Brazil: New Law Expands the Maximum Term for Engaging Temporary Workers

The Ministry of Labor and Employment issued a new regulation (“Portaria 789”) to Federal Law 6.019/74, which regulates the engagement of temporary workers, allowing employers to retain temporary workers for a longer period of time under prescribed circumstances.  This new regulation became effective July 1, 2014. 

Consolidated guidance of the Brazil Superior Labor Court of 1993 generally prohibits outsourcing, except under limited circumstances.  Law 6.019/74 provides that companies may engage temporary workers through a temporary staffing agency only in one of two scenarios: (1) to temporarily substitute a regular worker on leave; or (2) to provide services during an extraordinary increase in workload. 

This “temporary worker” exception carried its own set of restrictions.  First, it limited the temporary worker’s tenure to a maximum of three months.  Second, while the tenure could be extended for an additional three months, the client company (recipient of the temporary worker’s services) was required to obtain an approval from the Ministry of Labor and Employment, which required that the company justify its request for the extension.  These restrictions, coupled with the difficulties of getting the tenure extended, created managerial nightmares for HR and, in many cases, resulted in non-compliance with the law. 

The new regulation to Law 6.019/74 now allows companies to retain temporary workers for up to nine months to substitute employees on long leaves. The longer tenure, however, does not apply to coverage for an extraordinary increase in workload. 

This amendment affords companies some flexibility to reduce disruption in services, such as in the case of a worker on maternity leave.  Brazil’s law provides mothers with four months of maternity leave and grants tax breaks to companies that provide an additional two months of leave.  In addition, women workers typically try to avoid using their vacation days prior to giving birth, so as to use all accrued vacation days to care for their newborn.  As such, an employee’s maternity leave can extend to seven months.  Prior to the new regulation of Law 6.019/74, in such cases, the employer could initially retain a temporary worker for three months, and then was required to apply for a three-month extension, and finally would have to engage a different temporary worker for the seventh month since the law would not allow the same temporary worker to provide the services beyond six months.  

The new regulation now permits a company to seek pre-approval to engage a temporary worker to substitute the employee during the seven-month maternity leave.  If the period of leave is uncertain, the company can still engage the temporary worker for the estimated leave period and then apply for an extension up to the maximum of nine months.  

Companies with headquarters outside of Brazil should be aware that the engagement of temporary workers is not legal unless the staffing agency is duly registered with the Ministry of Labor and Employment for the exclusive purpose of providing temporary workers to fill temporary vacancies or to meet a temporary unusual increase in demand.  Additionally, a temporary work agreement is deemed null and void if a labor inspector determines no justified reason exists for the temporary engagement, in which case the contracting company may be subject to fines and potentially other obligations owed to the temporary worker under the labor and employment laws.  Temporary workers may also file labor claims before the labor courts against the contracting company, and may be successful in their claims if the staffing agency did not comply with its obligations under the applicable labor and employment laws.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.