Brazilian Labor Courts Are Slow and Little Effective for Workers

10/30/2017 - 14h15

Brazil's Labor Courts are expensive and overloaded, and thus cannot handle all the cases they receive.

Most of the times, they are used to guarantee the payment of nonpaid rescissory resources, such as unpaid amounts of workers' salaries and notice of dismissal fees, and unlike what most people think, they cannot be considered "pro-employee" - who receives on average R$ 4,500 (US$ 1,300) per case.

The image of the courts was built by researcher André Gambier Campos, of Ipea (Institute for Applied Economic Research), in a study obtained exclusively by Folha.

Campos believes the solution for the problem would not be to reduce the power of the Labor Courts, but to increase the mechanisms of negotiations before disputes reach the courts.

Campos also says that, as it misses the opportunity to strengthen workers' unions and labor committees, the labor reform approved by the Brazilian congress soon to come into force could worsen the issue of expenditure as it would tend to increase the judicial demand already under much pressure.

In 2011, 9% of workers dismissed by companies filed a lawsuit in the country's Labor Courts. In 2015, the number reached nearly 18%.

In the face of the high demand, 3.8 million new cases were received by the three instances of the Labor Courts in 2015 alone.

Another 2.1 million cases which had been received in previous years were still ongoing.

A little more than 66% of the total cases received final decisions in that year. However, repeating the dynamics of previous years, nearly 34% of the cases had to be continued in the next years.

Of the courts decisions made, the cases considered totally valid amounted to only 2% of the total, although the idea that the scales normally tip to the worker's side is considerably widespread.

The study also shows that the most frequent results involve partially favorable decisions, either through reconciliation between employers and employees (nearly 40%) or through decisions on merits (28%).

However, even when court orders favor employees, it takes a long time for the due amount to be paid, and in some cases, it is never paid.

In 2015, the year chosen for the study, it took on average seven months to reach a sentence in first instance. In regional courts, the cases last eight months and in the superior courts, a little more than a year.

The execution phase is by far the longest, as it lasts on average three and a half years. The final phase of labor cases, the execution is the moment when the judge orders the payment of the recognized rights.

HIGH COSTS

The Labor Courts are not only slow, but they are also expensive. They cost the federal government R$ 14.2 billion (US$ 4.3 billion) in 2014 – with December 2014 as a reference. Of this amount most (80%) was used to pay employees, especially judges, appeal judges and Supreme Court justices.

It is as if each cases cost on average R$ 4,000 (US$ 1,250) in order to reach a decision.

The amount is close to the average paid by employers to employees in each case (R$ 4,500- US$ 1,300).

The counterpart – in the form of tax collection – was well below costs.

In social security credits, proceeding costs and income taxes, the federal government managed to collect on average close to R$ 723 per case in 2015 (US$ 219).

Roughly for each R$ 1 (US$ 0.3) paid to employees, the Brazilian Labor Courts paid R$ 0.91 (US$ 0.27) and the federal government managed to collect R$ 0.16 (US$ 0.04).

"It is not about reducing Labor Courts, which go back a long and time and have an importance; however it does not make sense for society to spend so much money to produce court decisions of such small amounts," says Campos.

Translated by THOMAS MUELLO

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