Publications

Category: Labor and employment

Companies, in the recent past, were obliged to require employees to wear masks while working on their premises, following the recommendations of the respective norm 20/20, which provided restrictive measures directed at the working environment due to the covid-19 pandemic. The ordinance was later amended on some occasions by regionally adopted health protocols and had its validity tied to the end of the emergency declaration in public health of national importance (Espin).

The use of a mask is no longer mandatory from 22 May of this year, with the publication of the Ordinance 913/22, which established the end of the public health emergency, ending the restrictions related to the work environment, with the exception of the existence of more restrictive state and/or county standards.

With the emergence of an even more contagious subvariant of The Omicron, BQ.1, the cases of people infected by covid-19 have returned to rise in Brazil and worldwide. According to the World Health Organization (WHO), the subvariant has been found in more than 65 countries, including Brazil, and has prevailed over the other circulating variants of Ômicron.

Given this scenario, some determinations of the mandatory use of masks have already begun to reappear in judicial Court, such as the Regional Labor Court of São Paulo, by the GP/CR Act 5/22, and the Regional Labour Court of Campinas, through the Recommendation GP-CR 001/22.

There was also the Resolution 761/22 National Health Surveillance Agency (Anvisa), which updated the measures to be adopted at airports and aircraft, as well as the Decret 67,299/22 of the state of São Paulo, which determines the use of masks in public transport, places of access, shipments and landings.

Although there is still no standard that determines the mandatory return of the use of facial protection in work environments, we should consider the current scenario of much crowd by the World Cup period and year-end gatherings, which can enhance the growth of new cases.

In view of the determinations that have been taken, as shown in the examples mentioned, in order to safeguard the health of their employees, we suggest that companies begin to plan for a possible return of the mandatory use of masks in their facilities, while waiting for the manifestation of the competent agencies.

Category: Labor and employment

Alarming numbers: all of a sudden some of the major U.S. companies that have surfed the digital wave in recent years – largely as a reflection of the isolation imposed by the covid-19 pandemic –had announced mass layoffs, which in some cases, represent  a decrease of up to 50% of their current job positions.

However, it would be wrongful to admit that in the United States mass layoffs may take place without previous discussions. Heated debates have arisen among experts concerning the legal impacts and potential lawsuits challenging such layoffs alleging violations of the Worker Adjustment and Restraining Notification Act of 1988 (WARN Act).

The WARN Act is a U.S. federal statute that, in general lines, requires prior communication to employees or unions and other authorities, at least 60 days in advance, for mass layoffs of not less than 50 employees in companies that have more than one hundred employees in a single site.

This termination movement in the United States turned on the yellow light for companies in Brazil and, especially, labor unions, which fear that the wave of layoffs may spread overseas.

The concept of mass layoffs  within the Brazilian legal system was only regulated with the enactment of the Labor Reform (Federal Law No. 13,467/17), which has completely waived the prior authorization of the labor union or the performance of a collective bargaining agreement for this type of termination.

Like other Reform legal issues challenged before Courts, the mandatory collective bargaining for the mass termination of workers was also discussed in the Brazilian Supreme Court (STF). When assessing the theme 638 in the Extraordinary Appeal 999,435, the Court ruled that, in cases of mass layoffs, companies operating in Brazil shall allow a "prior union intervention". If such intervention does not occur, courts may declare null or abusive by the courts.

But what would be the so-called "prior union intervention" stated by STF’s Justices? Practice shows that the expression refers to the establishment of an effective dialogue between company and union representing the impacted workers, so that the layoff process would affect in a slighter way the group of terminated workers and society.

The STF has not determined that the dialogue and, consequently, the negotiation between the company and the union shall be fruitful. In our view, however, prior labor union intervention presupposes a duty of sincere effort between the parties to achieve a possible consensus or convergence. In case a stalemate happens, the company could proceed with the mass layoffs, regardless of union’s authorization.

