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Data Protection Officer (DPO) in Brazil

Data protection is the relationship between the collection and dissemination of data, technology, the public expectation of privacy, and the legal and political issues surrounding them.

The personal data controller is a person appointed by the company who basically will be responsible for the communication between the latter, the subject of the personal data and the ANPD (National Data Protection Authority), which oversees compliance with Law no. 13.709/2018, the General Law on Personal Data Protection (LGPD).

Article 41 of the LGPD obliges all companies to appoint a personal data controller, also known as a Data Protection Officer (DPO) by European law.

For the time being, there are no exceptions to the rule referred to in the previous paragraph, although the matter is already the subject of public consultation, for the exemption of small data processors, such as micro-enterprises, small businesses, start-ups and non-profit legal entities, natural persons and unincorporated entities. If these small processors do not appoint a controller, an obligation at least to provide a channel for communication with the data subject is also under consideration.

Note that this exemption applies only to the data controller. The LGPD will not cease to apply to small data processors.

The ANPD has not completed this public consultation and therefore its opinion has not yet been released.

What does a DPO do? According to the paragraphs of article 41, the DPO is responsible for: 1) accepting complaints and communications from data subjects, providing explanations and taking appropriate action; 2) receiving communications from the national authority and taking appropriate action; 3) advising the entity’s employees and collaborators on the practices to be followed with regard to the protection of personal data; and 4) performing the other duties determined by the controller or established in supplementary regulations.

Is it possible to outsource the control of personal data in Brazil? The LGPD does not prohibit outsourcing of the data control. Therefore, it is not obligatory that the controller be an employee of the company.

Accordingly, since it is possible to hire an external DPO, the employees can focus on the company’s core business, without being overburdened or even distorting their employment contracts, which could give rise to legal consequences, such as the payment of additional compensation for deviation from their original function or dual activity.

Logically, hiring a DPO, as a regular employee of the company, is justified when the company’s size and volume of data processing is so significant as to warrant this person’s dedication exclusively to this function.

The Brazilian Bar Association, in response to Consultation no. E-5.537/2021, has authorized lawyers to exercise officially the activities of DPO.

Penalties for non-compliance with the LGPD, which includes absence of a controller, have been in force since the beginning of August 2021, including fines of up to R$50 million, in addition to compensation for property, moral, individual or collective damage.

The Stüssi-Neves Advogados team is at your disposal for any additional explanation regarding this matter.

Fernando Seiji Mihara and Maria Lúcia Menezes Gadotti
Associate lawyer and Partner in Labour Law Area – São Paulo
[email protected] and [email protected]

Unilateral Termination of an Agreement for Services for a Fixed Term

Termination of employment refers to the end of an employee’s work with a company. Termination may be voluntary, as when a worker leaves of their own accord. Involuntary termination occurs when a company downsizes, makes layoffs, or fires an employee.

Agreements involving the provision of services are entered into every day and there are countless models for this type of contract, which are used in day-to-day business.

It so happens that, precisely because they are so commonplace, the contracts are frequently adapted to the specific needs of each business, which leads to a number of distortions and technical improprieties, culminating in the generation of certain risks, which go unnoticed at the time of formalisation of such contracts.

One of these situations, frequently observed, is the provision for the possibility of unilateral and unjustified termination of contracts for a fixed term, free of any penalty. Thus, it is common to see clauses establishing that either party may put an end to the relationship, at any time, simply by communicating their decision to the other party, often the only obligation being to give a certain period of notice, without the need to respect the term initially established for such relationship.

This type of provision can lead the parties into real traps, since they are under the impression that the agreement may be terminated unilaterally without any consequences. However, many jurists take the view that premature termination without cause always entitles the innocent party to compensation, as provided in the Civil Code, in articles 602 and 603, as follows:

Art. 602. A service provider hired for a fixed period of time, or for a specific job, cannot take leave of absence or quit without cause, before the time has elapsed or the work has been concluded.

Sole paragraph. If he quits without cause, he shall be entitled to payment for the work done, but shall be liable for damages. The same shall occur if he is dismissed for cause.

Art. 603. If the service provider is dismissed without cause, the other party shall be obliged to pay him in full for the work done, and one half of the amount that would be due from then until the end of the contractual term.

