Unemployment Hampers Advance of Labor Reform Breakthrough

04/24/2018 - 10h44

The agreement between an employer and a fired employee, one of the breakthroughs introduced by labor reform last year, has hardly been used due to high levels of unemployment.

According to the rule, a company can reach an agreement with a fired employee to pay a lower termination severance with the employee still being able to withdraw 80% of his FGTS (Guarantee Fund for Employment Duration).

The profile of dismissed employees in the first quarter is practically identical to that of those from the same period in 2017 when this option didn't yet exist: half of employees who were dismissed have up to 15 years of employment, according to the Labor Ministry.

"This point in the law presupposes that the employee has the intention of asking to be fired and the tendency right now is that there are very few such cases", said Clemente Ganz Lúcio, the coordinator of Diesse (Inter-Union Department of the States).

In March there were 13.5 thousand agreements like this, but the total number of dismissals was nearly 1.3 million.

"It was a piddling amount", said Ivo Dall'Acqua Junior, Vice-President of FecomércioSP. Other innovations from the new rules, like intermittent contracts, were also hardly utilized, he confirmed.

This can partially be explained by a lack of familiarity with the new rules, but he also points to another factor: dialog between employers' unions and employees has deteriorated.

"The relationship has been affected due to the question of mandatory union contributions. It hasn't been possible to have conversations about compacts, flexible hours, intermittent contracts and other subjects."

Translated by LLOYD HARDER

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