LABOR COMPLIANCE – How an effective compliance program can improve the work environment and reduce labor liabilities
The adoption of an active posture by companies located in Brazil in the fight against corruption has received great prominence on the most diverse fronts of debate in recent years, largely due to the requirements the penalties (perhaps mainly due to the latter) brought by the Anti-Corruption Law in force in the country.
However, although motivated primarily by fearfulness, the expansion of the spectrum on the subject has been extremely important to demonstrate that in addition to preventing accountability and the consequent application of punishments to companies, the creation and maintenance of internal integrity mechanisms entail a real competitive advantage for companies vis-à-vis their competitors that do not take similar mechanisms and may be a determining factor even for obtaining credit or investments in current times.
By going a little more focused on the internal prism of companies, a well-established compliance program can represent direct gains also from a labor point of view, including in terms of reduction of contingencies and liabilities.
The anti-corruption legislation does not include a specific regulation or even a definition for what could be understood as “labor compliance” itself, however, when it comes to obligations and rules to be complied with, the Brazilian labor sphere is very well served from existing content – in the Labor Code (“CLT”) alone there are almost a thousand articles governing various specificities of labor relations in the country, and special emphasis also to the 37 Regulatory Standards issued by the Ministry of Labor and Social Security, which regulate – at a sometimes impressive level of detail and technical specificity – topics such as ergonomics, use of Personal Protective Equipment (“EPI” in Portuguese), unhealthy and dangerous activities, safety signaling, work with boilers, work at heights and several other topics. It is also worth mentioning the existence of numerous other sparse regulations on the most diverse topics, which are still in force despite the recent reorganization that resulted in the cancellation of about 1000 decrees, ordinances, and normative instructions at the end of 2021.
Add to this list the rules provided for in collective agreements executed between companies and unions, as well as the Collective Bargaining Agreements annually entered into by the unions that represent employees and companies of their respective economic categories, and we have a comprehensive encyclopedia of very specific rules and obligations to be followed by Brazilian companies of all business sectors regarding their labor and employment relations.
In addition to the direct obligations of the company towards its employees, under the legislation and labor courts’ understanding, the employers can be held responsible for misconducts of its employees toward co-workers and third parties, and even be held responsible for the possible labor non-compliances of their contracted service providers, even though most of the times in a subsidiary/secondary manner.
Taking a little more time to analyze this scenario of such complexity and volume of labor and employment standards and obligations, it should be considered essential that a well-structured compliance program must necessarily have, in addition to specific provisions aimed at preventing and inhibit fraud and irregularities, a dedicated look towards "pure" labor aspects. In doing so, the employer will eventually develop its own mechanisms for the prevention and management of these issues, which consequently may imply a significant reduction in labor contingency/liabilities.
In order to exemplify such possible mechanisms in a practical way, we listed herein some possible actions that although not necessarily a regular part of compliance programs, can be adopted by employers as practices of "labor compliance ", at various stages, generating direct impacts in the reduction of judicial labor claims:
- Correctly define the company's corporate purpose and its main activity in practice: The formal definition of a company's main activity impacts not only tax aspects, but also, from a practical point of view, the workers’ union framework to be followed by the company and, consequently, the Collective Bargaining Agreements (union agreements) to be applied to such company and its employees.
Adopting the incorrect union agreement results in much more than applying an incorrect salary adjustment index, but numerous violations with significant impacts, including employment stability issues, working hours, profit-sharing arrangements, among others, and such topics commonly rank among the main objects of labor complaints in Brazil.
- Monitor compliance with legal quotas applicable to the company: Brazilian legislation requires companies to comply with quotas for certain groups of employees (such as people with disabilities and also apprentices) that are frequently supervised by the Ministry of Labor and, consequently, result in a high number of administrative complaints and even lawsuits filed by the Labor Prosecutor’s Office. The simple continuous monitoring of compliance with legal quotas prevents exposure to such risks.
- Development/adequacy of internal policies or procedures applicable to employees: The adoption of clear policies on certain topics may not only be a means of meeting any legal and/or regulatory requirements (e.g., conflict of interest policies, policy for offering gifts, regulation for the use of EPIs, etc.), but also an extremely useful tool for the establishment of rules of conduct that allow the employer to resolve internal conflicts, inhibit the discussion of certain topics in lawsuits and/ or to equip with defense arguments if it is necessary to objectively demonstrate violations committed by employees (e.g., code of conduct and ethics code, policy of use of social media, security, privacy and confidentiality rules, use of work tools, etc.).
- Establishment of rules / good practices for hiring and termination: The adoption of certain precautions both at the time of hiring and dismissal of employees can also, by itself, reduce the chance of questioning and lawsuits, even if the questioned actions are based on supposed good practices adopted in other jurisdictions (e.g., running background checks, which can be considered as discriminatory acts and violation of privacy and intimacy of the employee/candidate or, regarding dismissals, disclosure of disparaging/discreditable statements regarding former employees or creation of a list of “trouble-making” employees, who filed a labor complaint against the company or who are involved in union activity, among other hypotheses).
- Complaint channel and internal investigations: although the existence of complaint channels and internal investigation procedures is essential to any integrity program to meet the requirements of the Anti-Corruption Law, it is essential to highlight that they also function as mechanisms that allow the employer to detect early signs of the occurrence of "internal" illegal acts on the most diverse topics, creating a chance to properly address such matters before they negatively compromise the work environment and/or becomes evidence to potential legal claims. It is worth mentioning that investigations should be supported by internal regulations establishing procedural aspects to be observed, such as deadlines, those responsible for the assessment, lines of report, etc.
It should be noted that all actions focused on labor compliance mentioned here are fully in line with the measures usually considered as critical on compliance programs based on the Anti-Corruption Law but, in addition to that, they allow the prevention and/or immediate interruption of irregularities that are known to generate a huge volume of labor lawsuits in Brazil – according to a survey from the Supreme Labor Court, 1.5 million labor lawsuits were received in the first instances of labor courts in Brazil in 2021.
Even if this potential for direct reduction of legal claims was not enough, it is also worth mentioning that the mere existence of an integrity program already benefits the company. In fact, the assessment of a company's integrity program can be used as a factor in reducing the value of fines arising from the Anti-Corruption Law.
However, in order for all these actions to be effective, it is essential that the company also creates its own mechanisms for monitoring and auditing such actions (e.g., application of periodic training, control audits, and even the application of penalties for cases of irregularities).
Renato Canizares (firstname.lastname@example.org)
Patrick Lobo (email@example.com)
 (Law No. 12,846 of August 1, 2013, regulated by Decree No. 8,420 of March 18, 2015).
 The Ministry of Transparency and the Office of the Controller General (“CGU”), in its Integrity Program Guideline for Private Companies, defines the "Integrity Program" as "a specific compliance program for the prevention, detection, and remediation of harmful acts provided for in Law No. 12,846/2013, which focuses, in addition to the occurrence of bribery, also fraud in the bidding processes and execution of contracts with the public sector".
 Decree-Law No. 5,452 of May 1, 1943.
 Decree No. 10,854 of November 10, 2021, and Ordinance/MTP No. 671 of November 8, 2021.
 Article 5-A, §5 of Law No. 6,019 of January 3, 1974.
 Article 7, items VII and VIII of Law No. 12,846/2013.