The Brazilian courts have not yet reached a unanimous position on the matter, and the Superior Court of Justice is in fact currently discussing the need to determine (i) whether a clause in an agreement for services for a fixed term, authorising unilateral termination with a waiver of any type of indemnity, is legal, provided there is prior notice from the other party, and (ii) whether the party that enters into this type of legal transaction, agreeing to an express clause waiving any indemnity in the event of unjustified and premature termination, is guilty of contradictory behaviour (violation of objective good faith) if he seeks compensation in court.

Currently, there are many decisions that impose an obligation on the party that made the decision to leave the relationship prematurely to pay compensation, even if the contract expressly excludes any penalty or indemnity.

Accordingly, it is evident that something that appears to be simple may conceal an important contingent liability.

Thus, for as long as there remains no uniform opinion of the courts, it is recommended that the parties pay extra attention when entering into their contracts, and assess potential risks that may arise from a premature termination of relationships for a fixed term.

An alternative could be to enter into agreements for an indefinite term, with a provision for termination on giving a certain period of prior notice stipulated jointly by the parties, which may eliminate the risk of paying compensation on termination. However, the suitability of this alternative should be verified in each specific case with the advice of a legal professional, because even agreements for an indefinite term may give rise to additional obligations if, for example, the period of notice is not compatible with expectations created at the beginning of the term or investments made by the parties.

The discussion of termination of agreements for an indefinite term will be the subject of a future article.

Author Charles Wowk

Author Charles Wowk

Contact: Charles Wowk
Title: Partner in the Civil Area at Stüssi Neves Advogados – São Paulo
Email: [email protected]

Liability of The Guarantor Partner after Their Withdrawal

A guarantor is someone who agrees to pay your rent if you don’t pay it, for example a parent or close relative. If you don’t pay your landlord what you owe them, they can ask your guarantor to pay instead. If your guarantor doesn’t pay, your landlord can take them to court.

In commercial relations, it is common for creditors to demand that a partner of the company be the guarantor of the company’s obligations. A problem may arise when the guarantor partner withdraws from the company. Is he still liable for the company’s debt?

Recently, in the judgment of Civil Appeal No. 1131703-72.2016.8.26.0100, the 26th Chamber of Private Law of the Court of Appeals of the State of São Paulo determined the maintenance of the liability of the partner who guaranteed the company’s debt, even after his withdrawal, due to the lack of extinction of the guarantee or consent of the creditor to the substitution of the guarantor, subject to any right of recourse that the latter may have against the debtor and its current partners.

In this case, the guarantor was surety in a lease agreement to which the company was party and sold his corporate participation before there was any default under the contract. On the sale, the buyers assumed responsibility for all the company’s debts.

However, it is possible that the withdrawing partner may be released from his liability as guarantor. Ideally, the contract with the third party containing the guarantee should establish conditions for his replacement in the event of withdrawal of the guarantor partner.

In the absence of such a provision, the recommended course of action is for the guarantor, together with the company, to approach the creditor prior to any default, informing the latter of his withdrawal from the company and offering a substitution of the guarantee.

If the creditor refuses, it is possible to obtain an exoneration of liability by means of a lawsuit, demonstrating the guarantor’s good faith and that the reason for granting the guarantee no longer exists.

STÜSSI-NEVES ADVOGADOS main area of practice is the so-called corporate law, meaning that we are capable of rendering all services that a company needs in order to get established in Brazil, either by incorporating a subsidiary or by acquiring an existing Brazilian company or even through a joint-venture, as well as of assisting the incorporated companies in their daily businesses and routines, in tax, contractual, corporate, labour, litigation areas, compliance and data protection among others.

Provisional Job Stability of Disabled Employees due to Pandemic

A pandemic is an epidemic of an infectious disease that has spread across a large region, for instance multiple continents or worldwide, affecting a substantial number of individuals. A widespread endemic disease with a stable number of infected individuals is not a pandemic.

At the end of 2019 and beginning of 2020, the world observed the disastrous trajectory of the Sars-Cov-2 Coronavirus, which infected thousands of people in the city of Wuhan, China, and spread to several provinces in that country, and then around the world.

In Brazil, the Ministry of Health published, on February 3, 2020, Ordinance no. 188/2020, which declared a Public Health Emergency of National Importance, due to Human Infection by the new Coronavirus.

On February 6, 2020, Law no. 13.979/2020 was published, containing measures for countering the ESPIN, due to the outbreak of the virus. The Law has suffered subsequent changes.

