Dismantling the social safety net

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By JORGE LUIZ SOUTO MAIOR*

In the STF game, the loser is the working class: until when?

It is not new that the mainstream media has positioned itself as champion of democracy, but this militant action comes up against the limit of defending the historic alliance it maintains with the interests of the economic sectors that support it. Even his attack on the authoritarian and populist outbursts of rulers always finds a point of respite when anti-democratic practices are used to reduce social rights.

The mainstream media, which claims to be an intransigent defender of democracy, was allied with the entire anti-democratic process which culminated in the “labor reform”. Incidentally, the recent shocks to the country's democratic institutions were stimulated precisely so that an unconstitutional retraction of rights would be imposed on the working class.

In the midst of the pandemic, work and, consequently, workers were seen, with the naked eye, as essential. But all the invisibility was maintained about the precarious working conditions to which the Brazilian working class as a whole was led both by the labor “reform” and by the reiteration, verified for decades, of the initiatives of destruction of the social project established in the 1988 Constitution.

In 2020, male and female workers were applauded for saving lives with their work and, at the same time, being subjected to new forms of precariousness and reduced income. The work was seen and applauded, but the living and working conditions of workers were, solemnly, ignored.

In the game of scene that is established, the powers face each other publicly and when they feel worn out, they seek the point of understanding that is the pact around the dismantling of the social protection network that was constitutionally guaranteed to workers.

It has been like this since the 1990s and there are many examples of cornered rulers seeking balance through promises of favors to economic sectors. The fact, by the way, can be verified in the circumstantial formation of the “labor agendas” in the Federal Supreme Court.

The judgment of the labor credit update handed down by the STF (ADC 58 and ADC 59) last week is further evidence of this script. The previous week, the STF was placed under surveillance by the mainstream media, having previously been accused of tearing up the Constitution if it authorized the renewal of the terms of office of the Senate and Chamber of Deputies.

Opposing the rapporteur's vote and going against forecasts, the majority of STF members did not authorize re-election, which pleased the mainstream media, but generated internal instability. So that everything could settle down, what was the balanced solution thought of? The same as always: the establishment of a labor agenda in which the judgment could restore internal order and soften the external spotlight.

It was in this context that the STF defined the new form of updating labor claims, while maintaining fundamental matters related to access to the Labor Court (ADI 5766) and the charging of compensation for moral damages (ADI 5870) – or because it does not have arguments to deny the unconstitutionality of the provisions brought about in the labor “reform”, or to maintain them as assets in the face of a new media attack.

The result, however much the hope that insists on deceiving us led our imagination, was the one, fully predictable, integrated into the historical context of the retraction of labor rights based on supposedly economic arguments.

But it was not a simple task, that is to say, because the STF had already decided that the TR could not be a monetary correction factor, since it was insufficient to accompany the inflationary process and what was in the hands of the judges was the declaration of constitutionality or unconstitutionality of the provision of Law n. 13.467/17 which, by amending paragraph 7 of article 879 of the CLT, established that the TR would be the labor monetary correction index.

There was, therefore, no way that the device could be declared constitutional, although the personal position of the rapporteur, Minister Gilmar Mendes, was in this sense. On the other hand, declaring the unconstitutionality raised the problem of leaving the index to be applicable open and the TST had already positioned itself towards the application of the IPCA-E.

It turns out that the application of the IPCA-E would not be in line with the movement to reduce labor rights, since, as highlighted by the rapporteur, since the two injunctions issued in the same process, the IPCA-E generates an economic effect 25% higher than the of the TR – and even for this reason the TR was fixed as a correction index by the text of the labor “reform”, whose objective, as is known, was to satisfy the desires of economic power.

It should be noted, in any case, that this percentage data does not represent an unjustified benefit to the creditor, as the rapporteur tried to justify, since the comparison between the two indices only makes sense in view of the inflation variation in a given period. And what the higher IPCA-E correction percentage means is only a greater approximation of the inflationary index and not an unjustified enrichment.

Starting from the erroneous consideration that the application of the IPCA-E would represent an unjustifiable benefit to workers or that it would excessively burden employers, the guiding vote did not stick to the objective limit of the action and started to “fill the gap” left by the declaration of unconstitutionality of the current paragraph 7 of article 879 of the CLT, although, concretely, there was no gap to be filled in the scope of the action in question, since the text declared unconstitutional only came into existence in November 2017, with the entry into force of the Law n. 13.467/17, and a legal problem in this area was never considered before that.

