TST Defines Time Frame for Application of Labor Reform to Employment Contracts

The Superior Labor Court (TST) has taken an important step in standardizing labor jurisprudence by establishing the immediate application of Law No. 13,467/2017, known as the Labor Reform, to employment contracts signed before and after its entry into force. The decision was taken by the Full Court, in a session held on November 25, 2024, and consolidates a thesis that promises to bring greater legal certainty to employers and employees.

What was decided?

By majority vote, the TST ruled that:

“Law No. 13,467/2017 has immediate application to ongoing employment contracts, and will now regulate the rights arising from the law whose triggering events have taken effect as of its entry into force.”

This decision marks the end of a legal debate that has lasted since the entry into force of the Labor Reform. The thesis recognizes that there is no acquired right to a previous legal regime, but only an expectation of right, thus applying the new legal provisions to employment contracts in force from the date of the reform.

Why is this decision relevant?

There is still a lot of controversy about the temporal scope of the reform, and the decision moves in the direction of long-awaited uniformity. For workers hired before November 11, 2017, the application of the new rules raised doubts about the maintenance of rights consolidated under the previous regime.

With the TST's decision, the understanding has been consolidated that legislative changes must be applied immediately, as long as the triggering events occurred after the new law came into force. This eliminates divergent interpretations and reinforces the principle of non-retroactivity of legal norms.

Impacts for companies and workers

This decision has direct implications for employers and employees, including:

1. Review of contracts and labor practices: Companies will be able to adjust their internal processes to ensure compliance with the current rules, even for contracts signed before 2017.

2. Reduction of litigation: The standardization of case law contributes to the reduction of legal disputes related to the temporal application of the reform.

3. Possibility of rescission actions: Issues already decided under the old understanding can be re-discussed, impacting agreements, Conduct Adjustment Terms (TACs) and final court decisions.

Main changes brought about by the Labor Reform

Among the 117 changes to the CLT, the following stand out:

✔ Collective agreements now prevail over legislation - whatever is agreed between employee and employer is not vetoed by the law, respecting essential rights such as vacations and 13th salary.

✔ Working hours - previously limited to 8 hours a day and 44 hours a week, can now be agreed at 12 hours of work with 36 hours of rest, respecting the 220 hours per month.

✔ Vacation splitting - division into up to three periods allowed, but one of the periods must be longer than 15 days and the other must be at least 5 days.

✔ Overtime - Maintains the limit of two hours of overtime per day, but adjusts the percentage due for overtime to 50% - the percentage of overtime was already 50% according to the 1988 Federal Constitution - as the CLT dates back to the 1940s, it was still 20%.

✔ Bank of hours by individual agreement - overtime compensation does not necessarily have to go through a collective agreement with the unions, it can be agreed by tacit or written individual agreement, as long as the compensation takes place within the same month in which the hours were worked, or by written individual agreement, as long as the compensation takes place within a maximum period of six months.

✔ Regulation of teleworking (home office) - with new contractual guidelines.

✔ Reduction of lunch breaks - possibility of agreement for a minimum of 30 minutes.

✔ Pregnant and breastfeeding workers - work limited to environments with medium and minimum levels of unhealthiness.

This decision by the TST provides more legal certainty, but also raises doubts. We are here to clarify and guide you or your company through this new scenario.

Contact our team to find out more!

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