New Labor Rule Has Businesses Mistaking Outsourced With Contract Employees

Law firms are flooded with questions about the new type of hiring recently allowed by a Supreme Court decision

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Anaïs Fernandes
São Paulo

The recent Supreme Court decision that cleared outsourcing for all activities within a company has generated a flood of questions among employers.

Since the final ruling, on Thursday (30th), lawyers report that many clients are coming to them to seek advice on laying off their full-time staff and rehire them as contract employees.
 

Hand holding an employment record book, a Brazilian document that functions as a work permit. Employers are mistaking outsourcing for the possibility of laying off full-time staff and hire them as contract workers
Hand holding an employment record book, a Brazilian document that functions as a work permit. Employers are mistaking outsourcing for the possibility of laying off full-time staff and hire them as contract workers - Folhapress

This practice - laying off a full-time employee to rehire her again as a contracted worker, thus keeping the employment relationship - is still unlawful and it was not brought up in the trials that resulted in the new regulation.

"People often mix up the concepts of outsourcing and contract work. It's not possible to lay off all the staff and rehire them all as contract employees, right away. The Supreme Court decision was not about that," said Alan Balaban, a partner at Balaban Advogados law firm.
 
(With reporting from Larissa Quintino)

Translated by NATASHA MADOV


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