Brazil: Recent Supreme Court Decision Related to Union Welfare Contribution
On the 11th of September, the Supreme Court ruled in a decision that changed the understanding that had previously been in place regarding union welfare contributions. This contribution, also known as “contribuição assistencial,” includes the amounts negotiated and set forth in Collective Bargaining Agreements (CBAs), due to both employees’ and employers’ unions (Article 513, “e”, of the Brazilian Labour Code).
The decision has general repercussions and was ruled during the judgement of the Extraordinary Appeal nº 1018459 by Minister Gilmar Mendes. The union welfare contribution is now mandatory for all employees of the company because they are benefited by the CBAs even if they are not unionized. For reference, in Brazil, regardless of unionization, all employees are represented by the employees’ union and automatically granted all benefits provided in the CBA. Nevertheless, in its decision, the Supreme Court established that the right of “opposition” must be respected, which can be exercised by employees who refuse to pay the union welfare contribution.
The decision is relevant because it changes the understanding of the Superior Labour Court (Precedent 119) and of the Supreme Court itself, which yet understood that it was not possible to charge this contribution from non-unionized employees without prior express and individual authorization.
On the other hand, the decision does not modify the Supreme Court’s understanding of another union contribution, the so-called “imposto sindical,” in which the amount corresponds to the employee’s one day of salary and is paid—deducted by the company from the employee’s pay slip—in March of each year. Regarding this union contribution, the deduction is still conditioned on the employee’s prior consent.
Given the complexity of the source of funding unions, as well as the impacts on collective negotiations and the means of submitting the “opposition letter” to the union welfare contribution, which must be more flexible and adapted to modern times, companies need to be prepared to deal with this very sensitive issue related to union relations.
Key Action Points for Human Resources and In-house Counsel
- Although not set forth in law, from now on, the companies must be aware of the obligation to deduct from employees’ salaries the union welfare contribution, if provided in the applicable CBA, including the right to opposition.