By: Rafael Mello and Israel Cruz
The Brazilian Supreme Federal Court (STF) is set to resume a trial that could prohibit the unjustified dismissal of an employee. What would be the consequences of the conclusion of this trial?
The possibility that the Supreme Court will resume the trial regarding the effects of Brazil's ratification of Convention 158 of the International Labor Organization (ILO), which prohibits the dismissal of employees without “justified cause”, has been widely reported in the press in recent weeks.
The case before the STF is not new and discusses the situation in which Brazil approved, through the National Congress, in 1992 and ratified by the Executive Branch in 1995 ILO Convention 158, followed in 1996 by Decree 2100/1996 by then President Fernando Henrique Cardoso which made public Brazil's denunciation of ILO Convention 158. See:
THE PRESIDENT OF THE REPUBLIC hereby announces that ILO Convention No. 158, relating to the Termination of Employment Relationships on the Employer's Initiative, adopted in Geneva on June 22, 1982, will cease to be in force for Brazil as of November 20, 1997, as it was denounced by a Note from the Brazilian Government to the International Labor Organization, the denunciation having been registered by the latter on November 20, 1996.
Thus, the discussion in the STF is of a formal nature, that is, whether then President Fernando Henrique Cardoso could reverse the process of approval and ratification of ILO Convention 158 on the subject of unjustified dismissal, by decree.
Currently the case has eight votes and three possible understandings, which are:
- Ministers Joaquim Barbosa, Rosa Weber and Ricardo Lewandowski understood that the then President of the Republic could not, without the approval of Congress, withdraw Brazil from the aforementioned Convention. Therefore, the decree would be unconstitutional and Brazil would be subject to the rules prohibiting unjustified dismissal;
- Ministers Dias Toffoli, Nelson Jobim and Teori Zavascki understood that the decree remains valid; and
- Ministers Maurício Corrêa and Ayres Brito understood that the decree would need to be ratified by Congress and, therefore, it would be up to Congress to decide whether to maintain or overturn the decree.
Thus, Ministers Gilmar Mendes, Nunes Marques and André Mendonça remain to vote.
It is worth noting that the votes of retired or deceased ministers remain valid.
Going into the practical effects of this judgment, it is worth noting that the Superior Labor Court (TST) has also already addressed the issue and has repeatedly decided that ILO Convention 158 has a programmatic nature and, therefore, depends on a Complementary Law for the regulation and implementation of its effects.
See, the 1988 Federal Constitution itself already provided for employee protection against unfair dismissal, which should be regulated by law and, until that were done, section I of article 10 of the Act on Transitional Constitutional Provisions (ADCT) would apply. It has been 35 years and it does not seem that the ADCT really has a transitory nature nor that the Legislative Branch has any interest in legislating on this subject.
And why is this important? This historical and political context of how the same programmatic rule – employee defense against unjustified dismissal – is treated (or not treated) indicates that even if the STF states that ILO Convention 158 should be considered as fully approved and ratified and that Decree 2100/1996 is null and void or ineffective, it is certain that a regime will not come into force in Brazil immediately under which companies will be prohibited from applying dismissal without just cause, nor will the system by which the FGTS and fine on the balance play the role of compensating or protecting the employee against unjustified dismissal be terminated.
In our opinion, nothing will change unless there is a law regulating ILO Convention 158 in this regard, which certainly depends on the political environment and representation of the will of society itself, as it has become clear in recent decades that neither the unions representing employees nor the associations and federations that act on behalf of companies have had any interest in discussing and changing the transitional regime created by the ADCT. In other words, employers are afraid of how this prohibition on unjustified dismissal would be regulated and employees, truth be told, have shown no interest in abandoning the regime by which they receive a fine in the event of unjustified dismissal.
Having overcome the point that the STF's ruling is not enough to change the country's reality, and that news that adopts an alarmist tone in this regard is unfounded and exaggerated, it is also necessary to highlight that, in theory, the regulation of the impossibility of unjustified dismissal does not actually deal with a prohibition on dismissing employees or the possibility of dismissal only in cases of just cause.
In fact, the concept adopted by ILO Convention 158 is that the company cannot dismiss without a reason, defining in the aforementioned standard that the company can, in fact, dismiss an employee, as long as it proves that its grounds for dismissal derive from “employee ability or behavior” or, even, be “based on the operating needs of the company, establishment or service”. In other words, even in cases that do not fall under situations of serious misconduct and just cause, the company could dismiss an employee by proving that the employee lacks capacity or behaves inappropriately, or even that the company needs to make the dismissal, which involves criteria of operational or financial necessity.
In short, although the ruling on the matter by the STF may put an end to the validity and effectiveness of Decree 2100/1996, which, in our view, would be the most appropriate legal conclusion, the practical consequences would depend on regulation by the National Congress. It should also be noted that the National Congress does not depend on the ruling by the STF to address the issue, since whether or not Brazil is obliged to follow the aforementioned rule of ILO Convention 158, the fact is that this same issue has been pending regulation since the enactment of the Federal Constitution of 1988. Finally, the regulation of the protection addressed here would not mean a catastrophic regime restricting free private initiative, as the most alarmist propagates, but rather the implementation of a rule according to which a dismissal must be accompanied by a motivation, whether related to the employee's ability or behavior, or the company's financial or operational needs.