On March 11, 2020, the Director-General of the World Health Organisation, Tedros Adhanom Ghebreyesus, declared the existence of a pandemic, resulting from COVID-19, motivating the Brazilian National Congress to establish a state of calamity, until December 31, 2020, through Legislative Decree no. 6/2020. A series of Provisional Measures were issued in order to counter the pandemic.

One of the MPs was no. 936, converted, on July 6, 2020, into Law no. 14.020/2020, which created the so-called Emergency Program for the Maintenance of Employment and Income, and provided, in article 1, for complementary measures to combat the public health emergency caused by the coronavirus.

When MP no. 936 was converted into Law 14.020, article 17 was introduced, which prohibits the unjustified dismissal of disabled persons while the state of calamity persists. This category of employees was not singled out in the texts of the MP or of Law 13.979/2020 and its subsequent amendments.

It is an undoubted fact that persons with disabilities deserve differential treatment, in order to provide them with protection and ensure their inclusion in society and in the job market, as in Law no. 8.213/91, which provides for the mandatory hiring of these persons, pursuant to a pre-established quota.

Portaria no. 188 of February 3, 2020, of Ministry of Health, accessed on February 10, 2021. (Click here to read.)

Note that the social security legislation imposed, on a permanent basis, an obligation on the employer to hire a certain number of persons with disabilities, unlike article 17 of Law no. 10.020/2020, which guarantees protection to this group of employees only for the duration of the state of calamity due to the COVID-19 pandemic.

However, the state of calamity, which is the subject of Legislative Decree no. 06/2020, was not extended by the National Congress and, furthermore, Justice Ricardo Lewandowski of the Federal Supreme Court, when hearing Direct Unconstitutionality Action no. 6.625 MC/DF, maintained the validity of a number of articles of Law no. 13.979/20, but made no reference to the provision dealing with persons with disabilities. From this standpoint, there would be no question of stability of employment for this category of employees.

On the other hand, termination, on December 31, 2020, of the validity of Legislative Decree no. 6/2020, to which Law no. 13.979/20 is linked, unfortunately did not put an end to the state of calamity and the hardship imposed by the Sars-Cov-2 Coronavirus, reported on a daily basis by all the media. On the contrary, Brazil still faces great difficulties in combating COVID-19, which takes the lives of hundreds of people every day, and incapacitates many others.

This fact was stressed by Supreme Court Justice Ricardo Lewandowski, in the decision rendered in ADI no. 6.625 MC/DF. He considered that it was prudent and advisable that the exceptional measures contained in Law no. 13.979/2020 be maintained to combat the pandemic. The STF also ruled that the States may, through their Legislative Assemblies, decree the maintenance of the state of public calamity, as done by Minas Gerais, Paraná and Tocantins, besides several Brazilian municipalities.

Another question comes up. In view of the state and/or municipal decrees, which extend the state of public calamity, is it possible to maintain the employment of persons with disabilities, as provided for in item V, article 17, of Law no. 10.020/2020.

The exclusive competence of the Federal Government to legislate on Labour Law, provided for in art. 22, I, of the Constitution of 1988, prevents state or municipal governments from doing so. However, in this specific case, the federal law exists and may be applied, in theory, since the state of calamity remains.

The discussion on the subject is still far from over, and, little by little, lawsuits are reaching the Courts seeking the reinstatement of persons with disabilities dismissed after the enactment of Law no. 10.020/2020.

We suggest caution, therefore, when dealing with this issue, taking care to verify possible collective rules issued during this period and that may have regulated the matter in a similar or even wider manner than the law under comment.

Renata Gallo Tabacchi Gava de Oliveira and Patrícia Salviano Teixeira
Associate lawyers in Labour Law Area – São Paulo
[email protected] and [email protected]

Cost Sharing with Company Domiciled Abroad

Cost sharing is a process wherein two or more organisations work together to secure savings in one or more areas of business operations.

1. Characterisation of shared services as reimbursement

The payment of costs and expenses shared between companies of the same economic group, with headquarters in different countries, may be treated as a mere reimbursement without the incidence of a high tax burden on payment or receipt. However, in order for such costs and expenses to be characterised in Brazil as a reimbursement, certain requirements must be complied with.

First of all, to be treated as a reimbursement the costs and expenses must relate to supporting activities rather than core activities of the service provider. Thus, services that are included in the corporate purpose of the service provider may not be shared, and consequently the costs and expenses thereof cannot be treated as a reimbursement.

