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Brazil’s New Overtime Law Raises Fear of Higher IT Outsourcing Costs

Brazil’s New Overtime Law Raises Fear of Higher IT Outsourcing Costs
On the clock: What's it going to cost you?

By Filipe PachecoBrazil’s newest labor law could raise the cost of IT services and outsourcing there, or it could turn out to have only marginal effect. Implementation details of the regulation that says employees who answer work-related e-mail or phone calls after hours are, in the words of one Brazilian judge, “on the clock,” are still being resolved. But if nothing else, the decision reinforces the notion that doing business in Brazil is expensive compared to the rest of Latin America.

As in other countries where technology can enable job and life to meld together, there has been some intense debate in Brazil about working overtime and remotely and ensuring that employees are fairly compensated. On December 15th of last year, president Dilma Rousseff signed federal law 12.551, which alters the 6th Article of the CLT (Consolidação das Leis do Trabalho, the set of rules for legal employment in the country) to say that people who work overtime away from the office through various technological means have to be compensated for it.

Until the law’s implications and enforcement are clarified, it’s too soon to say how the change could affect providers and buyers of IT services. But Brazilian business people are concerned. An article in Businessweek describes the law as “one more obstacle companies say they face in Brazil, where regulations mandating everything from employer-provided breakfasts to union contributions are a daily drag on efficiency.” One labor attorney said he’s gotten several calls from clients “worried the law could drive their personnel costs up.”

However, it’s possible that in the tech industry, at least, employers will be able to negotiate after-hours policies or define expectations of being on and off the clock. Contracts could be updated to reflect what has become a standard part of working life. For now, it’s reasonable only to say the law could theoretically have huge repercussions for the cost of IT delivery… or it could be dealt with in ways that render its effect minimal.

But here’s what we know so far.

The gist of the law lies in this typical scenario: The IT manager of a company has a BlackBerry given to him by his employer. He answers it at 2 a.m. from wherever he is. Now, he must be paid something for that, and for the time spent on all the other voicemails he responds to and e-mails he answers on a Saturday morning or a Sunday afternoon.

To André Grandizoli, secretary of Employment Relations in the Ministry of Labor, the legislation represents “an evolution, because it recognizes a kind of work that already is done, the so-called teletrabalho [or 'virtual work']. If the worker is available to the employer outside of his working space, through any technological device, he must earn extra hours,” he was quoted by the official presidency blog a few days after the law was published.

Grandizoli emphasizes that it does not matter anymore where the worker is, but if he is executing a certain task for his employer, he has to be paid for that.

What Is “Work?”

There are several unanswered questions regarding the new law, including some pointed out by judges from the Tribunal Superior do Trabalho (TST), the courts that have jurisdiction over labor cases.

According to some labor specialists, the main problem is that the original legislative text allows too many different interpretations, and considers basically as similar situations those employees who check their corporate e-mail from home and those who are working from home.

And how much would all of this compensation cost? Not even João Oreste Dalazen, president of TST, knows the answer. “There is no doubt that the services provided by distance can constitute a working relationship, but what will it be like in cases such as when a worker is not working exactly, but is ‘available,’ who can be called to work at any moment, and with a cellphone provided by the company on hand for that?” Dalazen raised those questions during an interview for the TST website.

Dalazen also points out that three different situations can be considered in such cases. The first is that the employee must be paid for being at sobreaviso (on call) but not actually working, he would receive one-third of the total value of a regular productive hour.

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“The second scenario would consider the hour worked remotely or overtime as a regular working hour, and be paid for the total amount of a regular hour. And a third scenario would consider paying nothing,” he says. “Besides that, TST will have to study each method of communication [cellphone, pager, e-mail, fixed telephone] to define which of them can be considered means for sobreaviso.” In an attempt to clarify these doubts, Dalazen said, TST will have a week of debates this month.

He also says that the Súmula 428, a TST rule considered by courts and judges currently when such cases are brought to court, will have to be reviewed because it does not consider the teletrabalho the same way the new Law 12.551 does. According to Súmula 428, having a smartphone given by your employer does not represent sobreaviso.

Before a clear signal is shown by the authorities that have power to decide how this law will be interpreted and enforced, companies should review their internal policies regarding overtime and remote working to be prepared for problems. This could be especially crucial for companies that provide outsourcing services.

“Contracts will have to be updated considering forecasts of how the work will be provided, number of hours of work, use of technological devices made available by the company, as well as other important topics, may be a step toward prevention,” said Cristina Sleiman, specialist in digital law, in an interview given to TI Inside.

For British Eyes Only

Since the text of Lei 12.551 was made public, it started to reverberate on web social platforms and became a popular topic among friends in bars in the big cities. But are employees happy and employers worried?

Not exactly. Much has been said that this is just another “lei para inglês ver,” or “law to show to the British.”

This Brazilian saying recalls the country’s colonial era, when the Portuguese settlers had close business agreements with the British – especially around the time of Napoleon’s invasion of Portugal, in 1808, when the whole court and Royal Family moved to Rio de Janeiro. The British, much stronger commercially, used to impose some of their desires regarding trade with Brazil over the Portuguese conquerors. Then, the Portuguese would create the laws or royal rules – but “just on paper” (“só no papel“) for the British to see.

Many of these regulations became part of traditional Brazilian bureaucracy. But practically speaking, these “joke laws” make no difference to real life. At this point with Lei 12.551, due to the difficulty of monitoring or controlling how each company will deal with its employees working overtime or remotely, and the wide range of interpretations the law may permit, many people are thinking it will turn out to be just one more lei para inglês ver.

Meanwhile, many Brazilians – employers and employees – are anxious to know whether it is going to become a “real law” or not. Buyers of outsourcing services should be too.

 

 

About Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.
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