Brazil's labour laws_March 2011

The metalworkers proposals could improve matters at

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The metalworkers’ proposals could improve matters, at least for big companies. For smaller firms, and foreign investors, the best advice will still be “employer, beware”. Ana Rita Gomes, of Mattos Filho Advogados, a São Paulo law firm, talks to potential clients about what she calls “pots of gold”: practices that seem innocuous to the uninitiated, but lead straight to the labour courts. One example is stating salaries in a foreign currency. Exchange-rate fluctuations mean that this falls foul of a ban on ever paying an employee less one month than the previous one. Once her clients are suitably terrified, she explains why they should still proceed—with caution. “These difficulties put other investors off,” she says. “That means less competition for them, and higher profits.” In Pernambuco Mr Lemos is turning his mistakes to good use by advising other businessmen. He tells them to walk away from a deal unless the seller can produce payroll records, settles all outstanding labour-court cases and promises compensation if further cases are brought regarding matters that predate the sale. The new owner will still be liable if the old one cannot pay, he says, but at least there is less scope for bad faith. He recently learned that before his own ill-starred purchase the seller told his staff that the new boss was rich, and that they should save up their grievances until the deal went through.
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