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Brazil – Legislative proposal sparks new controversy over union fees

Written by
Veirano Advogados, one of the leading and most renowned Brazilian business and employment law firms.
José Carlos Wahle gives an expert view of the content and implications of President Bolsonaro’s controversial new proposal on the conditions for collecting union dues in Brazil and offers advice for employers.

Provisional Measure MP 873/2019, published by President Bolsonaro on 1 March 2019, establishes new conditions for the collection of union dues. It has created immediate controversy between defenders of workers’ individual freedom to unionise (and therefore to pay union contributions) and the defenders of union authority and the workers assembly’s capacity to determine the funding of union activity. Regrettably, this antagonism has more political bias than legal justification on both sides and this is unproductive.

The 2017 labour reform already provided for voluntary contributions (as opposed to the previous compulsory contributions), so MP 873/2019 is not innovative. It is intended to elaborate on and expand the concise text in the reform on this issue. In particular, it aims to clarify whether the decision to make monetary contributions to a union is a strictly individual matter or if it can be taken collectively by the workers assembly. I believe this and other issues will be resolved in court and we need time to ensure that legality prevails.

It is a fact that the reform did not go well when it removed compulsory contribution revenue from the unions but enhanced the possibilities for collective agreements. This highlights a contradiction in the unions’ role in employment relations. I have written before that we need a social pact to resolve this dilemma but the political situation currently does not seem to be ready for that.

Alternatively, we may consider the idea of reviewing union exclusivity (or monopoly): at present, in each designated area of Brazil, only one union is permitted to represent workers in a particular sector. Or we may envisage a financial contribution to be determined by a prior collective agreement (whereas before the reform the contribution was due irrespective of any agreement in place). We may also consider that a collective agreement could only apply to the workers who are affiliated and consequently make financial contributions to the union (today it applies to all irrespective of affiliation). All this depends on new laws. None of this is in MP 873/2019.

Lastly, we should not ignore the fact that the provisional presidential decree requires Congress approval, or it will be forfeited.

My advice to employers is to stay neutral in a controversy that only affects them incidentally (because they are required to withhold contributions from payroll). Look for advice to understand the controversial aspects but do not take sides in a dispute between workers who do not wish to make financial contributions and unions that need to raise funds. It is important to maintain calm and neutrality.

José Carlos Wahle
Partner - Brazil
Veirano Advogados