Remember that the application of the IPCA-E in the Labor Court had already been consolidated, in August 2015, in the judgment of ArgInc-479-60.2011.5.04.0231, as an effect of the position signed by the STF itself, on March 25 2015, in the assessment of ADIs 4357 and 4425.

According to the rapporteur, in the judgment of ADCs 58 and 59, although the STF had already fixed the application of the IPCA-E, this would have occurred only in relation to tax credits and, consequently, the position of the TST would have been backed by an “undue matching the nature of the labor credit with the credit assumed against the Public Treasury”.

Thus, a blind eye was made to article 889 of the CLT, which makes it clear that “the precepts that govern the process of tax executives for the judicial collection of the overdue debt of the Federal Public Treasury” are applicable to the execution of labor titles.

The criterion used to arrive at a correction index other than the IPCA-E was even more legally mistaken, that is, the assimilation of labor credit to a civil credit: “the proposal I bring to the collation is that, a once the validity of the TR is removed, the same criterion of interest and monetary correction used in civil convictions in general is used in the Labor Court” (cf. vote of the rapporteur).

At this point, the decision issued by the STF surpassed decades of a legal tradition rooted in the recognition that labor credit is privileged, even overriding tax credit, as, moreover, expressly provided for in art. 83 of Law no. 11.101/05 (Judicial Reorganization Law) – also solemnly ignored.

Incidentally, the STF ignored its own precedent, set in ADI 3934, in which, expressly declaring the constitutionality of art. 83 of Law no. 11.101/05, it was expressly recognized that labor credit is privileged in relation to all others, although, on that occasion, a limit was established (of 150 minimum wages) per creditor for this privilege - which was maintained, including, in the recently approved Law no. 14.112, of December 24, 2020.

In ADI 3934, the STF applied ILO Convention 173, which enshrines, internationally, the privileged position of labor credit. At the time, the invocation of the said Convention was to justify the limitation to the privilege imposed by art. 83 of Law no. 11.101/06, in the following terms: “It is important to highlight, moreover, that the international worker protection legislation itself contemplates the possibility of establishing legal limits to credits of a labor nature, provided that the minimum essential for the survival of the employee is preserved.

This understanding finds expression in art. 7.1 of Convention 173 of the International Labor Organization – ILO (Convention on the Protection of Labor Claims in the Event of Employer Insolvency), according to which “national legislation may limit the scope of the privilege of labor claims to an established amount, which does not must be less than a socially acceptable minimum”.

It so happens that, in order to reach this result, the Supreme Court explicitly integrated the ILO regulations into the national legal system, notably with regard to the protection of labor claims, even regardless of the ratification process. As established in the decision in question: “Although this Convention has not yet been ratified by Brazil, it is possible to state that the limits adopted for the guarantee of labor claims, in the case of bankruptcy or judicial recovery of companies, are supported by the rules adopted in the scope of the ILO, a member entity of the United Nations, whose scope is to make the countries that integrate it adopt minimum standards of protection for workers.

In this regard, the provisions of Law 11.101/2005 harbor a concern of a distributive nature, establishing criteria that are as equitable as possible with regard to the competition of creditors. In other words, by setting a maximum limit – quite reasonable, it should be said – for labor claims to have preferential treatment, Law 11.101/2005 seeks to ensure that this protection reaches the largest number of workers, that is, precisely those who earn the lowest wages.

Therefore, the “choice”, completely random and the result of the personal will of the judge, equates labor credit with civil credit, is beyond all legal parameters, bearing in mind that the employment relationship is regulated by Labor Law and not by the Civil Law precisely because it recognizes, historically, the diversity of civil and labor legal relations, the first, marked by equality, and the second, by inequality and economic dependence.

The equivalence proposed by the STF is contrary to the reality of the facts and an affront to all legal precepts conceived regarding employment relations as a factor, including the development of capitalist society, which was even expressly recognized in the Federal Constitution in several devices: “art. 1, items III and IV; art. 4, item II; art. 5th, item XXIII; art. 7th; art. 170 and items III and VIII; and art. 186, item III.

What is worse is that the argument for equating labor claims with civil claims was not only used to rule out the application of the IPCA-E. Extrapolating all the limits of the action, the vote went ahead and took advantage of the opportunity, even without any provocation from the constitutionally legitimized subjects in this sense, to propose the rejection, without a formal declaration of unconstitutionality, of the application of § 1 of art. 39 of Law no. 8.177/89, which sets default interest in labor relations at 1% per month, from the filing of the labor claim.

