Patrícia Vilhena | Sócia Manucci Advogados
At the end of last year, Law number 14.790/2023 was enacted, solidifying the legalization of sports betting and online gaming in Brazil. Investors looking to establish businesses in the country, including betting companies, must familiarize themselves with the concepts of work relationships and employment relationships, as well as the associated risks and costs of each arrangement.
Employee´s rights, which arise from an employment contract between the worker and the employer, are established in the Brazilian Constitution, the Consolidation of Labor Laws (CLT), and specific regulations related to employee´s health and safety. In most cases, Brazilian labor courts adjudicate disputes based on fundamental labor law principles, particularly the protection of economically dependent employees, and the principle that factual circumstances take precedence over formal agreements.
The concept of an employee is defined by labor legislation, which classifies as an employee any individual who, explicitly or implicitly, provides continuous services to another party with personal exclusivity, in exchange for a salary, and under legal subordination. The employer, in turn, bears the business risk. Legal subordination is the primary criterion used to distinguish between a work relationship and an employment relationship.
Under the Brazilian Labor Law, employment contracts may be established either explicitly or implicitly. For lower-wage employees, some companies record the employment contract directly in the employee’s Work and Social Security Card (CTPS). For mid and high-level employees, it is advisable to formalize a written employment contract, which, in addition to the elements mentioned above, should address aspects such as working hours, granted benefits, confidentiality obligations, and other relevant terms.
The Brazilian Labor Legislation establishes employee´s fundamental rights, including a standard workday of eight hours and a weekly limit of forty-four hours, with a permissible extension of up to two additional hours, if required. A minimum rest period of eleven hours between shifts must be observed. Special or shift work arrangements must be negotiated with the relevant labor union; otherwise, they may be deemed invalid. Employees are entitled to one rest day per week, preferably on Sundays, as well as one month of paid vacation with an additional one-third of the salary, proportional vacation with the same additional, monthly deposits into the Government Severance Indemnity Fund (FGTS), among other rights. É sempre importante verificar o instrumento coletivo aplicável à categoria, pois este pode estabelecer outros benefícios e, se não forem devidamente observados, podem gerar um passivo significativo.
It is always essential to review the applicable collective bargaining agreement, as it may provide additional benefits. Failure to comply with labor laws could result in significant legal liabilities. When accounting for applicable tax and mandatory contributions, the total employment cost can reach approximately 130% of the agreed base salary.
For this reason, the Brazilian Constitutional Court has recognized, in exceptional cases, the provision of services through a legal entity (work relationship), provided that the service provider holds a higher education degree and receives a differentiated salary. In this context, it is crucial for investors seeking to establish themselves in Brazil and engage in work relationships, rather than employment relationships, to execute robust contracts with carefully negotiated provisions aimed at clearly ensure the absence of legal subordination.
