The legality of outsourcing companies' core activities  is already pacified, including in the Brazilian Supreme Court - STF, allowing the engagement of legal entities to provide services related to the essential and non-essential activities of companies.

The doubts now concern the legality of hiring legal entities to provide services, essential or not, even if the requirements of the employment relationship are present.

In a recent decision STF, Minister mDias Toffoli, in Complaint 65868 (RCL 65868), revoked a decision of the Labor Court of Appeals of the 15th Region (TRT-15) that pronounced the employment relationship between a officer engaged through a legal entity incorporated by him and the contracting company.

Although the issue has already been the subject of discussion in Brazilian courts, especially in recent months, the decision has fostered arguments in favor of the validity of this type of engagement.

In the recent judgments of the Allegation of Non-Compliance with a Fundamental Precept (ADPF 324), the Declaratory Action of Constitutionality (ADC 48), the Direct Action of Unconstitutionality (ADI 3961) and the Extraordinary Appeal 958252 (Theme 725), the STF recognized the lawfulness of other forms of organization of the workforce in addition to the employment relationship.

Based on these decisions, the STF has issued several decisions recognizing the legality of engaging individual independent contractors through legal entities incorporated by them.[1] Such decisions determine, in general terms, that different employment relations can be established, including the provision of services by a legal entity for the outsourcing of companies' core activities  , provided that the contract is real and reflects, in practice, the absence of the requirements of the employment relationship, especially subordination.

Forexample, RCL 56285, the MinisterRoberto Barroso decided under the following terms, on December 6, 2022:

(...) 4. Contracts for the outsourcing of labor, partnerships, and the provision of services by a legal entity (pejotização) are lawful, even if for the execution of the company's core activity, provided that the contract is real; that is, that there is no employment relationship with the company taking the service, with subordination, hours to be fulfilled, and other obligations typical of the labor contract,  hypothesis in which the hiring would be rigged. 5. In this case, the claimant is not a low-income worker, and is therefore able to make an informed choice about his hiring. There is no concrete evidence in the contested decision that there was coercion in the contract concluded. 6. The appeal is dismissed. (g.n.)

The decision of theinsinister Dias Toffoli in RCL 65868 also refers to the above decision to revoke the decision of the TRT-15. In this case, however, the TRT-15, responsible for the analysis of facts and evidence, verified that, in the specific case, the officer provided services under subordination and, based on this, upheld the original judgment that recognized the employment relationship.

The TRT-15 decision, therefore, was not based on the intrinsic illegality of engaging individual independent contractor through legal entities incorporated by him/her. It was based on the analysis of the facts that, according to the understanding of the judges, evidenced the subordinate work:

Now, considering that both (the defendant's witness and the plaintiff) were subordinate to the president, the only difference lies in the greater or lesser flexibility of working hours, which confirms that the non-hiring of the plaintiff as an effective employee resulted solely from the defendants' choice to defraud labor rights. In view of all the above, there is no other conclusion to be reached than that the hiring of the plaintiff through a company constituted exclusively for this purpose (a phenomenon known as "pejotization") was perpetrated with the evident intention of defrauding rights provided for in the labor legislation. Therefore, it is necessary to recognize the nullity of the work performed (article 9 of the CLT) and the consequent pronouncement of the employment relationship during the entire period of service provision, including because all the legal requirements necessary for the pronouncement of the employment relationship are present. (g.n.)

Thus, although the STF has issued several decisions recognizing the validity of other forms of hiring other than the employment relationship, this validation is not absolute. The lawfulness of suc hemployment is conditional on  the absence of the requirements of the employment relationship.

Thus, it is clear that the topic still needs to be further debated to bring greater legal certainty to forms of engagement that do not only involve the employment relationship.

In the current scenario, there is still not enough legal certainty to affirm that the STF considers any form of contracting the provision of services through a legal entity to be lawful.

We understand that the best interpretation of the decisions issued by the STF to date is  that forms of employment other than the employment relationship  are valid, provided that the elements  of the employment relationship are not present in the specific case.

We will continue to follow the theme.


[1] Rcl: 58583, Rcl: 56453, Rcl: 60436, Rcl: 57057, Rcl: 59735.