In practice, companies sat within Brazilian territory that need to cut many workers should fulfill their duty to formally notify the union, so that they can meet with employees' representatives, aiming at an effective dialogue with the labor entity. This dialogue may be done by submitting proposals and counterproposals duly registered by the parties, capable of leading to a potential consensus or agreement between the interested sides.

Category: Tax

Constitutional Amendment 125, promulgated on July 14, 2022 (EC 125/22), introduced a new requirement for  admiting the special appeal by the Superior Court of JUstice: demonstration of the relevance of the issues of federal law infraconstitutional discussed in the case.

The institute is similar to the general repercussion, but differs in terms of the demonstration and subjective transcendence of the matter to be assessed: in the Supreme Court, constitutional; in the Superior Court of Justice, federal infraconstitutional law.^[1]

In the explanamation of the proposal that resulted in the approval of EC 125/22, its authors affirm that the requirement to demonstrate the general repercussion in the extraordinary appeal allowed a large reduction in the number of appeal that arrived in the Superior Court of Justice, which is why it would be worthy to adopt the same instrument also for the Superior Court of Justice.

Except in cases where relevance is presumed, listed in Paragraph 3 of the Article 105 of the Federal Constitution of 1988, in the event that a matter can be assessed by the Superior Court of Justice, it will have to be of great national interest and transcend the interest of the parties involved in the special appeal. With this, the Court will be able to focus its attention and effort to face issues of great relevance.

The Superior Court of Justice is the court competent to establish the interpretation of federal infraconstitutional legislation and resolve existing case law divergence between courts. Contrary to what happens in a constitutional court, whose action should be on the basis of conflicts involving constitutional issues depending on the order and whose interpretive north serves as a horizon for the construction of norms based on statements introduced by ordinary or complementary legislation, the STJ has the function of interpreting federal infraconstitutional legislation as a whole,  regardless of whether this is in the interests of small or large numbers of individuals.

Moreover, in relation to the divergence of case law, the fact that there are distinct positions between two courts justifies the action of the Superior Court of Justice to solve the issue, even if the matter has few interested parties.

In the Superior Court of Justice, there is also a mechanism that allows the trial of topics with a certain detachment from the discussion held by the two parties in the process: the special repetitive appeal. In this type of appeal, when the matter is considered repetitive, the competent chamber will assess the subject in its broadest scope and, at the second moment, the solution will be applied to solve the case that brought the matter to court. That is, it is a real instrument that allows the trial of theses by the Superior Court of Justice.

The procedure for affecting the subject for consideration by the section has the participation of all members of that fractional body, which is inferable that it is not all matters that can be decided according to that system. Only when it is found – from the manifestation of all the ministers who make up the fractional body – that the subject is discussed in many appeals, it will be subject to a broad assessment by the chamber and the decision will have a degree of binding to the classes of the court itself and the lower court bodies.

Therefore, the introduction of a requirement such as the determination of relevance of the matter under discussion in the special appeal as a condition to its knowledge would have the power to modify the essential characteristics of the Superior Court of Justice as a court that primarily interprets federal legislation infraconstitutional and resolves case law divergence between second-degree courts.

Although I believe that the requirement to demonstrate the relevance of the matter alters important characteristics of the Superior Court, since EC 125/22 was promulgated and the filter should be observed for the knowledge of the special appeal, we envision a possibility of overcoming the so-called "defensive case law" in relation to the knowledge of appeals brought on the basis of case law conflict, so that the role of the STJ is again more important.

Among the autonomous hypotheses of special appeal of Article 105, III of the Federal Constitution, point 'c' authorizes its filling when the decision "gives federal law a divergent interpretation of that which has given it another court" (divergence of case law). In that circumstance, the demonstration that the appealed decision interpreted a legal provision in a sense different from that given by another court already authorises the knowledge of the special appeal, and it is for the Superior Court of Justice to decide which interpretation is appropriate – and which should prevail.

