Economic Analysis of Brazilian Labor Law

Definition

Being a civil law country, Brazil heavily relies on codified rules to regulate labor relations. For this purpose, back in the 1940s, a comprehensive set of laws was consolidated in the Consolidação das Leis Trabalhista (CLT), which remains the main source of labor regulation in the country, even after some minor reforms in the end of the year 2017 (to be discussed ahead). Besides the CLT, the Federal Constitution itself has several clauses governing labor and employment relations. Finally, more and more judicial precedents have been taken and followed (although not in a mandatory manner) as sources of law.

Introduction

Labor law in Brazil is based on a paternalistic, overly protective, and dictatorial view of employees. The first and perhaps most important principle is that of the vulnerability of employees: these are considered almost legally incapacitated, with no knowledge whatsoever of what their desires are. This is the first and sharp contrast with the economic concept...