The labor legislation provides that for every 12 months worked, the employee is entitled to 30 days of vacation, which must be taken within the 12 months following the date on which the employee accrued this right. For each vacation period, the employee must be paid the remuneration that would be due to him as though he had worked, plus the constitutional increase of 1/3 of the amount, up to two days before the vacation period granted.

In 2014, the Superior Labor Court (TST) promulgated Precedent 450, which provides as follows:

“Payment is due at twice the remuneration for vacation, including the constitutional one third, based on article 137 of the Consolidated Labor Laws, when, even when taken at the appropriate time, the employer has breached the deadline provided for in article 145 of the same law.”

In other words, Precedent 450 of the TST establishes that the payment of double vacation pay, legally provided for when vacation is enjoyed outside of the time period, is also applied in the event that the employer pays vacation after the legal deadline, even if the vacation is enjoyed at the appropriate time.

In 2017, the governor of the state of Santa Catarina proposed a petition for breach of a fundamental precept (ADPF), which is an instrument for control of constitutionality used to prevent or repair injury to a fundamental precept, the subject matter of which is the constitutionality of Precedent 450 of the Superior Labor Court. This is ADPF 501.

The filing of ADPF 501 was supported, basically, on the fact that the TST allegedly applied, by analogy, a sanction provided for for conduct other than that indicated in the precedent. Thus, since the Judiciary is usurping a typical function of the Legislative Branch, there was said to be breach of the constitutional principle of separation of powers, in affront to the Federal Constitution.

After the labor reform, the legislation itself now stipulates that "precedents and other pronouncements of case law issued by the Superior Labor Court and by the Regional Courts of Labor Appeals may not restrict rights legally provided for or create obligations that are not provided for by law.” Thus, the creation of obligations not provided for by law, as stated in Precedent 450, is now expressly forbidden by the labor legislation itself.

Justice Alexandre de Moraes, reporting judge for the ADPF, found that, even if the obstacles related to legality and the use of analogy were overcome, it would be impossible to carry the penalty imposed for a given case of default to a different situation, since sanctions rules have a restrictive interpretation, which means that they cannot have a broader interpretation than that conferred by the literalness of the law.

The Attorney-General of Brazil also issued an opinion favorable to the understanding that it is impossible to apply the sanction provided for in Precedent 450 of the TST: "it is not incumbent on the Superior Labor Court to change the scope of application of the rule itself, in order to reach a situation not contemplated by it, especially since it is a rule with sanctioning content and, therefore, of restrictive interpretation.”

Based on the above-mentioned grounds, the ADPF was granted relief in a majority opinion to declare the unconstitutionality of Precedent 450 of the Superior Labor Court and invalidate all court decisions that have not become final and unappealable, which, supported by this precedent, have applied the penalty of double payment in the event of late payment of vacation pay.

In all actions in which there is a judgment that is not yet final and unappealable in this regard, therefore, it is possible for companies to request a review of the decision, not least because the decisions handed down in the scope of claims of breach of a fundamental precept are unappealable and binding on all proceedings that still discuss the same matter. There are enough matters to litigate these decisions all the way to the Federal Supreme Court (STF).