However, over the years, a doutrine was formed in the Superior Court of Justice that the knowledge of the special appeal brought based on the existence of case law conflict would be conditional on the evidence of the violation or negative validity of the federal infraconstitutional legislation for the case. In other words, greater importance was given to one of the hypotheses of the special appeal and a requirement for the knowledge of the appeal based on case law divergence was added.

EC 125/22, in this particular, may contribute to the STJ overcoming this misguided interpretative line and resume its role as a court competent to standardize the interpretation of federal legislation infringing, even if it is not facing violation or negative validity.

It is not hard to remember that legal provisions can be interpreted in various ways, provided that there is consistency and respect for the legal system. Moreover, until there is a binding demonstration from a higher court, the authorities may not be able to perform their function in waiting for a position with that characteristic. This leads to decisions in different senses, without violation of the law.

In Paragraph 3 introduced to Article 105 of the Constitution by EC 125/22, its paragraph V states that there will be relevance in the "cases in which the trial under appeal contradicts the dominant case-law of the Superior Court of Justice". It should be noted that this is one of the hypotheses expressed in which there is relevance of the issue dealt with in the special appeal.

Although the precept indicates that the relevance will occur contrary to the case-law of the Superior Court of Justice itself, a systematic interpretation of the hypothesis must be given and the standardfunction of the court, which has been so unprestigious in recent years, should be given a systematic interpretation.

Given the introduction of a new requirement for the knowledge of the special appeal and established some hypotheses in which there is relevance of the issue dealt with, an opportunity arises to overcome the interpretative line mistakenly constructed with the sole purpose of preventing the processing of special resources. There is also the chance to reinforce one of the powers of the Superior Court of Justice, which is to standardize the case law and solve the divergence of interpretation of federal infraconstitutional legislation between courts.

^[1] ALVIM, Teresa Arruda; DANTAS, Bruno. Special appeal, extraordinary appeal and the new function of the higher courts. 5th ed. São Paulo: Thomson Reuters Brazil, 2018. p. 320.

Category: Labor and employment

The Government of São Paulo announced the mandatory return of the use of masks on public transport, in publication in the Official Gazette of November 25, 2022. The objective of the measure is to contain the new increase in cases of covid-19.

Thus, on November 26, the mandatory use of masks, as regulated by Article 1 of the Decree 66,575, of 17 March 2022.

It occurs that, although the government has announced the return of the measure only on public transport, the Decree 67,299, of 24/11/2022, determines the mandatory use of masks in transport passenger collectives, not distinguishing whether the medium is public or private.

Given the uncertainty, it is recommended that companies again require the use of masks in chartered means of transport, as well as in places of access, embarkation and disembarkation, from November 26, 2022.

Category: Competition

The Administrative Council for Economic Defense (Cade – the Brazilian antitrust authority) discussed the retroactive application of the Resolution 24/19, which provides the methodology for calculation of fines for gun jumping violation (the early consummation of transactions, prior to Cade’s approval), which can reach the maximum of R$ 60 million.

The discussion took place in the context of a gun jumping investigation (APAC) referring to the consummation of a transaction prior to the approval of Cade, which occurred before the entry into force of the resolution that brought specific parameters for the calculation of the fine in cases of gun jumping – taking into account, for example, the duration and severity of the wrongdoing, the intention of the parties, and also considering the value of the transaction and the revenue of the parties.

Prior to the resolution, fines for gun jumping followed the general parameters set out in the Cade's Internal Regiment.

According to the Commissioner Rapporteur assigned to the APAC, a retroactive application of Resolution 24/19 would be possible if it could benefit the wrongdoers (i.e. the parties to the investigated transaction). However, the Commissioner Rapporteur concluded that the methodology of Resolution 24/19 could aggravate the parties’ situation instead, and decided to apply the rules provided for in Cade’s Internal Regiment, which was in force at the time of the wrongdoing.

