Ursula Mauro and Caroline Marchi       ADPF No. 323, or Action for Declaratory Relief with Respect to Breach of a Constitutional Precept No. 323, may already be scheduled for a decision by the plenary session of the Federal Supreme Court after the release of the case by reporting judge...

ADPF No. 323, or Action for Declaratory Relief with Respect to Breach of a Constitutional Precept No. 323, may already be scheduled for a decision by the plenary session of the Federal Supreme Court after the release of the case by reporting judge Gilmar Mendes. 

Filed by the National Confederation of Educational Institutions (Confenen), this action seeks declaratory relief recognizing the illegitimacy and unconstitutionality of the judicial interpretation embodied in Binding Precedent 277 of the Superior Labor Court, in its current form as issued by Resolution 185/12.

In an interpretation diametrically opposed to the interpretation that has been given by the Judiciary as a whole, the Superior Labor Court edited Binding Precedent 277, in 2012, providing for the incorporation of the working conditions of the collective bargaining into individual employment contracts until a new agreement is signed. The new interpretation expresses the understanding that collective rules are grandfathered, a principle that used to be in effect in Brazil due to an explicit provisions of Law No. 8,542/92, but which was revoked from the Brazilian legal system when Provisional Measure No. 1,709 was converted into Law No. 10,192/01. 

The Superior Labor Court argues that the new wording of Article 114, Paragraph 2, of the Federal Constitution, as given by the expansive Constitutional Amendment No. 45 of 2004, which constituted an overhaul of the Judiciary, calls for continuity in collective rules by providing that the Labor Courts, upon deciding collective bargaining disputes, must comply with the rules previously agreed upon, as though "in repetition." 

However, such a change of position by the Superior Labor Court occurred in a sudden, unexpected, and unusual manner, and only in 2012, almost ten years after the Constitutional Amendment, and in a setting of complete absence of prior decisions, thereby adopting a new understanding and instantly creating enormous labor liabilities for companies that had not been previously accounted for, and creating once again an enormous legal uncertainty for all of society. 

The argument made in the ADPF is that the change in Binding Precedent 277 violates the principle of separation of powers (Article 2, 60, Paragraph III, of the Federal Constitution), inasmuch as the Judiciary has arrogated for itself the function of the Legislative Branch, without public debate and without all the corresponding procedures and guarantees, and has come to, of its own accord, dictate not only the rule, but also the limits of the alteration that the Legislature created, and has thereby chosen who would benefit from and who would be disadvantaged by it. The suit further argues that there was infringement on the principle of legality (Article 5, head paragraph, of the Federal Constitution) and the principle of supremacy of collective labor conventions and agreements (Article  7, item XXVI, of the Federal Constitution). 

In October 2016, convinced of the breach of basic constitutional principles, Justice Gilmar Mendes granted an injunction ad referendum of the Plenary Session of the Federal Supreme Court (Article  5, Paragraph 1, of Law No. 9,882/1999), thereby ordering a stay of proceedings for all ongoing cases and the effects of judicial decisions handed down by the Labor Courts that related to the grandfathering of rules from collective conventions and agreements, without prejudice to the completion of the cases in which the evidentiary phase had already been completed, as well as executions already initiated.  

Justice Mendes stressed that the proposals to void collective labor conventions and agreements with respect only to those issues that are supposedly in the interests of employers, while still maintaining the burdens employers assumed as against their employees: a) lead to discouraging collective bargaining, thereby weakening the workers’ unions themselves; b) encourage employers to dismiss employees who have collective clauses incorporated into their employment contracts in order to hire others with lower benefits; c) stimulate an increase in collective disputes; d) discourage the granting of benefits by businesses because they may come to be permanently incorporated into the employment contract. 

This decision reaffirms the trend followed by the case law of the Federal Supreme Court (Extraordinary Appeal No. 590,415-RG; Direct Action for Declaration of Unconstitutionality No. 4364; Extraordinary Appeal No. 895,759) to honor collective bargaining and strengthen the constitutional prevalence of the terms negotiated in collective bargaining agreements and conventions, also on the basis of the principles of pacta sunt servanda and fair dealing.

The injunction granted by Justice Mendes brings some relief to companies giving them time to organize and study their potential liabilities if the ADF’s plead  does not prevail, but it does not solve the principal future problem that has long been the subject of debate: the limitation on rulemaking power and judicial interference in union affairs. Our understanding was that the arguments put forth at the time of the enactment of this Constitutional Amendment were that it would stimulate bargaining and reduce interference by the Government.