Brazilian Labor Law – Common Law vs. CLT
As I practiced labor law in Brazil, I was always surprised by how foreign companies as well as national companies are terrified by the costs of a legally signed employment contract with an employee.
Many companies seek ways to lessen these costs by creating new forms of employment (individual firms, informal work, outsourcing companies and so forth) and challenge local rules and labor laws so they can survive the first two years in the market, and beyond that, estimate real profit.
Nonetheless, companies must take into account their potential liability in the Brazilian labor courts, so this has always been a big issue for the development of the country. The more companies that have profit and growth, the more jobs there will be available and the country as a whole will grow.
Labor Law in the United States
On the other hand, I have observed that in the United States the the labor laws and the concept of labor rights are both quite different and have nothing in common with Brazilian principles. American labor law is not stated in codes or well established laws applicable to society, but rather made of rules based on common sense and societal norms.
Vacation, salary, working hours, lunch breaks and benefits are all part of a company’s policies or are within the employee’s power in his or her bargaining process while accepting a job position. This implies that Americans believe that employees and employers are equal (except for some limits imposed by law, such as equal payment for men and women and working hours), something that contradicts the Brazilian concept of the worker always being the weaker party in need of government protection.
In the United States, individual firms and bigger companies tend to not only survive, but also grow in this environment where there are fewer costs for the employer to assume by hiring an employee.
We recently watched as the President of the United States tried to pass the Paycheck Fairness Act, which is yet another attempt to reduce the male-female income disparity in the country. A Census Bureau report published in 2008 indicated that women make 77.5% of what men make, a wide difference attributed to systematic discrimination against women and their lifestyle choices.
The above mentioned Act shows that attention is being placed on the disparities and unbalanced labor rights that exist in the country. This is especially true considering the world economic crisis has greatly affected American companies, and consequently, increased unemployment rates.
This issue has to be addressed immediately. We can learn from underdeveloped countries that if you have few job positions available and a significant number of unemployed citizens, employers will take advantage of this fact and hire only very qualified people for the wage and benefits they are willing to pay.
It is a very delicate moment where American society will soon need to act to avoid going in the opposite direction of underdeveloped countries, which now are starting to copy the American successful model of freedom of contract.