Applying the Labor Reform to Ongoing Employment Contracts
On November 25, 2024, Brazil’s Superior Labor Court (TST) ruled that the Labor Reform (Law 13,467/2017) had immediate effect on ongoing employment contracts, but only to facts occurring after the law's effective date of November 11, 2017. The court reached this majority decision in a Repetitive Appeals Incident (IRR), establishing a binding precedent (Topic 23) to be followed by the entire Labor Justice system.
I. Case Study: Horas in Itinere
The judgment involved a worker from JBS S.A. in Porto Velho (RO), who sought payment for horas in itinere — the time spent commuting using company-provided transportation, which had previously been considered time at the employer’s disposal, prior to the Labor Reform. When the Labor Law entered into force, this obligation was eliminated. The main issue at question was whether the new rule would apply to contracts established before the reform.
II. Third Panel Decision and Appeal to the Full Court
Initially, the Third Panel of the TST ruled that JBS should pay for the horas in itinere, determining that this right was part of the worker’s legal patrimony, covering the entire contractual period from December 2013 to January 2018. However, JBS appealed, and the case was taken up by the Full Court of the TST due to its prominence, aiming to set a precedent for similar cases.
III. TST’s Interpretation on Legislative Changes
The reporting judge, Minister Aloysio Corrêa da Veiga, argued that the changes introduced by the Labor Reform should be immediately applied to ongoing contracts, but only for facts occurring after the new legislation. The court’s opinion states that, when contract conditions are derived from legal provisions, the new law applies to pending or future situations without affecting acquired rights.
The majority opinion emphasized that the constitutional principle of wage non-reduction protects only the nominal value of permanent installments, not the calculation method or variable benefits linked to future events. Thus, legal changes impacting variable payments are applicable to ongoing contracts.
I.V. Limitation of JBS's Liability
Under this interpretation, JBS was ordered to pay horas in itinere only up to November 10, 2017, the day before the Labor Reform came into effect. The decision also reinforces the application of this understanding to other changes introduced by the Labor Reform.
V. Binding Precedent and Divergences
The binding precedent established by the TST is as follows:
“Law No. 13,467/2017 has immediate application to ongoing employment contracts, regulating rights derived from laws whose triggering events occurred after its effective date.”
The Superior Labor Court is composed of 27 Ministers; 25 participated in the judgment, with two absent. The vote was 15 to 10. While the majority concurred, the Vice-President, Minister Mauricio Godinho Delgado, argued that contracts predating the Reform should follow the previous rules, a position supported by the other nine ministers.
VI. Participation of Entities in the Judgment
Several entities participated in the judgment, including the National Confederation of Industry (CNI), the Confederation of Agriculture and Livestock of Brazil (CNA), the National Confederation of the Financial System (CONSIF), and the Unified Workers' Central (CUT).
This decision marks an important milestone in the interpretation of the Labor Reform, providing greater legal certainty for both employers and employees regarding the application of new rules to ongoing employment contracts.
