A factual overview of Brazilian Labor Laws compared with Labor Laws in the US State of New York
Updated: Jan 15
Black Mountain works closely with the Fortus Group, our trusted HR partner in Brazil. Maxwell Brewster, Director of International Clients for the Fortus Group, recently prepared an article for us, explaining key differences with Brazilian labor laws compared with those in New York. It makes for an informative read.
Although the Brazilian labor reform came into effect in November 2017, the subject is still a cause for much discussion, both for and against. When compared to other countries, one notes that the difference is large, even after this minor modification. It is a fact that many would say that in Europe and the United States, job opportunities, working conditions and wage levels are very different from Brazil. Even so, the topic often comes up.
In this regard, the Anglo-American, Maxwell Brewster, director of international clients for the Fortus Group, also an attorney in the State of New York and a consultant in foreign law licensed by the Brazilian Bar Association-Rio Grande do Sul Chapter, has made a few comparisons. However, he stresses that speaking about US labor laws in a comparison with Brazilian ones is a difficult and complex task, taking into account the greater autonomy of the US States in this field, even though federal laws establish minimum standards in certain labor-related matters.
“In this case, due to this difficulty of comparison, the basis of reference in the US will be the Labor Standards and NY York State case law, as well as federal laws, under which an important piece of legislation is the 1938 Fair Labor Standards Act.”
Rest - With respect to certain topics, it would actually appear that Brazilian Labor Laws are becoming closer to the US approach, generally considered to be market-oriented. In the labor reform, for instance, the minimum period of rest changed from 1 hour to 30 minutes, which is generally the minimum in New York, in the case of daytime work.
Work Day and Overtime - In the same regard, concerning work days, in the context of an agreement, the labor reform brought about the possibility of increasing the work day from 8 hours a day to 12 hours a day, when, for example, in the State of New York there are no limits concerning the number of hours in a work day, subject to certain exceptions. Nevertheless, the US system can be said to be more protectionist since the Fair Labor Standards Act establishes that more than 40 hours is considered overtime in the case of employees with low wages. In Brazil, the equivalent ceiling is 44 hours. Brazil can once again be said to be more protectionist when one considers the limit of 2 hours per day for overtime, there being no restriction in the US. This is only limited, for example, in the State of New York by the number of hours of rest weekly in certain professions.
Union Dues - Moving onto another market-oriented example in the labor reform, union dues are now optional, following the example of US States with the so-called "right to work”. In these States with the "right to work", in unionized workplaces, employees are not required to join the associated unions and pay dues, with a few exceptions. However, the State of New York is not one of these States and, in the case of civil servants, union dues are compulsory.
Breaking up of vacation time – With respect to the breaking up of vacation time, the labor reform also brought about a market-oriented change. In Brazil, vacation time can now be broken up into three periods, making the system a little more similar to that existing in the US. Nevertheless, it is still much less flexible, since in its northern neighbour it is customary to grant vacation in working days (differently from Brazil, where calendar days are granted), which people take once at a time, for example, to have a long holiday weekend. However, in the US there is no right to paid vacation without an agreement in this regard between the employer and employee.
Notice of Termination – The Brazilian labor reform did not have an affect on all aspects of labor laws and, with regard to notice of termination, for example, the Brazilian Consolidated Labor Laws have retained their protectionist tendencies. In this way, employees are entitled to 30 days' advance notice, supplemented by 3 days following each year of employment, up to a maximum of 90 days. This is an example of a privilege that Brazilians take for granted, which does not exist for either side in New York, or in the US as a whole. In fact, according to the New York Labor Law § 195(6), employers must "notify any employee terminated from employment, in writing, of the exact date of such termination as well as the exact date of cancellation of employee benefits ... [no] more than five working days after the date of such termination."
Termination without Good Cause – Another aspect that has not changed with the labor reform and that has stuck to protectionist tendencies, is the right to compensation in the event of termination without good cause, retaining a model contrary to that of the US. In the US, the "employment-at- will" model reigns, meaning that in the case of an open-ended employment contract, the employee and employer can terminate the contract without good cause and without compensation, there being a few exceptions. For example, some exceptions are dismissal due to discrimination based on race, religion, sex, national origin, age, gender, sexual orientation, handicap status and marital status.
Minimum Wage – Brazil's protectionism is placed in check when one compares the Brazilian minimum wage with that in the US. In Brazil, the minimum wage is BRL 954.00 monthly, while in the US it is $7.25 per hour, working out to BRL 4,097.00 per month, when one takes as a basis 40 hours weekly and an exchange rate of US$ 1/BRL 3.26. In addition, in the city of New York, for example, where for a company with more than 11 employees the minimum wage is US$ 13.00 per hour, taking 40 hours weekly as a basis and an exchange rate of US$ 1/ R$ 3.26, it adds up to BRL 7,346.00 a month. However, one cannot forget that wages in Brazil conceal 90% more in charges, which would increase the minimum wage to BRL 1,812.60.
Employee vs Independent Contractor - The level of protectionism of workers in Brazil can also not be considered to be at one end of the spectrum when it comes to recognizing an independent contractor as an employee. According to the Brazilian Consolidated Labor Laws, "an employee is an natural person who provides services of an non-occasional nature to an employer, under the employment thereof based on a wage." In the State of New York, there are similar principles, relating to direction, supervision, exclusivity, performance evaluation, permission for leave, provision of facilities and equipment, control over hours and negotiation of pay. In any regard, irrespective of the criteria, the fact is that in the State of New York, since 2017 ride-sharing app drivers have been considered as employees and not independent contractors, subject to certain restrictions.
In conclusion, the Brazilian labor reform has brought the Brazilian system a little closer to that of the United States. Due to the reform, there now exists more possibility of negotiation between the two parties, following the US model a bit more, which has built into it more room for negotiations, believing that people should live their own life.
That said, I have identified three aspects in which reforms could go further, thereby following the US model within the Brazilian context, with benefits for employers, employees and courts:
1 - Breaking up of Vacation – I would change vacation from 30 calendar days to 22 working days (deducting 8 weekend days), with the possibility of breaking up the days as parties wish. In this way, employers would be able to reduce prolonged absences by workers, and employees would be able to take time off over the year, with a greater chance of enjoying this privilege when they really want to.
2 - Employment Booklet – I would abolish the employment booklet, since I consider it to be unnecessary bureaucracy that is not used in many countries,
including in the US. This is because the employment contract and other formalities already establish a relationship between the parties. Less bureaucracy would benefit employers, employees and courts.
3 - Termination without Good Cause – I would eliminate the obligation of employers and employees to pay compensation in the event of termination without good cause, in accordance with freedom of contract and working with whom they wish. This would provide relief to courts, which would have more time to address other matters.
Director of International Clients