Manpower outsourcing problems under Brazilian labour law

The use of outsourced labour has historically been a bone of contention for employers in Brazil. The issue has featured regularly in the Brazilian media and has been the subject of a variety of legal and judicial interpretations. Chinese companies establishing or acquiring subsidiaries in Brazil, or engaging in natural resources or other projects, should therefore take great care when using outsourced labour for construction, mining or any other activity.

Due in large part to the high costs associated with employing Brazilian nationals, employers have increasingly turned to outsourced manpower as an alternative. This has in many cases served to reduce employment costs, but has also frequently harmed employees’ labour rights.

Historically, Brazilian labour law has offered workers a high level of protection. It is therefore not surprising that outsourcing initiatives in Brazil have come under the spotlight of the national authorities, which have strengthened the oversight of such activities and applied sanctions in cases where they have deemed conduct to be illegal.

Geir Sviggum is managing partner of Wikborg Rein in Shanghai. Andrea Falcão is a partner at Vieira Rezende Barbosa e Guerreiro Advogados, an associated law firm of Wikborg Rein, in Rio de Janeiro