Brazil Amends Outsourcing Employment Laws to Benefit Services Industry

The previous law prevented companies from outsourcing their core activities, while the amended law permits outsourced employees to work in both a company's primary and support activities.

Brazil
A view of Brazil's chamber of deputies.

Brazil has passed a legislative bill allowing businesses to hire more temporary workers on longer-term contracts, giving the information technology and professional services sector a revitalizing shot in the arm.

The previous law prevented companies from outsourcing their core activities, while the amended law permits outsourced employees to work in both a company’s primary and support activities, and extends the maximum duration of temporary work contracts from three months to nine months.

The Brazilian Federation of Information Technology Companies (Assespro) has applauded the law, saying the hiring model aligns with the way the IT sector operates.

The law will no doubt lower the cost of employment, helping businesses to put up with the pain caused by the economic recession wreaking havoc in the South American country.

Eduardo Nistal, president of Assespro, has expressed confidence that the law will lead to the creation of more jobs, according to IDG Now. The Brazilian Association of Software Companies (ABES) has also backed the law, saying it would benefit the technology sector greatly.

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But the labor unions are angry. Some of them say that the new law will create a sense of insecurity as it frees companies to fire employees and replace them with outsourced workers at lower wages.

Jobs are precious commodities in Brazil these days, with the number of people unemployed rising to 12 million last month. As inflation is rising to new highs with each passing day, many businesses are struggling to weather the economic storm.

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