Brazil’s Supreme Court upholds union fee change as constitutional
While lawyers agree that the Supreme Court’s ruling on union fees gives much-needed reinforcement to Brazil’s labour reform, they are divided over what this now means for the future of the country’s unions.
Last Friday, Brazil’s Federal Supreme Court ratified one of the most contentious points of Brazil’s sweeping labour reform, passed last November, by affirming that the decision to make workers’ union contributions non-compulsory is constitutional, despite opposition from many unions. As a result of the ruling, some 19 lawsuits regarding the contributions have now been closed, many of which were filed by labour unions and federations who argued that the termination of compulsory union fees was unconstitutional.
Veirano Advogados partner José Carlos Wahle agrees that companies paying for contributions may not be the best solution since there may be a conflict of interest. “This is where the real trouble begins,” he notes. “I suspect that companies under the UK Bribery Act or the FCPA cannot make such grease payments without it looking like quid pro quo.”
Some also argue that the reform has provided a “poor solution” to the problem of union fees being compulsory and could threaten the existence of unions that are making a positive impact on workers’ rights. “Cutting off the unions’ main source of revenue whilst incrementing negotiable items is terribly contradictory,” says Wahle. “Many legitimate unions’ activities are now at risk.” Those unions that have weak representation and low appreciation from workers are at risk of disappearing, although Wahle admits that such a purge of unions is not necessarily a bad thing particularly since Brazil has over 15,000 unions, compared to only 91 in Argentina. “It's a much-needed sanitisation to get rid of unions that existed mostly to collect their fees,” Wahle says. “Traditionally, active unions will be affected, no question about it, though they will survive.”
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