STF establishes thesis and modulates effects on mass termination

The subject of mass termination or mass layoff, wherein a company dismisses a significant number of employees within a short period, has always sparked discussions in the Labor Courts.

The discussions primarily centered around whether there was a necessity for prior collective bargaining with the union to mitigate the effects of a significant number of dismissals. In 2017, with the Labor-Law Reform, the Consolidation of Labor Laws (CLT) expressly stipulated that no prior negotiation requirement would be necessary for mass termination, affording the same treatment for an individual termination.

The discussion eventually reached the Federal Supreme Court (STF), which examined the matter during the decision of the Extraordinary Appeal 999.435 and established the following thesis: Prior union intervention is an indispensable procedural requirement for mass termination, distinct from prior authorization by the union, collective labor agreement, or collective-bargaining agreement.

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Despite the understanding established by the STF, legal uncertainty persisted concerning the determination of a specific time restriction for implementing the Supreme Court’s decision on the matter.

Therefore, in the motion for clarification decision regarding the Extraordinary Appeal 999.435, which occurred in April 2023, the STF clarified that the decision would take effect from June 14, 2022, date of adjudication upon the merits.

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Written by Daniel Rangel and Júlia Soares.

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