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Dear Sirs,

On March 22nd, the House of Representatives approved a bill that changes the regulation of outsourcing in Brazil. In order to be enforceable, the bill still has to be sanctioned by the Brazilian President, who is likely to do so, as he is one of the major supporters of the proposal.

Besides the rules connected to companies commonly known as “service providers”, the project also has specific provisions related to temporary personnel. Temporary work was the only situation in which employees from outsourced companies were legally allowed to work, with direct subordination, in the contracting party’s core business.

Regarding temporary work, the main change is related to the term of the contracts, which is now increased to 180 days, extendable for an extra 90 days. These periods can be changed through collective agreements. In the previous legislation, the terms were shorter and less flexible.

However, the major change made by the bill is the possibility of outsourcing all the activities performed by the company, and not only the secondary activities.

It is important to stress that in order to avoid the employment relationship with the contracting party; the bill provides that the outsourced employees cannot be directly subordinated to the contracting party. It means that those employees must respond only and directly to the managers of the service provider and also be remunerated by the service provider.

The contracting party’s secondary liability regarding outsourced employees’ labor rights was maintained by the bill, as is the current practice. This means that it is important to have internal policies related to the outsourcing management, in order to minimize risks in the case of insolvency of the service providers.

The goal of this newsletter is to highlight the main aspects of this new legislation. However, Labor Courts will probably have strong debates about this issue and probably will decide to interpret the law in a restrictive way, as already happens with other labor laws (i.e., bank of hours), as well as create new jurisprudence to validate the terms and conditions established in the law.

ANDERSEN BALLÃO ADVOCACIA
Shana Carolina Colaço Vaz Bertol – shana.carolina@andersenballao.com.br