If this is effectively evidenced in the judgment to be published, the STF will have removed Law n. 8.177, which regulates the updating of labor credits since 1991, to replace it with article 406 of the Civil Code, resulting in the application of the SELIC rate, already composed of interest and monetary restatement. Thus, by legal magic, the labor credit that had been updated by the IPCA-E index, retroactive to the time of “default”, and added interest of 1% per month, counted from the date of filing of the labor claim, would become be updated by the IPCA-E during the pre-judicial period (as named by the rapporteur's vote) and, from the date of filing the employment relationship onwards, by the SELIC, bearing in mind that the SELIC rate was 4,5% per year , in 2019, and the projection is that it will remain at 2%, in 2020.

In this way, the filing of a labor claim becomes one more factor to reduce the effects of illegality, that is, a form of punishment for the victim, even stimulating procrastination procedural practices, because, from now on, the longer the process takes, the more eroded will be the credit and more benefit the offender will experience.

It is extremely important to highlight, therefore, that the concrete effect of this jurisprudential engineering is not merely that of an equalization of labor credit to civil credit, but the lowering of the first in relation to the second, since what art. 406 of the Civil Code is that this index, which concerns only interest on arrears, will be applied when the contract does not stipulate otherwise. Now, it is well known that in civil contracts the creditor is fully able to “impose” moratorium clauses, and one of the points of greatest discussion in the civil legal sphere revolves around precisely “abusive interest”. Contractual inequality when it exists in civil relations is favorable to the creditor. See, for example, what happens between the renter and the landlord, between the bank and the customer, between the commercial house and the consumer. Thus, in concrete, rarely the rule of art. 406 of the Civil Code is applicable. In the labor sphere, precisely the opposite occurs and the creditor, the worker, does not have the slightest condition to demand the establishment of moratorium clauses in the employment contract.

In addition, the prevailing vote made no mention of article 404 of the Civil Code, which guarantees the creditor the right to recover “losses and damages” arising from the unlawful act of which he was a victim, automatically integrating monetary restatement, interest, costs and fees, in addition to specifying that when the default interest is not sufficient to cover the loss experienced, the judge may determine additional compensation [I].

Thus, the announced position is that of a huge downgrade of labor credits, encouraging illegal activities and contributing to employers' impunity. It represented, so to speak, a reduction in the condition of citizenship of male and female workers, and therefore the premise used in the vote that “the judicialized labor debt has been assuming extremely advantageous contours (well above the market average)” is completely false.

By way of information, it is important to note that dealing with the effects of the decision on ongoing processes, the direction was in the sense of:

– deem valid – not giving rise to any further discussion (in the ongoing action or in a new demand, including rescission action) – all payments made using the TR (IPCA-E or any other index), in a timely manner (extrajudicially or court order, including court deposits) and default interest of 1% per month;

– maintain the execution of final and unappealable judgments that expressly adopted, in their reasoning or in the provision, the TR (or the IPCA-E) and default interest of 1% per month;

– apply, retroactively, the Selic rate (interest and monetary restatement) in ongoing processes that are suspended in the knowledge phase (regardless of whether they have or without a judgment, including in the appeal phase), under penalty of future allegation of unenforceability of judicial title based on an interpretation contrary to the position of the STF (art. 525, §§ 12 and 14, or art. 535, §§ 5 and 7, of the CPC);
– apply erga omnes effectiveness and binding effect of the decision rendered, in order to reach cases that have already become final and unappealable in which there has been no express manifestation regarding the indexes of monetary correction and interest rate (omission or simple consideration of following the legal criteria).

All this affront to various constitutional, supraconstitutional, legal, principled, logical and human precepts was carried out in the decision handed down by the STF on Friday, December 18, 2020. And what about this decision was said in the mainstream media? Absolutely nothing! Total silence!

Why? Because in the account of the Brazilian media and economic elite, the Federal Constitution, with regard to labor rights, is nothing more than a sheet of paper that can (and even should) be constantly torn.

The curious thing is that nothing has been seen talking about the subject in the union environment and very little in the labor legal field. The explanation for this may be that after so many and repeated losses of rights, suffering a decrease in monetary correction and interest rates would no longer be such a big blow. Involved in a certain discouragement, it was as if the legal environment and the world of work said: “what is a little more clay for someone who is already completely mired in the mud?!”.