For this reason, it is only possible to recognise as a reimbursement of shared costs and expenses those actually incurred by the service provider. It is therefore not permitted to add any amount or profit margin to the costs or expenses shared and reimbursed.

Moreover, in order for the costs and expenses to be recognised as a reimbursement, it must be shown unequivocally that the services shared are of mutual benefit to the companies that participate in the agreement. Accordingly, all the companies must benefit from the services shared, including those performing the services.

With a view to proving compliance with the minimum conditions required, it is necessary to have, apart from other documents, a formal contract between the companies of the group, showing the total costs of each service incurred and shared, and also the reasonable and objective criteria used for the division.

The minimum  of said contract were set out in Cosit Answer to Consultation no. 8/12 of which it is worth citing the following:

  • a) the division of the costs and risks inherent to the development, production or obtaining of goods, services or rights must be detailed;
  • b) the contribution of each company must be consistent with the individual benefits expected or actually received;
  • c) the identification of the specific benefit to each company of the group must be clear;
  • d) there must be an agreement for reimbursement, meaning the refund of costs relating to the effort or sacrifice incurred in the carrying out of an activity, without any additional profit;
  • e) the collective nature of the advantage offered to all the companies of the group must be express;
  • f) there must be a provision for remuneration of the activities, irrespective of their actual use, it being sufficient to “put the activities at the disposal” of the other companies of the group;
  • g) the conditions must be such that any company, in the same circumstances, would be interested in contracting.

In short, the contract must state the total cost or expense that benefits the signatory companies; the criteria for its division, each company necessarily defraying only the benefits actually expected or gained, with the possibility of their identification; and further it must state the manner in which reimbursement of the cost or expense will be made, with the supposition that it will be attractive even for independent companies.

Although the amounts classified as reimbursement of costs and expenses do not reflect any financial gain, which is sufficient to justify the non-incidence of taxation, the Brazilian Federal Revenue has still not adopted a firm position to this effect.

2.1. Payments abroad

Generally speaking, payments, credits or remittances abroad relating to the provision of services are subject to Withholding Income Tax of 15%, the Contribution on Economic Activities of 10%, the Contribution for the Financing of Social Security payable by the Importer of Foreign Goods or Services from Abroad of 7.6% and the Contribution for the Social Integration Programme and Civil Servants’ Investment Programme due on the Importation of Foreign Products or Services of 1.65%. The Tax on Financial Operations of 0.38% is due in any case. The Tax on Services, with the maximum rate of 5%, may also be demanded by the municipality.

The IRRF paid in Brazil may be taken as a credit abroad if there exists a double taxation convention with the country in question, or, at least, reciprocity of treatment.

It is worth mentioning that, in the event of a remittance of funds abroad in payment of services, the financial institutions involved are also responsible for the operation, for which reason they tend to confirm the need to pay the taxes due on the operation in order to avoid any risks.

2.2. Cash receipts from abroad

Payments received by the Brazilian company for services shared may be regarded as corresponding to services exported. In this case, the funds received from companies abroad, in the form of foreign currency, would not be subject to PIS and COFINS on the amount invoiced. In any case, if they are recognised as remuneration for services rendered, they would be subject to IRPJ and CSLL. The ISS on the services may also be demanded by the municipality in question.

3. Possible risks and means for their reduction/elimination

As already stated, the Brazilian Federal Revenue has not confirmed its attitude regarding the non-taxation of payments relating to costs and expenses shared and reimbursed. As a result, in operations involving remittances abroad, the financial institutions normally require to see proof of payment of taxes.

If it is intended to avoid paying tax, and with a view to reducing, and even eliminating, possible risks, it is important that the operations be properly formalised. It must be possible to show, by producing solid evidence, that the funds received from, or paid to, the related party refer to the recovery of expenses incurred for the benefit of another, so as not to generate income/earnings for the recipient.

The contracts signed must contain details sufficient to prove compliance with the requirements necessary for characterisation of the reimbursement, with the resulting non-taxation, and all the supporting documentation must be retained.

An alternative, in order to guarantee the position of the Brazilian Federal Revenue, in principle and preferably in favour of the non-incidence of tax, is the submission of a formal consultation with a view to confirming the interpretation applicable to the case.

