In the judgment of a motion for clarification in Extraordinary Appeal 999.435, which occurred in April, the STF established that the requirement of prior labor union intervention applies only to layoffs that occur after publication of the minutes of the judgment on the merits of the case - June 14, 2022.

Layoffs or collective dismissals occurs when a company dismisses a considerable number of employees at the same time or in a short period of time, with the same motivation - which usually derives from financial necessity, unrelated to the performance of the employees.

Up to 2017, layoffs were not formally regulated in legislation. In 2016, an extraordinary appeal was filed to debate the mandatory collective bargaining requirement for layoffs of workers imposed by the Superior Labor Court (TST).

The case law has always faced heated debates on the subject. On the one hand, there were those who contended that the legal system does not provide any support for differentiated treatment between individual and collective dismissals; on the other hand, there were those who contended for the need for prior authorization from the labor union of employees in the category for the layoffs or even execution of a collective bargaining agreement to effect such a dismissal.

Extraordinary Appeal 999.435 was filed in a case regarding the dismissal of more than 4,000 employees of Empresa Brasileira de Aeronáutica S.A. (Embraer) which occurred in 2009. The TST decision that established, for future cases, the need for prior collective bargaining for layoffs was questioned.

According to the appellant companies, by establishing a condition for layoffs, the TST assigned to the Labor Courts the obligation to rule on a matter that the Federal Constitution restricted to supplementary law. Among the arguments of the appeal is the allegation that the decision would threaten the survival of companies in crisis, with undue interference in management power and affront to the principle of free enterprise.

As of 2017, with the enactment of the labor reform, the Consolidated Labor Laws (CLT) now states that "individual, collective, or group dismissals are equivalent for all purposes, without the need for prior authorization from a labor union or execution of a collective bargaining agreement." In other words, the legislation now expressly states that there is no need for prior authorization from the labor union for layoffs.

In view of this provision, the Federal Supreme Court (STF) decided that the prior authorization of the labor union entity would not be necessary, but clarified that prior negotiation would be required. According to the Court, this requirement would open up the possibility of "sitting at the negotiating table." The company could state its reasons for the layoff and, on the other hand, the labor union could speak on behalf of the workers. Prior negotiation is not to be confused, however, with prior authorization for dismissal, but is only a measure to stimulate dialogue.

Justice Dias Toffoli clarified, in this same sense, that it would not be a matter of a request for authorization from the labor union for the layoff, but of involving it in a collective process for the maintenance of jobs. He also discussed that the participation of labor unions in situations of possible layoffs could help to find alternative solutions that would contribute to the recovery and growth of the economy, besides valuing human labor.

The STF decided, by majority opinion, that the prior participation of labor unions in cases of layoffs is essential, not to be confused with the need for authorization. It established the following theory of general repercussion: "Prior labor union intervention is an essential procedural requirement for mass dismissal or layoffs of workers that cannot be confused with prior authorization by the labor union entity or execution of a collective bargaining agreement.

When ruling last April 25 on the motions for clarification filed by the parties, the STF softened the effects of the above decision.