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Legal Update

Brazil: Supreme Court Decides it is Lawful to Outsource All Business Activities

31 August 2018
Tauil & Chequer Legal Update

The Brazilian Supreme Court (STF), in a judgment session concluded on August 30, 2018, decided by majority vote (7 to 4) for the constitutionality and lawfulness of hiring outsourced workforce for all activities performed by the company, including core-business activities.

The decision has a general repercussion, which means that it must be observed by the other lower courts and has the following wording: "Outsourcing or any other form of division of labor between different legal entities is permitted, regardless of the corporate purpose of the companies involved, with subsidiary liability continuing to be incumbent on the contracting company".

The judgment in question, filed in the records of the case of Claim of Breach of Constitutional Precept (ADPF) 324 and Extraordinary Appeal (RE) 958252, represents an important conciliation on the issue of outsourcing, which until such judgment was subject to the understanding of Precedent 331 of the Superior Labor Court (TST), which prohibited the outsourcing of core-business activities.

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