Isabela Fernandes Freirias
Lawyer at Marcos Martins Advogados
This article seeks to analyze the problem arising from the absence of a specific law on collective dismissal and its growing application in Brazil, due to the worsening economic crisis. To this end, we will look at the conceptualization of this institute, as well as the position of the Superior Labor Court on the subject.
In order to understand the subject, it is necessary to define what is meant by dismissal. Octávio Bueno Magano, a professor specializing in Labour Law, in his book Dicionário Jurídico-econômico das relações do trabalho[1], page 79, published by Saraiva, defines dismissal as “a unilateral and receptive declaration of will made by the employer to the effect that the employment relationship should be terminated either immediately or after prior notice has been given”. In this vein, it should be noted that the Consolidation of Labor Laws only regulates individual dismissal. In other words, national legislation does not regulate the collective dismissal of workers. It should be noted that the national law does not even mention the concept of what collective dismissal is.
Thus, in order to find subterfuges for this gap, we have sought its definition in doctrines, such as that of Orlando Gomes, a renowned jurist, who describes collective dismissal, taken as a synonym for dismissal, in his work Dispensa coletiva na reestruturação da empresa – Aspectos jurídicos do desemprego tecnológico[2], page 575, published by LTR as:
Collective dismissal is the simultaneous termination, for a single reason, of a plurality of employment contracts in a company, without replacement of the dismissed employees. […] The employer, forced to lay off a certain number of employees, does not propose to lay off certain workers, only those who cannot continue in their jobs. By taking the step of dismissing a number of employees, the employer is not targeting specific individuals, but a group of workers identifiable only by non-personal traits, such as their position in a certain section or department, their professional qualifications, or their length of service. The cause of dismissal is common to all, and is not linked to the behavior of any one of them, but to a company need.
For the Superior Labor Court, a collective dismissal is one in which a single economic, technological or structural fact, unrelated to the employees, is the cause of multiple decisions. This understanding is demonstrated in the case law transcribed below:
Collective bargaining of a legal nature. Collective dismissal. Non-configuration. Absence of a single fact unrelated to the employee. The dismissal of one hundred and eighty employees over the course of four months does not constitute a “mass dismissal”, since this presupposes a single event, whether of an economic, technological or structural nature, unrelated to the employee. In the specific case, it was shown that the dismissal of the employees was within the normal parameters of the company’s workforce flow, and occurred at a time of increased production and recovery of jobs, characterizing it only as a mass dismissal. With this understanding, the SDC unanimously dismissed the ordinary appeal filed by the Union of Workers in the Metallurgical, Mechanical and Electrical, Electronic and Optical Fiber Industries of Campinas and Region. (Superior Labor Court – Case 0000147-67.2012.5.15.0000 – SDC – Rapporteur. Minister Maria de Assis Calsing – Judgment 15.4.2013).
Having conceptualized collective dismissal, the question remains: if there is no law regulating collective dismissals in Brazil, what are the guidelines to be observed when companies carry them out? In this regard, it should be noted that Brazilian case law has not clearly defined the number of workers required for a layoff to become collective. However, one valid criterion is the potential for damage to local society.
But how is it possible to foresee or even measure the extent of the damage caused by a collective dismissal? This brings to mind the emblematic case of the automaker General Motors exposed in the documentary Roger and Me, directed by Michael Moore. The film depicts the departure of General Motors from the city of Flint, Michigan, USA. However, the city revolved around the automaker’s industrial park, including in terms of jobs.
By leaving the city in a position based solely on less investment in another city, the company left 67,352 (sixty-seven thousand, three hundred and fifty-two) people unemployed, which is equivalent to half the population of the city of Flint at the time. The immediate consequence of this situation was a significant increase in the crime rate. The documentary not only exposes this situation, but also severely criticizes the stance adopted in this case.
