Labor Reform and Arbitration
One of the most controversial provisions introduced by the Labor Reform is the possibility to resolve disputes concerning individual employment issues through arbitration.
As Law No. 13,467 comes into force in November 2017, the employee whose salary is at least twice the amount of the security pay cap – currently, eleven thousand, sixty-two reais and sixty-two cents (BRL 11,062.62) – may enter into an arbitration clause with the employer and have any future dispute resolved by arbitrators pursuant to the Brazilian Arbitration Act (Law No. 9,307/96).
The law allows parties to submit to arbitration any dispute involving alienable rights.
The main challenge in using arbitration to resolve labor disputes is the doctrine by which labor rights are generally non-alienable rights. This is because non-alienable rights cannot be, as expressly stated in the law, submitted to arbitration since they cannot be waived or subject to settlement.
To overcome this obstacle, one should have in mind that not all labor rights cannot be waived or subject to settlement. For example, although a union official cannot be dismissed unless a judicial investigation is initiated to investigate an alleged serious violation, claims regarding labor charges – including that corresponding to the indemnity in lieu of stability pay – can still be settled in court.
Since this topic has long been fiercely debated by the labor law community and it will certainly be brought to the review of Brazilian Courts, companies must be cautious and careful enough to evaluate each case individually in order to avoid a case which was intended to be submitted to arbitration from ending up in court.