Brazilian Supreme Court Allows Resumption of Proceedings on "Pejotização" (a Brazilian term referring to the practice of hiring individuals as independent contractors to avoid labor laws)“

The Brazilian Supreme Federal Court took a significant step in addressing General Repercussion Theme 1,389, which discusses the legality of hiring freelancers and legal entities to provide services, as well as the rules for distributing the burden of proof when fraud is alleged in this type of contracting (the phenomenon known as "pejotização").

Since April 2025, the rapporteur for the matter, Minister Gilmar Mendes, had suspended all proceedings dealing with the issue throughout the country. In a decision dated June 18, 2026, the minister ordered the partial end of this suspension, authorizing the resumption of proceedings in the first and second instances—that is, before the Labor Courts and the Regional Labor Courts.

What changes in practice?

• Cases that were stalled can resume producing evidence and move towards trial in the Regional Labor Courts.
• Following the second instance decision, the process is suspended again, awaiting the final ruling from the Supreme Federal Court (STF) — there is no reopening of the deadline for appeal to the Superior Labor Court (TST) yet.
• The proceedings within the TST itself remain suspended until a new ruling by the STF.

Recommendation

Companies with litigation involving PJ (legal entity) contracts, commercial representation, or independent service provision should resume actively monitoring these processes, reviewing their evidentiary strategy and liability provisioning in light of the new scenario. Our labor law team is available for an individualized analysis of each client's litigation portfolio.

Article written by: Rafael Mello.