The aim of this announcement is to provide a high-level review of class actions in Brazil from a labor law perspective.
As in other countries, class actions are common under Brazilian law and represent a safeguard for collective rights created by government initiatives or associations with specific purposes such as trade unions. The complexity of dealing with this type of litigation is associated with the difficulty of controlling collective demands from a company’s perspective, which tends to grow and increase risks and costs.
From a labor law perspective, the main discussions in class actions relate to equal pay, non-discrimination practices and collective dismissals.
Relevant Class Action Mechanisms
The equivalent of a class action lawsuit in Brazil would be the civil public action – ação Civil Pública. As mentioned above, this is the appropriate legal tool to pursue rights in relation to any claim in almost all areas of law, especially in defense of collective interests when constitutionally guaranteed social rights are not respected. It is therefore of fundamental importance that the claims asserted in the collective claim correlate with a homogeneous interest represented by all persons represented by the plaintiff.
As part of a working approach, such a lawsuit can mostly be brought by the Labor Public Prosecutor Office (MPT), but the unions retain the same rights. No fees are initially charged if this procedure is proposed by the prosecutor. In trade unions, however, case law is inconsistent and has given different opinions on whether or not the fee is applicable. In any case, the part is exempt from these costs if the financial impossibility of bearing the court fees has been properly demonstrated.
Regarding opt-in and opt-out claims in relation to collective claims, one can maintain one’s individual lawsuit with equivalent claims while the class action is processed – however, the judgment will not benefit those recognized by the pending collective demand . For this reason, it should be noted that in the case of opt-in requirements, the identification of the persons represented is only required during the calculation / enforcement phase.
In addition, the court has the power to “combine” individual claims with common or related facts, but the composition of the collective claim is not mandatory. To do this, the judge will inform the public prosecutor’s office depending on the number of applicants. If dimensions are not deemed relevant enough to characterize a necessary public civil action, the judge will recognize a lis alibi pendens situation and the damage records will be reunited in a single proceeding. In any event, in terms of the administration of the case, due to the importance of a public civil lawsuit and the difficulty of administering collective claims that raise common problems, it is preferable to avoid collective actions.
The existence of a collective claim is made public and widely known to individual claimants, and this potential exposure is a concern for employers.
Asserted homogeneity of interests
Homogeneous claims are the key element in class and public civil actions. The discrepancy between the interests of those making a collective claim is intended to hinder the development of the above-mentioned complaints. In this way, the organizational efforts promised by the plaintiff may jeopardize his own will to continue the collective proceedings. As a result, the defendant may have the same problems in realizing it. In any case, Brazilian law allows the cause of action to be re-characterized if the difficulty in meeting collective conditions is diagnosed.
Participation of trade unions in proceedings
As mentioned earlier, trade unions in Brazil play an important role in labor disputes. Although their intervention has been tempered in recent years, they are still actively involved in disputes related to employment relationships. Since you can represent employees as plaintiffs, this condition gives rise to an express number of actions.
For example, when the discussion is about collective moral harm, unions usually demand outrageous bonuses. However, the facts may not apply to all employees, only to certain groups.
Negotiate
Since the class action lawsuit in Brazil typically involves a large number of persons represented, negotiations are usually complicated. In addition, the unions and the prosecution do not have the same prerogatives when acting in the proceedings, which makes the settlement process different for each case. Unions are not allowed to have credits owed to workers in the representation to allow for future individual claims – as stipulated in case law. However, the legitimacy of the prosecutor in concluding agreements appears to be less in doubt.
Conclusion
We conclude that, despite their effectiveness in protecting the collective interest, the difficulty of addressing collective demands on common issues is a major problem for employers as it is difficult to manage the costs and risk that arise in particular a class action lawsuit when we consider the costs associated with legal fees or potential rewards, such as: B. in the case of collective moral damage, but also when we consider damage to the company’s reputation. However, companies should make every possible effort to avoid class actions.
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