The proceedings resume and reignite the debate over the limits of hiring service providers through legal entities.
By Julhi Bonespírito
Legale Overseas, no. 985.
The Brazilian Federal Supreme Court (STF) authorized yesterday the resumption of proceedings, before trial courts and Regional Labor Courts (TRTs), in cases involving so-called independent contractor arrangements through legal entities, commonly referred to in Brazil as “pejotização.” The decision was issued in Extraordinary Appeal with Interlocutory Appeal No. 1,532,603 (ARE 1.532.603), which addresses General Repercussion Topic No. 1,389.
As a result, these cases may now proceed to the evidentiary and trial stages in the ordinary courts. Following decisions by the Regional Labor Courts, however, the proceedings will remain suspended until the STF issues a final ruling on the matter.
Topic No. 1,389 was recognized with the purpose of standardizing the legal debate surrounding the validity of this hiring model. The Supreme Court is expected to determine under which circumstances the engagement of service providers through legal entities is lawful and when it may give rise to an employment relationship. The Court will also establish criteria regarding the jurisdiction of Labor Courts and the allocation of the burden of proof.
In practical terms, the decision reactivates thousands of cases and shifts the focus of the dispute toward the production of evidence. Procedural discovery—including witness testimony, documentary evidence, and expert examinations—now assumes a central role, as the factual findings established at this stage may influence the future application of the binding precedent to be issued by the STF.
Companies that rely on service arrangements through legal entities are directly affected, particularly those that use such structures on a recurring basis or for strategic positions. In these situations, it will be important to assess whether the actual working relationship aligns with the contractual framework, especially with regard to the service provider’s autonomy.
Vaz de Almeida Advogados closely monitors the developments of Topic No. 1,389 before the Federal Supreme Court, analyzing its implications and contributing to companies’ adaptation to changes in the Brazilian labor landscape.
Translation Disclaimer
This document was originally drafted in Portuguese and subsequently translated into English using artificial intelligence (AI).
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