New Brazilian Rules on Outsourcing to Benefit Call Center Companies

Draft laws on outsourcing in Brazil could benefit contact center companies by addressing legal uncertainty and clarifying the requirements involved in such outsourcing deals.

Photo by Diana Varisova.

Brazilian call center companies are excited about the draft bill that regulates outsourcing services in the country. Bill 4330 was approved by the Brazilian House of Representatives and sent to the Senate to be voted on. The market expectation is that the new regulations will reduce the legal uncertainty in Brazil and they should increase the demand for contact center services, with companies seeking to outsource their activities in order to reduce costs in the face of the current slowing of the Brazilian economy.

The call center sector employs about 1.5 million workers, providing customer services for large companies. In 2014, the outsourcing of such services generated US$14.94 billion and for this year, the forecast is for 3.73% growth. However, the lack of specific regulation on outsourcing has increased legal uncertainty in this sector. “The draft bill provides greater legal certainty by allowing the outsourcing of all kinds of activity,” said lawyer Gabriela Coutinho Frassinelli, a specialist in digital law at Opice Blum Associated Attorneys.

The proposed law should help to reduce the number of lawsuits. According to Frassinelli, there are 10,000 legal proceedings involving call center outsourcing and 16,000 legal actions related to outsourcing in general. “If the draft bill, which has been approved by the House of Representatives, passes through Senate it should bring efficiency gains to companies and allow them to plan their processes better,” said José Americo, director of the Brazilian Association of Telecommunications (Telebrasil).

Many contact center companies have faced several lawsuits filed by their employees, who claim that they had to be hired directly by contracting companies rather than the intermediary employer.

In addition, some telecom companies and banks have been fined due to some judges understanding that the outsourcing of the contact center in these sectors is not permitted, because this service is related to the core business of such companies.

However, there is not a clear definition of what is considered a core activity. The precedent “súmula” 331 of the Superior Labor Court (TRT) stipulates that the outsourcing of the services related to the core activities of the contracting company is not permitted. In the cases of activities such as security services, maintenance, cleaning or other services that are not related to the core business of the contracting company, outsourcing is allowed.

Nevertheless, the General Telecommunications Law (Law 9,472 / 1997) provides for the outsourcing of inherent, accessory or complementary services by telecom companies. “We understand that the telecommunications companies were allowed to outsource call centers. This is an issue that is not fully clear and, therefore, it is possible to contest such judgments,” said Americo.

In September 2014, the Minister of the Supreme Court, Teori Zavascki, suspended all legal proceedings in the Labor Court with regard to the legality of call center outsourcing by telecom companies. “Those processes are awaiting judgment by the Court and should remain unchanged until the Supreme Court has a clear understanding about this issue,” said Frassinelli.

Companies that outsource their services have to oversee the tax payments by the contracted companies. “I recommend that companies oversee the payments of employees and tax collection every month, as well as requesting that outsourced companies send their payment receipts,” said Frassinelli.

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Furthermore, they continue to have secondary liability, i.e, if the contractor is prosecuted and if it is proved that it is not able to comply with its obligations, the contracting company may be liable.

Frassinelli said that companies that outsource their services should also be aware of situations that can be characterized as a direct employment relationship. “For example, if a certain employee from a contracted company is requested to work within the other company and he has to meet the targets set by the contracting company, this situation can be characterized as a direct employment relationship.”

Legal uncertainty is a factor that has hampered corporate transactions in this sector and has made investment in this segment less attractive for foreign companies.

This situation happened to AeC. The company, one of the largest Brazilian contact center providers, had problems with the negotiation involving a merger with British Serco in 2013, which did not go ahead due to the legal uncertainties regarding outsourcing activity in Brazil.

Headquartered in Belo Horizonte, in the state of Minas Gerais, AeC has about 35,000 employees and expects to reach a revenue of one billion Brazilian real (approximately US$319 billion) this year. “The approval of the outsourcing law should attract foreign companies that are interested in investing in the call center sector in Brazil,” said Watson Pacheco, lawyer specialist in labor and teleservices industry at Terçariol, Yamazaki, Calazans e Vieira Dias Attorneys.

In addition, Brazilian call center companies may specialize in providing specific customer services to clients from different sectors, said Pacheco. After the law on outsourcing comes into force, companies will have 120 days to comply with the new regulations.

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