The report of the Joint Committee responsible for evaluating Executive Order 905 of 2019 (MP 2019) confirms a step backwards from the initial proposal on negotiations with respect to profit sharing programs (PLR).
While the original text of MP 905 amended the current law so as to dispense with compulsory participation by labor unions, the new wording includes the need to at least notify the union entity. Only if the labor union does not appoint a representative within seven days to participate in the negotiation process may the committee conduct and complete the work autonomously.
In his opinion, the rapporteur for the joint committee justified the change by arguing that waiving labor union participation would result in the weakening of these entities and, in his view, it is necessary to preserve the role of labor unions in negotiations.
Trade unions’ role may even be very relevant and beneficial in negotiations of PLRs. However, the obligation to always notify them, regardless of the environment and the context of a specific negotiation, is a real step back from the proposal of MP 905, which sought to resolve a series of difficulties faced by companies in establishing PLR programs.
Today, the law presents as a requirement the participation of labor unions, which not infrequently results in some mishaps, such as:
- The silence of some entities in response to calls to sit on the joint committees;
- Interventions by labor unions often detached from corporate reality and misaligned with the workers' own desires;
- Trade unions that condition their participation in the negotiation process on the creation of a negotiation fee or compulsory contribution (scenario aggravated after the end of the compulsory payment of union dues).
The proposal by the joint committee resolves the first difficulty mentioned, since the companies will be able to sign the PLR program via the joint committee of employees, if the union notified does not respond within seven days.
This condition should avoid the repeated tax assessments applied to companies that decided to sign the PLR program directly with the committee, without the labor union’s endorsement.[1] The other two situations of deadlock, however, would remain unresolved.
As already occurs today, it would be up to companies to decide between attending to eccentric labor union proposals or complying with claims for mandatory negotiating fees (at risk of having their legality questioned). Otherwise, the business deadlock that has been installed may attract unnecessary strike movements and collective bargaining disputes, which, generally, do not resolve the issue.[2]
In this context, the original wording of MP 905 is more in line with the initiatives of economic freedom and de-bureaucratization defended by the current government. If it is approved by the Brazilian Congress, to the detriment of the text proposed by the joint committee, the difficult situations that many companies have been facing in instituting programs aimed at sharing profits or results with their employees could be resolved.
And, contrary to what is argued, this will not necessarily mean devaluation of labor unions. Professional entities that are actually representative will always be positively involved in negotiations of PLRs.
[1] The most recent decisions by the Carf have defended the position that the participation of labor unions in the negotiation of PLR programs is essential and that silence by some entities with respect to call notices made by companies does not eliminate this need.
[2] Many labor courts take the position that the prerogative to negotiate PLR issues is exclusive to employers, employees, and labor unions and for this reason they do not resolve the conflict. The Regional Court of Labor Appeals for the 2nd Region, for example, consolidated this understanding in Precedent 35 of the Collective Disputes Section, which returns the deadlock to the parties for them to form a committee to negotiate the PLR.
