Understanding Unions in the Brazilian Labor Context: What Multinational Companies Need to Know 🇧🇷🤝

For companies looking to expand into Brazil, understanding the structure of labor relations — especially the role of unions — is essential. The Brazilian labor environment is complex, and ignoring union dynamics can result in operational disruptions, unexpected costs, legal risks ⚖️, compliance issues 📋, and even fines 💸.

Hierarchy of Labor Legislation in Brazil 📚

First, let's understand the hierarchy of laws that shape the Brazilian workplace:

1. Federal Constitution – The supreme legal framework that establishes fundamental rights.
2. Collective Labor Agreements (ACTs) and Collective Bargaining Agreements (CCTs) – Negotiated between employers and employees through their respective unions.
3. Labor Laws (CLT) – Statutory provisions regulating employment relationships.
4. Decrees and Ordinances – Government-issued administrative rules and guidelines.
5. Labor Court Decisions – Judicial rulings that interpret and apply labor laws in specific cases.
6. Internal Policies and Regulations – Company-level rules governing conduct and procedures.
7. Employment Contracts – Legally binding agreements outlining the rights and obligations of employers and employees.

The 2017 Labor Reform in Brazil 🇧🇷 introduced the principle of “negotiated over legislated” 📜, meaning that collective agreements (ACTs and CCTs) can prevail over labor laws in several matters. This change allows the creation, reinforcement, or limitation of rights through collective bargaining, covering 13 specific areas, such as:

• Working hours and annual time banks ⏳
• Rules for remote work, on-call duties, and intermittent work 💻
• Career plans, performance bonuses, and profit sharing 🎯
• Break times for meals, remote work arrangements, on-call duties, and intermittent work 🍽️

Supporters argue that this flexibility in labor rules is crucial during crises and for job creation 📈. Unlike in the past, the reform enhanced the autonomy of the private will and provided greater legal certainty 🛡️, aligned with Article 7, XXVI of the Federal Constitution.

The goal is for unions to negotiate special rules for their specific categories, which then prevail over general legislation. The law not only permits this precedence but also defines scenarios, limits, and penalties ⚠️ to ensure legal security in labor relations.

ACT vs. CCT: What’s the Difference? 🤔

Although similar in purpose, ACTs and CCTs mainly differ in scope:

Collective Labor Agreement (ACT):

• Negotiated between a union and one or more specific companies 🏢
• Applies only to the employees of those companies
• Designed to solve particular or specific issues for that group of employees

Collective Bargaining Agreement (CCT):

• Negotiated between a union and an employer association for an entire sector 🏭
• Applies to all companies and workers within that category and region, regardless of membership
• Aims to standardize working conditions across an entire category

In both cases, once signed and registered, these instruments have the force of law ⚖️ between the parties.

How ACTs and CCTs Impact Companies, HR Departments, and Payroll 📑🏢👩💼

Whenever a company decides to start operations in Brazil, it must identify which union it is associated with and confirm if there is a valid or pending collective agreement. This is critical to understanding the benefits and conditions companies are legally required to provide employees.

This is basic, but unfortunately, even Brazilian companies sometimes fail to do the proper diligence 🔍.

Example: Suppose your company has an internal policy offering Life Insurance coverage of R$50,000, but the collective agreement requires R$60,000 coverage. Using only the internal policy means your company is non-compliant, exposing it to union lawsuits ⚖️ and fines 💰.

ACTs and CCTs can have a major impact on a company's financial planning. Therefore, my recommendation for HR and Payroll teams is:

1. Identify the union for your sector and region 🗺️
2. Check if there is a valid ACT/CCT — do not assume that only the CLT applies 📑
3. Adjust salaries, benefits, and policies to ensure compliance ✅

No union in your sector? Follow the CLT — but this is rare (most sectors are unionized).

Proactive Compliance: A Strategic Advantage 🚀

Navigating Brazil’s complex labor landscape may seem challenging 🛤️, but it doesn't have to be a solitary or overwhelming journey. By proactively understanding union dynamics and collective agreements, companies not only ensure legal compliance ⚖️ — they also position themselves for sustainable growth 📈 and stronger relationships with their workforce.

In today’s competitive market, mastering the local labor environment is more than a regulatory requirement — it’s a critical driver of operational excellence, brand reputation, and long-term success 🌎🏆.