New Developments On The Enforceability Of Releases In Brazil

In 2017, companies in Brazil welcomed changes to its labor code that introduced the option for securing enforceable releases to employment law claims. The changes to the labor code included allowing parties to seek a ratification of a private settlement with the labor courts. The rationale behind the new law was to permit parties to settle matters in an amicable way, thereby reducing judicial disputes.

However, the labor courts—in particular the trial-level courts—consistently denied the full release of claims. This undermined the main purpose of the settlements by requiring the parties to appeal to the higher courts and making the outcome uncertain and the process too long. Therefore, many companies decided not to use this mechanism.