Specifically for operations involving remittances abroad of sums relating to the costs and expenses shared, it is possible that, even on production of the contract signed between the companies of the group, together with all supporting documentation, and further even presenting the formal consultation to the public authorities, the financial institution may not agree to make the remittance without payment of the tax.

In this event, a declaration may also be produced to the financial institution, in which the company making the remittance assumes the obligation to inform the institution immediately of the result of the formal consultation, as soon as a reply is received from the Federal Revenue, and also to comply with the result thereof, if necessary, with payment of tax on the operation.

We consider that, provided the above requirements are met, the risks may be reduced or even eliminated.

The LGPD and Labour Relations in The Brazilian Jurisdiction

Non-observance of the LGPD will give rise to administrative sanctions imposed by the National Data Protection Authority as from August 2021, as determined by article 20 of Law 14.010, which modified the text of article 65 of Law 13.079.

In spite of this, many authorities are already imposing or seeking to impose penalties for failure to comply with the LGPD and are taking court action in this respect. Moreover, there is nothing to prevent data subjects from claiming compensation in court, as well as coercive measures to enforce compliance with the LGPD.

In the context of labour relations, the LGPD is firmly present in the three stages, although there are no specific regulations in this respect. Apart from the direct relationship between the company, the candidates for job vacancies offered and its own employees, the LGPD is also present in relations with the employees of outsourced companies.

For the reasons set out in the preceding paragraph, companies must adapt as soon as possible, creating procedures and policies, adjusting their work contracts and agreements for services with independent contractors, training and instructing their work force regarding the law and the care necessary in the treatment of data, thereby avoiding the formation of administrative and judicial liability and the exposure of their name, brand and reputation.

At the pre-contract stage, companies will have to adjust their recruitment and selection processes, deciding whether resumes not used are to be discarded or kept in their database for future vacancies, obtaining, in the latter case, the express consent of the candidate to do so.

The companies must also consider that the recruitment and selection processes may be subject to investigation by the competent authorities and/or judicial discussion by these same persons or by the candidate himself, and, in this respect, the treatment of candidates’ data may constitute evidence for their defence, the regular exercise of rights.

In the course of the employment relationship, the applicability of the LGPD is vast, since the employer is obliged to provide personal as well as sensitive data of its employees in order to comply with legal obligations, such as for the E-social, for the DCTFWeb, for the CAT, for the obligatory Occupational Health and Safety Programmes, for the labour inspectors of the Special Secretariat of Social Security and Labour and of the Federal Revenue, unions and class entities, among others.

The employer uses the data of its employees, also, in order to comply with contractual obligations, such as for the provision of benefits, health and life insurance, agreements in general with other companies etc., constituting, therefore, the regular exercise of rights, which strictly exempts it from obtaining the express consent of the employee, provided of course that such benefits are in the latter’s interests or result from a regulatory provision.

The employer may also be obliged to use such data in administrative or judicial proceedings, as determined by the supervisory body or judge, in which case authorisation to supply such information from the employee is not required, since this undoubtedly constitutes a regular exercise of a right.

In the event of an occupational accident or health problems that justify the adoption of measures by the employer for the protection of the life and physical safety of the data subject, in this case, the employee, the company will also have to use his data.

It is essential to mention, if only briefly, the matter of the employee’s consent, since a trend of opinion has already been formed on this point, not only in Brazil, but also abroad, to the effect that it is inapplicable, as a rule, to employment relationships, given the worker’s situation of “hypo-sufficiency”. On this subject, we will express our views in further detail in a future article.

On termination of the employment, the employer should, strictly speaking, eliminate the personal data of its employee, since their purpose has been achieved or they are no longer necessary. However, considering that many of these data may be subject to analysis by the Brazilian authorities and/or constitute evidence in legal proceedings that may be brought against the company, including by the employee himself, they may be stored, for compliance with legal obligations or the regular exercise of rights, for the period in which they may be required; these are situations that, we repeat, do not require consent of the data subject.

The retention period could, in principle, be standardised according to the two-year and five-year limitation periods that apply to the employment relationship. However, there are situations that may exceed these periods, such as cases of accidents at work and death of a worker leaving minor heirs, matters which should be considered when the employer sets the parameters for the storage and destruction of data.

These are the initial observations of our labour team regarding the impact of the LGPD on labour relations. We will continue to produce material on the subject, as there will be many challenges to be faced in the near future.