – SP – Brasil | CEP: 01046-915

Tel./Fax: 55 11 3121-0088 / www.asserttem.com.br


SEBRAE, the Federal Agency for Small Business Promotion (Serviço de Apoio à Micro e Pequena Empresa) maintains a national register of small and medium companies in all sectors, many of which offer certain types of outsourced services. The agency also runs training programs for small companies, specifically seeking to bring them up to a level of efficiency and quality where they can be effective suppliers to major companies.

Larger companies, particularly industrial companies, will find the SEBRAE register useful when seeking suppliers of specific services. The organization can prepare reports matched to the needs of individual client companies.

SEBRAE in São Paulo also maintains a public library with substantial information on topics related to labor, hiring, small companies, etc. Tel (São Paulo and Rio de Janeiro): 0800-5700800.