Territorial jurisdiction in the Labor Courts, that is, the place where the labor claim must be filed, is defined based on the location of the provision of services, with the two exceptions provided for in paragraphs 1 and 2 of article 651 of the Consolidated Labor Laws (CLT), regarding employees who are commercial or traveling representatives and employees who carry out their activities at a place other than where they were hired.

The current CLT provides for the possibility of submitting a defense to jurisdiction and its form of procedure, but it is silent regarding the form of arguing lack of jurisdiction with respect to the Court to which the suit was assigned, that is, it does not specify whether the defense should be submitted in the defendant’s answer itself or in a separate motion or at what moment in time the allegation of lack of jurisdiction must occur, and for this reason the Brazilian Code of Civil Procedure (CPC) is applied secondarily, pursuant to article 76 of the CLT.

The CPC of 2015, in its article 64, states that lack of jurisdiction, whether absolute or relative, must be alleged as a threshold issue in the defendant’s answer, thereby altering the rule of the previous code, according to which lack of jurisdiction should be presented in the form of a motion, submitted in a separate brief.

This scenario, however, will be altered by the labor reform, since the CLT, with the enactment of Law No. 13,467/2017, will contain specific rules regarding the form, deadline for submission, and procedure for the defense of lack of territorial jurisdiction, bringing in provisions different from those set forth in the CPC and applied to date in Labor Procedure due to the omission in existing labor legislation.

According to the new articles of the CLT, the defense of lack of territorial jurisdiction must be submitted before the hearing, within five days from the receipt of service of process by the respondent company and in a separate brief, which should explicitly state the existence of the defense, as amended by article 800 of the CLT:

"Article 800.  If there is a defense of lack of territorial jurisdiction within a period of five days from service of process, before the hearing and in a brief that indicates the existence of this defense, the procedure established in this article shall be followed."

In addition to the provisions mentioned above regarding the deadline and the form of, the labor reform establishes a new procedure for handling the defense of lack of jurisdiction in the labor sphere.

According to a new rule, once the defense of lack of territorial jurisdiction has been submitted, the case shall be stayed until the defense is decided, and the judge shall summon the other parties to respond within the common deadline of five-days, scheduling a hearing for the production of oral evidence, if deemed necessary. After the decision on the defense of lack of territorial jurisdiction, the case will return to be processed as normal, with the designation of a hearing and submission of the defendant’s answer.

In light of the provision for a stay in the proceeding pending a judgment on the defense, it is important to note that any allegation of relative lack of jurisdiction for merely dilatory purposes may be considered litigation in bad faith, and the company may be subject to a fine.

In this context, it is of the utmost importance that companies be especially attentive to the new deadline for filing a defense of lack of territorial jurisdiction, which is short and begins with the receipt by the company of service of process for the labor claim, in order to avoid preclusion of the opportunity to argue it.