What cannot be denied is that in practice, especially in times of economic crisis such as the present, collective dismissal has gradually become more routine. This is because in our legal system the unilateral termination of the employment contract on the initiative of the employer is permitted, by virtue of its potestative power, i.e. the legal prerogative to impose on others the subjection to its exercise. Furthermore, the constitutional provision prohibiting arbitrary dismissal has not yet been regulated.
However, collective dismissals are capable of generating major social impacts, as has been shown, since many families lose their source of income, which exacerbates the country’s miserable situation. In other words: collective dismissals transcend the individual sphere, impacting society as a whole. It is therefore clear that collective dismissal cannot be treated in the same way as individual dismissal. Although there is no specific legislation on the subject, the Judiciary, in an activist stance, has been resolving issues relating to this topic.
In this vein, the Superior Labor Court has settled on the understanding that collective dismissal necessarily requires prior collective bargaining in order to discuss the forms and criteria in which it will take place. This negotiation provides for the necessary measures to deal with the company’s economic crisis, in order to mitigate the impact of collective dismissal. If this is preceded by negotiation, it will be considered legitimate. If not, it is arbitrary and, as such, unlawful and subject to nullity. The practical consequence, in principle, is the reinstatement of the dismissed workers.
The Labor Prosecutor’s Office recommends, in its guideline no. 06[3], from the Coordination Office for Trade Union Freedom, CONALIS, that collective bargaining with the trade union representing the category should take place before collective dismissal is carried out, under penalty of nullity.
This prior negotiation will also try to avoid the collective dismissal of workers through measures such as lay off (suspension of employment contracts for employees to take part in professional training courses or programs offered by the employer), collective vacations or even a reduction in working hours.
If none of these measures prove to be effective, other formulas can be instituted to reach a compromise between the parties, such as: (i) granting financial compensation, calculated on the basis of the length of the contract; (ii) maintaining certain benefits, such as food vouchers and health insurance, for a fixed period; (iii) promoting professional qualification courses for dismissed workers, so that they can increase their chances of being placed back in the job market; (iv) a preference clause for rehiring, in the event that the employer overcomes the financial adversity and needs to hire new employees.
As you can see, all these measures serve the public purpose of preserving social welfare. It should also be noted that there is no constitutional or even legal provision on collective dismissals, so there is also no legal obligation to hold collective bargaining in order to proceed with collective dismissals.
However, the case law issued by the Superior Labor Court diverges from this understanding, in particular because of the social function of companies, as well as pointing out that collective dismissals that dispense with the union’s prior participation violate good faith and the principles of trust and information, characterizing an abuse of rights. Thus, for collective dismissal to be effective and considered legitimate, it must be preceded by negotiations with the trade union.
Marcos Martins Advogados was founded in 1983 and seeks to provide innovative legal solutions to the needs of its clients. Working in all areas of law, in litigation and prevention, with an intense dedication to Business Law, the firm has extensive and recognized experience, which allows it to interact with companies with significant participation in the national and international market. The firm also has qualified professionals for this type of demand.
[1] MAGANO, Octávio Bueno. Dicionário jurídico-econômico das relações de trabalho. São Paulo: Saraiva, 2002. p. 79.
[2]GOMES, Orlando. Collective dismissal in company restructuring: legal aspects of technological unemployment. São Paulo: LTr, 1974. p. 575.
[3] “COLLECTIVE DISMISSAL. Considering the constitutional principles of the dignity of the human person (art. 1, III), democracy in labor relations and the peaceful resolution of disputes (preamble to the 1988 Federal Constitution), the right to information on the reasons for mass dismissal and collective bargaining (art. 5, XXXIII and XIV, art. 7, I and XXVI, and art. 8, III, V and VI), the social function of the company and the employment contract (art. 170, III and Civil Code, art. 421), as well as the terms of Conventions Nos. 98, 135, 141 and 151, and Recommendation No. 163 of the International Labor Organization (ILO), collective dismissal will be null and void if it is not subject to the prior procedure of collective bargaining with the union representing the professional category.”
