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Recent labor overhaul in Brazil and main impacts on flexibility of working hours

In Brazil, in addition to the Federal Constitution, the main source of labor law is the Consolidated Labor Statutes (CLT) of 1943. CLT governs most aspects of labor relations and labour procedures. After 74 years of effectiveness, there were a lot of requests for updating many of its provisions to meet the reality of working environment.

Accordingly, after a wide debate on the Legislative Branch, on July 13, 2017, the President of Brazil approved a new law that adds and modifies several articles of CLT, which meet the society's current demands. This law is called in Brazil "Labor Overhaul" and will come into full force in the second half of November/2017.

The Labor Overhaul brought many changes that updated the Brazilian Labour Legislation, but on this article, we will only approach the impacts of the Labor Overhaul on the greater flexibility to the working hours, which allow the workers to match their particular needs to their professional obligations.

In this sense, there is the possibility to negotiate an hour bank agreement (compensation of working hours) directly with each employee, on an individual basis. Offsetting of working hours regime allows the employee to work more in some days and offset these working hours with time off on other days. It is important to clarify that the Labour Overhaul has not changed the legal limits of working hours (usually, 8 hours a day and 44 hours a week), but only formalized mechanisms that could make it more flexible.

As an example, before such law, it was only possible to establish working hours offsetting regime through a collective bargaining agreement entered into with the labor unions. Now, working hours compensation regime can be negotiated directly with the employee. This is a great improvement to the matter that will bring benefits to companies and their employees.

Another relevant matter that affects the working hours and was regulated by Labor Overhaul is the remote work or home office.

The possibility of working remotely was already a reality even before Labor Overhaul. Although this type of work already existed, there was no legal provision or regulation on it, which created uncertainty for the Brazilian companies to adopt it.

The main discussion was whether employees who worked remotely would or would not be eligible (exempt) for the control of working hours, and thus, overtime. With the new wording of the law, remote work is not subject to control of working hours and, therefore, home office employees are exempt from having their time controlled and, that way, they do not have the right to overtime.

Other home office details were also regulated, including the need for companies to reimburse employees for reasonable expenses with their home office.

The Labor Overhaul will also allow the negotiation with the labor union to change the date of local holidays. This possibility, previously prohibited, in our view, will greatly benefit employees, since mid-week holidays may, for example, be redirected towards the end of the week, creating a longer weekend what is more generous to employees and more productive to companies.

Another topic approached in the Labor Overhaul, which was a great source of discussion and dispute in the judiciary, is related to the lunch/rest time. In this sense, companies can reduce the lunch/rest time from 1 hour to 30 minutes, if the Labor Union agrees. This was an important demand from companies and employees because a reduced schedule allows greater productivity for companies and the possibility for employees to leave work earlier. Until then, agreements on this matter were deemed invalid by the courts even if duly negotiated with the unions.

One more relevant change affecting employees' working hours is linked to the new rules on the vacation period, which has new provisions and rules.

Before the Labor Overhaul, vacation of 30 consecutive days acquired every 12 months of work could be distributed in only two periods, and each period should be at least 10 consecutive days. In addition, persons under 18 years and those over 50 were forbidden to divide vacation in more than one period.

After the Labor Overhaul, if employee agrees, vacation may be divided into up to 3 periods, irrespective of the employee's age, provided that a period has at least 5 days and another period has at least 14 days.

It is worth mentioning that the Labor Overhaul is very important to the Brazilian legal system. It has dealt with several issues that needed to be changed, updating CLT, which was silent on the current demands of society.