Brazilian Federal Supreme Court to conclude, in 2023, judgment that can impact the possibility of terminating employment without cause

At the beginning of 2023, news surrounding the potential application of Convention No. 158 of the International Labor Organization (ILO) in Brazilian territory resurfaced among the press, while several sectors of society rekindled the discussion over its potential effects.

Convention 158 is significantly relevant, due to establishing that termination of any employment contract must be justified, whether under technical, disciplinary, financial or operational aspects. In addition, Convention 158 provides for certain procedures to implement such terminations and assure employees the right to challenge – before the competent bodies – the validity of the justification used by employer.

The widespread repercussion of the matter lies on the fact that, within the first semester of 2023, the Federal Supreme Court will resume the judgment of ADC 39 (Action for Declaration of Constitutionality) and ADI 1,625 (Action for Declaration of Unconstitutionality), both pending since 1997. Such Actions address the unconstitutionality of Decree No. 2,100/1996, which ceased the effectiveness of Convention No. 158 in Brazilian territory. 

Such expectation results from the recent approval of the Amendment of Procedural Rules No. 58/2022, which establishes that judgments suspended due to the Ministers’ request for analysis of the case must resume within 90 days subsequent to the publication of the session’s records.

Up to this moment, eight (8) Ministers have voted – adopting different juridical interpretation – and three (3) votes remain. There are several possible outcomes for the case, especially because the Supreme Court can adjust the effects of the decision, depending on matters of political and legal certainty.  

Companies must pay close attention to this matter, as the judgment can significantly affect labor relations and the process to terminate employment agreements.

Demarest’s Labor and Employment team is available to provide further clarifications regarding potential results of the judgment of ADC 39 and ADO 1,625, as well as to advise you on the topic.