In recent years, Labor Courts of Appeals (TRTs) have ruled that the notice period paid in lieu – when the employee does not work during the notice period – should not be considered in the calculation of the pro-rata Profit-Sharing (PLR) due to former employees, as no services are rendered during this period.

These TRT decisions are based on TST Precedent No. 451, which states that pro-rata PLR payments should only consider “months worked.”

Accordingly, it is common for PLR agreements to establish that employees terminated without cause are entitled to PLR calculated on a pro-rata basis to the months worked — thus excluding the notice period paid in lieu.

Despite this, the Superior Labor Court (TST) recently ruled that the notice period – even if paid in lieu – must be included in the calculation of the pro-rata PLR due to former employees (Theme 193).

Upon reviewing the decisions used as precedents by the TST, we note that most cases involved employment contracts terminated before the Brazilian Labor Reform (from 2017) and, consequently, PLR agreements entered into prior to the reform.

Therefore, in ruling on Theme 193, the TST did not consider Article 611-A of the Brazilian Labor Law (CLT), introduced by the Labor Reform, which expressly includes PLR among the rights that may be collectively negotiated. Nor did it consider the Supreme Court ruling on Theme 1,046, which recognized the precedence of negotiated provisions over legislated provisions — provided that absolutely unwaivable rights are respected—and upheld the constitutionality of Article 611-A of the CLT.

Thus, we find that the understanding established in Theme 193 by the TST did not take into account the legislative and jurisprudential changes that occurred after the Brazilian Labor Reform, which expressly included PLR among the rights that may (and should) be subject to negotiation, rather than treating it as an unwaivable right.

This understanding, like another recent TST decision that disregarded a PLR agreement clause concerning employees who resign during the calculation period, contradicts paragraph 3 of Article 8 of the CLT. This provision requires that, when analyzing collective agreements or conventions, the Labor Court must base its analysis and decision on the principle of minimal intervention in the autonomy of collective will.

So, from now on, must companies necessarily include the notice period paid in lieu in the pro-rata PLR calculation?

Upon analyzing the PLR agreements that governed the cases considered by the TST, we found that they provided for PLR payments “proportional to the months actually worked.” For this reason, in the event of a legal dispute, the inclusion of this expression may no longer be sufficient to justify the exclusion of the notice period paid in lieu.

From a procedural standpoint, in the event of litigation, if the TRT applies Theme 193, the matter may be resolved at the regional level, with no possibility of appeal to the TST.

In this context, for new precedents to be established validating collective agreements that exclude this period from the PLR calculation, it is essential for companies to adopt measures that allow for the application of the distinguishing technique. This approach requires that the specific characteristics of the case at hand contain elements that differentiate it from those already examined in previous precedents.

To this end, companies should strive to negotiate collective clauses that expressly exclude the notice period pain in lieu from the PLR calculation.

In the event of a legal dispute, it is essential that defenses and appeals be based on Articles 8, paragraph 3, and 611-A of the CLT, as well as STF Theme 1,046.

At Machado Meyer, we understand it is important to adopt a proactive stance, both in the negotiation and litigation phases, to build precedents capable of refining the TST’s understanding in light of the new elements introduced by the Labor Reform.