Various businesses in Brazil have recently been suffering the consequences of the aridity of the current economic scenario. Often the organizations affected invite their creditors to discuss possible adjustments in their debt payments and at the same time reorganize their internal structure and staff.

To circumvent the point of no return from ungovernable debts with their creditors, renowned companies in crisis resort to an in-court or out-of-court reorganization plan to avoid bankruptcy - and, consequently, the domino effect on customers, suppliers, and workers.

In-court reorganization, in short, is the procedure initiated by a company with financial difficulties to make it possible to maintain its business. It is based on creating a plan approved with the creditors so that the debts are reorganized in order of preference and the business remains healthy while going through the turmoil.

As has been reported in the media, reduction and/or reorganization of the workforce has gained prominence in the judicial reorganization plan as a necessary instrument to ensure the company's health and may generate the forced measure of mass lay-offs.

The case of Lojas Americanas, especially after its filing for judicial reorganization on January 17 of this year, brought more relevance to the subject and raised questions: if the collective lay-off of workers is inevitable, is collective bargaining with unions necessary, even if the company is under judicial reorganization or in the process of reorganization? And, if negotiation is necessary, what should be negotiated with the unions?

On the subject of collective lay-offs, the Federal Supreme Court (STF) has decided Extraordinary Appeal 999435, with general repercussion (Topic 638), and decided by majority vote for the necessary prior intervention of unions in mass lay-off procedures, which we commented on in a recent article.

Looking at the current picture, it is known that if there is a need to collectively lay off workers, whether before or during the judicial reorganization phases, the prior intervention of the professional union is an indispensable step, and an agreement may be reached or not.

Although union negotiation in cases of collective lay-offs has been clarified to some extent by the STF, heated new debates have arisen over what "effective" negotiation would be when imposed on companies in crisis. In other words, what should "saving" businesses with compromised cash flow offer when negotiating with their unions?

We recall the emblematic case of Editora Abril which, at the time under judicial reorganization, proposed to its employees' unions a collective bargaining agreement with the purpose of paying in installments the severance pay and the fine provided for in article 477 of the Consolidated Labor Laws (CLT), due to workers that would be collectively laid off due to the organizational restructuring.

Despite Abril's financial challenges at the time, the 6th Panel of the Regional Court of Labor Appeals for the Second Region decided for the illegality of the collective lay-off and for reinstatement of the workers, under the argument that the proposal presented by the company to the unions "in no way represented an effective willingness to negotiate to minimize the impact of the collective lay-off of its employees.”[1]

In our opinion, the court's understanding in this case deserves to be changed, especially because it seems unreasonable to us that companies, in this delicate moment of scarcity of economic and financial resources, should have to make additional payments or commitments of an economic nature that may expose to risk the entire business activity and the chain of individuals and companies that depend on it.

Decisions such as the one in the Editora Abril case may form a line of case law contrary to efforts to overcome crises at companies that are already undergoing or may undergo judicial reorganization. More than this: they can consolidate dangerous concepts that, in practice, would affect jobs, future hiring, and the willingness of companies to file for judicial reorganization.


[1] Case 1000446-88.2018.5.02.0061.