But there is also a quantitative explanation. The issue is that after so many and successive withdrawals of rights and the spread of precarious forms of hiring, added to the obstacles to access the Labor Court, there are very few Brazilians who have a formal contract and legally guaranteed labor rights. Even fewer are those whose labor rights are actually respected. And a much smaller portion are those who claim to sue the Labor Court for their rights (in 2019, there were 1,5 million complaints, within a universe of 33,6 million workers with a formal contract) . Of those who propose complaints, the number of those who effectively have their claims upheld has been decreasing, given a considerable change in the attitude of the Labor Court towards the assumption of the prevalence of social legal precepts over economic interests . As a result, the issue of interest on arrears and monetary restatement of labor claims has become almost a kind of “privilege” for very few Brazilian citizens.

On the other hand, this same fact rules out any validity of the economic argument used in the vote to operate this extreme legal engineering against the Constitution and against the law. This is because the 25% decrease (or a little more) in the calculations for updating the precarious labor rights of no more than 2 million people cannot generate a significant economic effect in a country of 212 million people.

The fact is that the position established by the Supreme Court ended up opening all the doors to the complete deregulation of labor relations in Brazil.

Incidentally, in the same session on December 18, in the judgment of ADC 66, the next step was taken. Reproducing arguments used in ADPF 324 (which allowed the outsourcing of the core activity), the constitutionality of article 129 of Law 11.196/2005 was declared, which establishes that, for tax and social security purposes, the provision of intellectual services, including those of scientific, artistic or cultural nature, subject only to the legislation applicable to legal entities, regardless of whether the service is provided on a very personal basis or not, with or without the assignment of any obligations to partners or employees of the company providing services.

The judgment practically legitimized labor fraud operated by “pejotization”, which is the artificial transformation of the worker into a legal entity, as if it were an option for the parties to elect or not Labor Law to govern their respective employment relationship. The decision also goes against fundamental precepts, rooted in the formation of social rights, on the non-distinction between the different types of work, as even prescribes the sole paragraph of art. 3 of the CLT (not even modified by Law n. 13.467/17), in the following terms: “Art. 3 - An individual is considered an employee who provides services of a non-continuous nature to an employer, under his/her dependence and in return for a salary. Sole Paragraph – There will be no distinctions regarding the type of employment and the condition of worker, nor between intellectual, technical and manual work.”

It is important to note, in line with the identification of coincidences, that this decision came in the context of an intense mobilization by the Federal Revenue Service, which had been prosecuting telecommunication companies for the fraudulent use of links with legal entities to formalize the hiring of anchors and artists, to mask the employment relationship and reduce the tax and social cost of hiring.[ii] And there was no media repercussion about it either.

The big question is that this supreme disregard of constitutional legal precepts effected by the aforementioned decisions is much more than a new blow to labor rights. This is an extremely serious situation and needs to be perceived as such, for the sake of effective respect for the democratic rule of law.

In the terms in which they were issued, the decisions, running completely outside the constraints of the Constitution and the various legal and procedural precepts applicable to the matter, open up decisive space for a situation of complete destruction of constitutional guarantees, both labor and of any other nature ( including freedom of expression and even freedom of the press), even allowing the Supreme Court itself to see its legitimacy reduced or eliminated to invoke the constitutional order against authoritarian outbursts and the countless affronts to fundamental rights that have been growing , in an increasingly comprehensive and convinced way, in the national reality – see the countless cases of feminicide, racism, intolerance, discrimination and financial and institutional offenses that multiply in the news every day.

It is urgent to turn this game around, because in the end we will all lose! Even the mainstream media and the economic sector that applaud (or silence) labor's constitutional dismantling will be victims in some way of the breakdown of institutionality rooted in the pact of social and human solidarity.

From a strictly legal point of view, the multiplicity of forms makes it possible to establish counterpoints to the total dismantling movement.

In fact, in the labor field, he has always refused to see disrespect for labor rights as an authentic illicit act. It was as if the employer had “the right” to break the law. All punitive charges for labor “defaults” – as the saying goes – were deposited in late payment interest of 1% per month from the filing of the labor claim, accompanied by monetary correction.

