Brazil Garment Industry – Health and Safety Issues Overview
Jan 26, 2015 QuickCounsel Download PDF
By Renata Neeser, Shareholder, Littler New York
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Brazil General Health and Safety Rules
Health and Safety is generally regulated under the Brazilian Labor Code and more specifically by the Ministry of Labor through its Regulations ("NR").1
The regulations vary according to industry, type of work, premises and number of employees. The rules involve minimum standards of sanitation, safety, comfort, medical control programs (as described below) and risk prevention.
Companies must employ safety technicians and engineers, doctors and nurses to provide their specialized services (Servicos Especializados em Engenharia de Seguranca e em Medicina do Trabalho – SESMT). The company's risk grade, which is based on its main activities, will determine how many of these safety- and health-related employees the company must maintain on its payroll. The SESMT should maintain a regular relationship with the Internal Commission for the Prevention of Accidents (CIPA) (a company established committee) in order to develop solutions and corrective measures for the company's safety issues (as discussed below). Companies that do not fit in any risk category may provide health and safety assistance to their employees through SESMTs organized by unions or associations.
Companies must maintain a CIPA depending on their type of business, type of activity or manufactured product and number of employees. For example, companies in the textile industry that produce cotton fabrics ("CNAE 13.21-9") are part of the C-3 group that needs at least one permanent CIPA member and one alternate if they have more than 20 employees. In the garment industry, if a manufacturer of underwear ("CNAE 14.11-8") has more than 30 employees, it needs to maintain one CIPA member and one alternate.
CIPA members representing the employees are elected by the employees. CIPA members are elected for one year and may be reelected. The employer can appoint its own representative. The CIPA must meet regularly. CIPA members enjoy job stability; they cannot be terminated, except for gross misconduct. The CIPA must be registered with the Ministry of Labor within ten days from its establishment.
CIPAs develop risk assessments and plans to reduce accidents, work with the SESMT, provide training, and collaborate with the development of PCMSOs (Medical Control Programs of Occupational Health, which establish the need for regular and supplemental medical checkups), PPRAs (Programs of Environmental Risk Prevention) and other programs relating to health and safety in the workplace.
Companies must also provide adequate Individual Protection Equipment to employees based on the needs of each company's line of business.
Even though Brazil has robust safety regulations and mechanisms to safeguard employees, annually, about 700,000 cases of occupational accidents and diseases are reported in Brazil. The most common accidents are those resulting in broken bones, sprains, amputations and other injuries, mostly related to non-compliance with basic rules of health and safety. There are also a considerable number of fatalities. According to a study prepared by ILO in 2012, Brazil ranked #4 (after China, United States and Russia) in cases of work-related fatalities, with 2,503 cases registered. Most fatalities seem to be related to occupational diseases, not to accidents.
Issues with the Garment Industry
Fortunately, in Brazil there have not been any major accidents in the garment industry, as happened in Bangladesh where many people were killed or severely injured. Brazilian textile and garment industry employers, for the most part, comply with applicable safety and health regulations, as well as their main labor and employment obligations.
However, some garment workers have endured work conditions considered to be quasi-slavery in some clandestine sweatshops. The U.S. Department of Labor lists Brazil's garment industry as one that produces goods by forced labor.2
The Brazilian Penal Code defines conditions similar to slavery as those where the employee is subject to: (i) forced work, (ii) exhausting work hours, (iii) degrading work conditions, or (iv) limitation on their freedom of movement.
The labor law defines conditions similar to slavery as those mentioned in the Penal Code plus: (v) limitation on using transportation, (vi) hostile monitoring, and (vii) retention of personal identification documents and personal items.
Usually, when quasi-slavery conditions exist, several other violations of health and safety rules are encountered. Very often, these workers are required to work at dangerous worksites, without protective equipment, in poorly ventilated or excessively hot rooms, without fire safety features, and sometimes even without basic sanitation and clean water.
Most Vulnerable Workers
The garment industry in Brazil operates in urban areas, many in the largest and wealthiest cities of the country, such as Sao Paulo and other important commercial centers in the vicinity.
Due to the nature of the work, many companies operate "under the radar" in small shops. The work does not involve large-scale capital investment and its products are easy to ship, so the activities are geographically mobile.
The most vulnerable workers in the biggest urban areas are illegal immigrants. Their illegal status generally makes them more fearful of contacting the authorities about their working conditions, minimizing the likelihood of complaints on which the authorities depend to identify illegal sweatshops. Most illegal immigrants come from neighboring countries, such as Bolivia and Peru, and do not speak Portuguese, which further complicates communications with the authorities.
The Faulty Supply Chain Structure
Many garment and clothing-design companies from Brazil and some foreign subsidiaries outsource part of their clothing production to third parties, who may, in turn, outsource the production to unfit manufacturers for a fraction of the price.
