The mass layoff controversy

Check out an article by partner Wilson Sales Belchior on the controversy about mass layoffs published by Estadão

One of the main reasons that motivated the labor reform was the modernization of standards to reduce the costs of maintaining a productive activity in Brazil. The purpose was to encourage entrepreneurship and the resumption of economic growth in the country. In this context, the regulation of State interference in the economy, including the Judiciary, is inserted, above all in the freedom essential to the management and decision-making capacity of enterprises – which must be preserved as a reflection of free initiative, as the foundation of the Democratic State of Law and national development, as a fundamental objective of the Republic.

Based on this scenario, on January 5, Minister Ives Gandra Martins Filho, president of the Superior Labor Court, took an innovative decision in cases of mass dismissal. He suspended the decision of the Regional Labor Court of the 4th Region and allowed the dismissal of 150 professors from UniRitter University. The understanding contradicts the jurisprudential positioning signed by the TST plenary in December 2017.

Article 477-A, of the CLT, which was removed at the regional level, provides that the chances of extinction of the employment contract – individual, multiple or collective unmotivated dismissal – are equivalent. Thus, for the president of the TST, there is no need for prior authorization from the union authority, nor for the conclusion of a collective agreement or collective labor agreement for mass dismissals to occur.

In other words, the entrepreneur who knows the flows of his own business – for economic, logistical and financial reasons – has the competence to terminate an employment contract without cause, or several of them. This is due to diversified or identical motivations, but which are explained by a need of the enterprise. In these cases, the employer is responsible for the payment of severance payments and delivery of documents proving the termination of the employment contract.

Removing the normative effects of article 477-A of the CLT, backed by the legitimacy of approval by popular representatives, means admitting interference by the Judiciary in business management. In addition, it means setting criteria that have no legal provision to determine when, where and how entrepreneurs can conduct their business. Thus, it is forgotten that activities essentially contribute to the development of the country.

Now, the second instance has ruled out a valid, effective and constitutional legal rule to prevent the management of an enterprise, neglecting the autonomy and full competence that is linked to the management of a business. Therefore, it is unacceptable for a judicial decision to interfere and limit the coordination of a productive activity. Therefore, the decision of Minister Ives Gandra Martins Filho is correct, which reestablished the legality of the labor rule.

Wilson Sales Belchior is a partner at Rocha, Marinho E Sales Advogados

https://politica.estadao.com.br/blogs/fausto-macedo/a-polemica-das-demissoes-em-massa/