Amid Protests, Brazil Passes Controversial Labor Reform Bill

On July 11, 2017, the Brazilian Senate gave its nod to the controversial labor reform bill. Given the countrywide protests by labor unions, it raised doubts if the bill would ever come into effect. However, in a dramatic turn of events, President Michel Temer finally made the much-anticipated announcement after passing the bill through the Senate. The bill is dubbed as the first major overhaul in labor reforms in Brazil in 70 years. Many experts believe that Temer has done this not just to revive the declining Brazilian economy, but also to revamp his political career which has been mired during the past year with corruption charges.


The objective of this bill is to help businesses reduce costs and allow companies to negotiate contracts directly with employees. Labor unions, on the other hand, expressed apprehension that this bill will reduce job security in the country.

Key Points
  • Giving more leeway to collective bargaining agreements (CBAs)
  • Reducing the scope for legal intervention in labor disputes
  • Making dues paid to labor unions voluntary (they are currently mandatory, regardless if an employee is a member or not)
  • Giving more flexibility to part-time work and temporary contracts
  • Cutting the statutory lunch hour to 30 minutes
  • Auctioning for oil licensing rights and transport concessions
  • Overhauling the social security system

On July 13, 2017, the Brazilian President signed the labor reform bill into law. The new rules are likely to be rolled out in four months and it will subsequently apply to all employment contracts, including all pre-existing contracts as well. Earlier, the unions called for two general strikes in opposition to the new labor reforms and ever since then the government has been trying to pacify them by agreeing to bring in a provisional decree that would propose some changes to the labor reform bill. However, these proposed amendments need to be discussed further in Congress and with union leaders before they can take final shape.

The government is hoping that the labor bill will bolster the economy and bring it back on track after a prolonged period of recession. Businesses, large and small, have welcomed the bill, and expect that these reforms will bring in both depth and flexibility to the job market.

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