Sept. 17 (Bloomberg) -- Brazil’s decision to recognize overtime pay for workers contacted by their bosses after regular hours by e-mail or telephone is poised to increase companies’ costs and test their ability to boost productivity.
Employees must be paid a third of their hourly compensation if called or texted by their managers outside of regular work hours, according to a Sept. 14 statement by the highest labor court in Brasilia, Tribunal Superior do Trabalho. Having a company-owned mobile device doesn’t grant or guarantee an overtime payment, the court said. The ruling is meant to provide guidance to the nation’s judges in future labor suits.
While the ruling is fair, it probably will boost costs for companies in a country where labor regulations and taxes are often considered an obstacle to doing business, said David Fleischer, a political analyst at the University of Brasilia.
“There are not many countries with labor charges so high as Brazil, where companies pay 103 percent on top of salaries,” he said in a telephone interview from Brasilia yesterday. “There are attempts to reduce the Brazil cost but so far things are not going very well.”
The labor court issued the ruling in response to legislation signed into law by President Dilma Rousseff in December 2011 that said the use of company-owned portable communications devices is equivalent to working in the office. The court had to determine how to enforce the new law.
Brazil, the world’s largest developing economy after China, is seeking to reduce the cost of doing business, which manufacturers say deters investment and competitiveness. Rousseff’s administration cut interest rates to a record low, reduced labor taxes for some industries and last week announced reductions in electricity rates.
Economic growth in Brazil will slow to 1.6 percent this year, a smaller rate than the U.S. or Japan, from 2.7 percent in 2011, according to a central bank survey of economists published last week. The rate of expansion will quicken to 4 percent in 2013, according to the same survey.
Anthony Pereira, director of the Brazil Institute at King’s College, London, said the labor court decision is fair but could create unintended consequences. Employers may be encouraged to route all after-hours communication to managers, who would not be covered by this ruling, he said in an e-mail statement.
“If this ruling is seen as fair and it results in workers who feel valued, there is no reason to think that it would be ruinous for competitiveness and productivity,” Pereira said. “That being said, it will probably be a hard law to interpret and enforce.”
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