The Commissioner Rapporteur assessed gun jumping precedents in which the Internal Regiment rules were applied, to identify those with characteristics similar to those of the investigated case (e.g. type of operation – global or national –, size of the companies involved, effects in Brazil and competition aspects) and ordered a pecuniary contribution, to be paid by the wrongdoer, that was equal to the amount reached in the most similar case, duly updated per the Selic rate.

The Commissioner’s decision was unanimously followed by the Cade’s Tribunal.

Before the Resolution 24/19 was in effect, the highest fine imposed by Cade in a gun jumping case was R$ 30 million, and each of the other fines imposed amounted to less than R$ 3 million.

In the first case in which the fine calculation methodology provided for in Resolution 24/19 was applied, a R$ 57 million fine was imposed, not reaching the statutory maximum limit only because of a discount granted by the Commissioner Rapporteur of the case. The maximum limit of R$ 60 million for fines was recently reached in a case settled by Cade and the parties involved in the investigated transaction, where details about the calculation were not disclosed.

Cade’s decision went beyond establishing the possibility of not applying the methodology for calculation of fines set out in Resolution 24/19 for transactions consummated before July 2019 (when the Resolution entered into force) without Cade’s approval: it also made room, in such cases, for the settlement negotiations to consider sanctions imposed in precedents with characteristics similar to the case under negotiation, giving society greater certainty and predictability.

Category: Capital markets

The Brazilian Securities Commission (CVM) introduced on June 10 of this year, through the CVM Resolution 135, the possibility of carrying out transactions with large lots of shares and securities representing shares in specific segments or trading procedures in exchange and organized over-the-counter markets.

According to paragraph 1 of Article 95 of CVM Resolution 135, transactions with large lots are considered to meet, cumulatively, the following conditions:

• the minimum lot is not less than that disclosed by CVM in relation to the respective securities;
• occur with single and indivisible lot of securities; and
• participation of a member of the securities distribution system.

Since the publication of the resolution, the market has been waiting for the CVM to disclose the methodology to be applied for the definition of large trading lots, which occurred on October 4, in view of the decision of the CVM Board that approved the proposal presented by the Superintendence of Relations with the Market and Intermediaries (SMI).

The proposal made by SMI, after interactions with the market, was inspired by the European regulations for the definition of so-called "Large in scale orders" or LIS, calculated from the average volume traded per asset. According to the technical area, the European model was considered more appropriate for the Brazilian market, since it considers the different liquidity patterns of the shares.

It was defined as this:

Frequency of disclosure – The shares and securities representing shares that can be traded in large lots and their respective minimum lots will be disclosed, in principle, every four months, through the Circular Letter of SMI (it should be noted that CVM Resolution 135 will be amended at this point because it initially provided for annual disclosure).

Criteria – The following criteria will be used in the disclosure of minimum lots for the trading of large lots:

• the median daily volume traded during the base calculation period, making it unnecessary to exclude the trades carried out on the first trading day of the calculation basis; and
• the minimum number of trading sessions in which there has been trading for the purposes of meeting the eligibility criterion shall represent 25% of the trading sessions of the base calculation period.

Minimum lot definitions for trading large lots – The following table will be used for the definition of shares and securities representing shares that can be traded through transactions with large lots:

With the permission to set up specific trading segments or procedures for conducting trades with large lots of stocks and other securities representing shares to be made in the stock and over-the-counter markets, the regulator seeks to offer an alternative to mitigate any market impacts deriving from the harmful volatility in the price of a given asset, depending solely on the existence of an offer with a large-volume transacted.

The changes promoted do not represent a fence for the use of the mechanisms previously existing for the trading of large amounts of shares and securities representing shares.

This is the case, for example, of special negotiation procedures that were provided for in the CVM Instruction 168/91 (revoked), in case of transactions involving substantial blocks or quantity of shares or direct offers higher than the daily media traded in the last trading sessions – with CVM Resolution 135, the rule of these procedures became included in the regulation of the stock exchange's managing entity.