The notion of losses and damages due to submission to an illegal situation was solemnly rejected in most judgments, on the grounds that reparation had already been given by the institutes in question, forgetting that the illegal act requires, in itself, a specific effect , since whoever commits an offense in a contractual relationship imposes an unexpected life situation on the other, full of disastrous consequences and, consequently, material and moral damages. For example, an employer who does not record his employee's work card leaves this worker in a situation of total insecurity and away from the ideal working conditions set exactly in the apparatus of labor legislation. There are evidently presupposed losses and damages – which do not even require proof – in this situation, as can also be seen in the loss of employment without receiving severance pay (of an indisputable salary nature).

Well, in view of the withdrawal of all punitive burden of the labor offense that was attributed to interest and monetary correction, another door is also necessarily opened, that of viewing the repair of losses and damages experienced by the victim of the wrongful act, which is what is effectively taken care of when it is declared that a labor right has not been respected.

The intense public debate that took place in Brazil around labor legislation, at a time of outcry for the moralization of institutions and for ethics in social relations, brought as a minimum inevitable effect the recognition that disrespect for labor rights constitutes an illicit act, that must be punished for the proper preservation of the authority of the legal order, and it cannot be understood as valid legal transactions that simply by their form try to annihilate rights.

For decades, he refused to point out the practice of disrespecting labor rights as an illegal act, treating it by the euphemism of breach of contract. The correction of the situation considered as a “mere irregularity” was not charged with a punitive effect, not being seen, therefore, as a rescue of the authority of the legal order, but as a fallacious and misleading “pacification of the conflict”. The debauchery of some employers who, until now, were part of the daily routine of labor relations and the Labor Courts and to whom the status of “legal nothingness” was attributed, such as: hiring without registration; salary payment “on the outside”; absence of time cards that reflect the actual hours worked; failure to pay severance pay; non-collection of FGTS etc., enter the field of illicit. This theoretical assumption reinforces the punitive character that should be attributed to such practices, therefore, convictions for payment of only the amount corresponding to what would be due if the offense had not been committed are not sufficient.

The fact is that from the arguments that seek formulas in the legal order to disregard the legal order, inevitable contradictions emerge. Therefore, it is in the very argument of equating labor claims with civil claims that the decisive basis is found for finally perceiving the disrespect for labor rights as an illegal act, generating not only the possibility of repairing losses and damages, as established in art. 404 of the Civil Code, as well as the guidelines outlined for civil liability, based on articles 186, 187, 927 and 944 of the Civil Code.

It also enables – and even requires – the application of various other punitive devices for illicit practices, attracting, above all, the notions of recidivism and even delinquency, as a way, including, to protect the economic system.

Indeed, under the terms of Law no. 12.529/11, which structures the Brazilian System for the Defense of Competition and provides for the prevention and repression of infringements against the economic order, the notion remains clear that disrespect for labor rights represents an infringement of the economic order. As provided for in said law, constitute a violation of the economic order, regardless of guilt, acts in any form manifested, which have as their object or may produce the following effects, even if they are not achieved: I - limit, distort or in any way harm free competition or free enterprise; (….) III – arbitrarily increase profits.

Thus, the labor offense aimed at obtaining an advantage over the competition or to increase profits represents a serious violation of the economic order, even more so when it is carried out repeatedly.

In turn, recidivism, customarily denied in the labor sphere, is expressly provided for, for example, in art. 59, of Law no. 8.078/90 (Consumer Protection Code). In Criminal Law, recidivism constitutes an aggravating circumstance of the sentence (art. 61, I, CP) and prevents the granting of bail (art. 323, III, CPP).

Finally, in the absence of a specific legal objective criterion for repairing damages and punishment for non-compliance with labor rights, it becomes necessary to qualify the illicit conduct practiced, assess the damages experienced by the victim and seek in the legal system the grounds for identifying the necessary legal implications applicable to the fact, given that the labor claim, henceforth, is equivalent to the civil claim, for all purposes.

*Jorge Luiz Souto Maior is a professor of labor law at the Faculty of Law at USP. Author, among other books, of Moral damage in employment relationships (publishers studio).

Notes


[I]. “Art. 404. Losses and damages, in cash payment obligations, will be paid with monetary restatement according to regularly established official indices, including interest, costs and attorney's fees, without prejudice to the conventional penalty.

Single paragraph. If it is proven that the default interest does not cover the damage, and if there is no conventional penalty, the judge may grant the creditor additional compensation.”.

[ii]. https://noticiasdatv.uol.com.br/noticia/televisao/receita-federal-acusa-globo-de-associacao-criminosa-com-artistas-47747.

 

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