Over the past several years, the Labor Prosecutor Office has investigated third-party suppliers suspected of not meeting the minimum requirements of labor laws or otherwise violating workers' rights. Where it found violations of the law, the government rescued the workers, many of whom were illegal immigrants, and filed charges against the companies that engaged these suppliers based on its view that the supplier is simply a logistical extension of the company's main business. Many such companies are fighting back, claiming that they cannot be required to employ everyone in the supply chain.
Several Brazilian and foreign brands have been questioned about their supply chain management and were required to sign Terms of Undertakings (TACs) with the labor authorities to avoid further prosecution. Some of these TACs go far beyond the mandatory auditing of suppliers and require companies to become the actual employer of the suppliers' employees.
Most Recent Results
In 2014, several companies entered into agreements with the government to pay reduced fines (some still in the multi-million-dollar range) and to maintain auditing programs over their supplier chain. One of the objectives of such auditing programs is to make sure suppliers comply with health and safety regulations. These programs may be conducted under the supervision of the Labor Prosecutor Office.
A public hearing was held this past May in São Paulo, sponsored by the State of São Paulo Congress, to investigate supply chain issues in the garment industry. The Congress heard testimony from company representatives of several clothing brands, including those that have been found to be in violation of the law on more than one occasion.
In May of 2014, labor department inspectors released six people who had been working in quasi-slavery conditions on the outskirts of Sao Paulo. Most of the merchandise was manufactured for M.Officer, a well-known Brazilian brand. This was the second raid linked to M.Officer. The company denied responsibility for the degrading conditions of those workers, claiming a supplier that outsourced the work was solely responsible. The authorities, however, disagreed, heavily fined the company and demanded the cancellation of its State taxpayer registration to operate in the State of São Paulo.3
Recent Legal Developments
Since 2003, the Brazilian government has put an emphasis on trying to eradicate forced labor in Brazil.4 The Ministry of Labor, the Federal Police and the Internal Revenue Service have worked together to dismantle irregular operations, and the Labor Prosecutor Office has relentlessly prosecuted companies involved.
The Brazilian government created a blacklist5 of companies that have been found to be involved with forced labor. Companies on the list could not participate in government bids or get loans from government banks. Unfortunately, on December 27, 2014, the Brazilian Supreme Court issued a preliminary injunction6 suspending the publication of the list. This move stemmed from a lawsuit contesting the constitutionality of the Ministry of Labor's regulatory norm that establishes the rules about the black list and its regular updating.
In May 2014, Congress passed a constitutional amendment7 which modified Section 243 of Brazil Constitution to include that rural or urban properties, where exploitation of slave labor (as defined by law) is found, will be expropriated without compensation to its owner, or limitation on other sanctions. The amendment, however, does not specify which law defines "slave labor;" there is a bill in Congress to regulate its definition and the procedure for the expropriation.8
In January of 2013, the State Congress of São Paulo enacted a state law9 empowering the state government to cancel a company's taxpayer registration for the circulation of goods and services if such company uses, directly or indirectly, labor working in slavery or similar conditions.
The Brazilian labor courts have also imposed direct responsibility upon certain beneficiaries of outsourcing arrangements for unfair labor practices. Several cases, for instance, have confirmed that excessive working hours may lead to moral damages, including collective moral damages when the excessive overtime reaches most employees. A recent decision from the Labor Superior Court10, the highest labor court in Brazil, confirmed a collective moral damage award of approximately $40,000 against another well-known clothing company (C&A) for excessive overtime, work on public holidays without authorization, preventing employees from enjoying breaks, and late payment of overtime hours, and further ordered the company to refrain from continuing with the same practices.
1NR is the acronym for normas regulamentadoras. See all NRs at http://portal.mte.gov.br/legislacao/normas-regulamentadoras-1.htm. 2DOL list at http://www.dol.gov/ilab/reports/child-labor/list-of-goods/
3See article from Julia Carvalho published at Exame.com on July 23, 2014, http://exame.abril.com.br/negocios/noticias/m-officer-pode-ser-banida-de-sao-paulo-por-trabalho-escravo
4See National Plan for the Eradication of Slavery Work, at http://portal.mte.gov.br/trab_escravo/plano-nacional-para-erradicacao-do-trabalho-escravo.htm.
5See "Black List" at http://portal.mte.gov.br/trab_escravo/portaria-do-mte-cria-cadastro-de-empresas-e-pessoas-autuadas-por-exploracao-do-trabalho-escravo.htm.
6Associação Brasileira de Incorporadoras Imobiliárias – ABRAINC v. Ministro de Estado do Trabalho e Emprego, ADI 5209 – Ação Direta de Inconstitucionalidade at http://www.stf.jus.br/portal/processo/verProcessoAndamento.asp
7Emenda Constitucional # 81 at http://www.planalto.gov.br/ccivil_03/constituicao/Emendas/Emc/emc81.htm.
8Senate Bill 432 of 2013 at http://www.senado.gov.br/atividade/materia/detalhes.asp?p_cod_mate=114895.
9Law 14.946 of January 28, 2013 at http://www.legislacao.sp.gov.br/legislacao/index.htm.
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