Will Brazil Expand the Use of Outsourcers and Contingent Workers? | DCR Workforce Blog

Will Brazil Expand the Use of Outsourcers and Contingent Workers?

Will Brazil Expand the Use of  Outsourcers and Contingent Workers?After spending more than decade in uncertainty, Brazil is finally considering a bill (PL 4330/2004) for the adoption of a regulatory framework for outsourced work. Today, outsourcing is restricted to non-essential business functions like cleaning and transportation. With the passing of the bill, all public and private sector companies would be able to contract out their labor force. There would be no limitations on the types of position or percentage of the workforce to be outsourced.

Arguments for:

  • The bill will establish parity. Today, outsourced workers in Brazil are paid 24% less than their regular employee counterparts. The have the highest accident rates, and work longer hours.
  • The bill will provide extra protection for workers as client companies become liable for any failure to meet labor standards.
  • High labor costs make it difficult for small and medium enterprises in Brazil to compete. The use of non-employees will make these companies more agile and competitive.
  • It will eliminate the high level of “under the table” working arrangements. Today, companies illegally using non-employees are denying these workers their legal status while cheating the government of tax revenue.
  • Creating a more affordable workforce will stimulate the country’s economy. In 2014, the economy grew just 0.1%, and economists predict that in 2015 the GDP will actually decline. Unemployment in February, when the bill passed its first milestone, was 7.4%.
  • Subcontracted workers would be entitled to the same benefits (such as health coverage, paid vacation, maternity leave, or the right to organize and establish collective bargaining agreements) as regular employees. This will eliminate standard of living disparities.
  • Staffing firms in Brazil supply complementary outsourcing services to clients along with temporary staffing services, where an assignment is limited to a period of three months with the possibility of just one more extension for an additional three months. With the passing of the bill, these firms will enjoy a lot more flexibility in their operation.

Arguments against:

  • The law is a setback to labor rights and could negatively impact working conditions.
  • The number of full time workers could decrease while subcontracted work goes to more people.
  • These subcontracted workers will not need to belong to the organization’s worker union, reducing worker bargaining power.
  • It could negatively impact wages and social security funds as companies revamp compensation to accommodate this new class of workers.
  • It could be a ploy to reduce worker benefits and rights. Opponents point to the change in eligibility for unemployment insurance. Eligibility was extended from a 6 month period of formal employment to 18 months of formal employment, a term which eludes most young people in their first jobs. This is cited as an indication of things to come.

This legislation is highly controversial, and its ultimate passage is uncertain. Brazilian unions and some political parties are coming together to fight against the bill’s implementation, calling for work stoppages and demonstrations. The workers are protesting by blocking roads, halting services and holding demonstrations.  The bill is now under review by the Senate and, if passed, must be signed into law by the President. Given the polarity of this issue, and the current popularity ratings of the incumbent administration, it is to be seen if, under these circumstances, the President will approve the bill and pass it into law – or not!

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.