Portuguese 
English 
Spanish 
4 min of reading 
1 comment 
Supreme Court Rules on Measure That Already Affects Millions of Workers and Puts Historical Rights and Social Security Stability at Risk
Brazil is experiencing a decisive moment in its labor history. On April 14, 2025, Gilmar Mendes, a minister of the Supreme Federal Court (STF), suspended all actions regarding “pejotização” in the country. The measure seeks to unify the legal understanding regarding the hiring of workers as legal entities. This practice has grown rapidly and has profoundly changed the Brazilian labor market.
Since then, the STF has held public hearings with experts, union representatives, and members of the federal government. The final ruling, expected to be in 2025, could redefine the course of labor relations. It could also impact social rights established by the 1988 Constitution, which worries organizations and legal experts.
Hearings Reveal Division Between Modernization and Precarization
During the sessions held in Brasília, it became evident that “pejotização” divides opinions. On one side, business owners defend the practice as a symbol of contractual freedom and modernization. On the other, legal experts and labor organizations warn that it represents a disguised form of fraud that dilutes essential rights.
-
End of the 1-hour lunch break in the CLT? Current labor law maintains the break, allows for negotiated reductions, and defines rules for working hours and home office in Brazil.
-
Employee Fired After Accumulating 114 Days of Medical Leave in One Year, Labor Court Upholds Company’s Decision
-
Employee Fired While Treating Depression Wins in Court and Vale Is Required to Rehire Him Following Decision Based on the CLT and INSS Benefits
-
Workers Should Be Aware! March 6 Will Be The Fifth Business Day Of March And The Final Deadline For Companies To Pay Salaries According To The CLT
According to the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese) and the Institute of Applied Economic Research (Ipea), “pejotização” nearly doubled in less than ten years. It rose from 8.5% in 2015 to 14.1% in 2023, affecting around 18 million Brazilians. These workers operate without vacation, 13th salary, FGTS, and unemployment insurance, which increases social vulnerability.
Moreover, data from the Brazilian Institute of Geography and Statistics (IBGE) show that 56% of “pejotized” workers earn up to R$ 2,000 per month, while 37% earn up to R$ 6,000. Thus, the model mainly affects the base of the social pyramid, and not just high-income self-employed professionals.
Economic and Social Effects Worry Government and Experts
During a public hearing, the Attorney General of the Union, Jorge Messias, classified “pejotização” as “the termite infestation of Brazilian labor rights”. He warned that, between 2022 and 2024, the practice caused a deficit exceeding R$ 60 billion in Social Security and losses of R$ 24 billion in FGTS. This funding has ceased to support retirement, housing, health, and sanitation, according to data from the Attorney General’s Office (AGU).
The Center for Union Studies and Labor Economics (CESIT), from Unicamp, pointed out that “pejotização” reduces average income by up to 20% and increases inequality. Thus, the drop in consumption decreases production and broadens unemployment, creating a vicious cycle of impoverishment. This process benefits large companies, but weakens the country and its workers.
Furthermore, the Ministry of Labor revealed that 1.6 million companies have delayed or nonexistent FGTS deposits, affecting 9.5 million people. Meanwhile, the Ministry of Planning estimates that business tax evasion exceeds R$ 500 billion per year, which compromises public finances and the sustainability of Social Security.
STF Decision May Redefine Labor Justice
The Supreme Federal Court will examine whether private autonomy in contractual relations can prevail over social rights guaranteed by the Constitution. Furthermore, it will decide whether Labor Justice will remain competent to rule on contract fraud and disguised service relationships.
According to experts, a decision favorable to “pejotização” will open the door for mass hiring without minimum guarantees. Thus, the country may regress decades and weaken the social pact of 1988, which assures vacation, limited working hours, and social security protection.
The president of the STF, Edson Fachin, also confirmed that the court will judge within 30 days the recognition of the employment relationship between drivers and apps. This issue is directly linked to Uberization and new digital forms of work, which broadens the scope of the Supreme Court’s decisions.
A Stalemate That Defines the Future of Work in Brazil
The STF ruling goes far beyond a legal question. It questions what model of society Brazil wishes to build. On one side, there are those who advocate for flexibility and hiring autonomy. On the other, there are those who fight for the preservation of dignity and labor security.
The Supreme Court’s decision will affect millions of workers and determine whether the country will continue to value decent work or open the way for a new cycle of precarization. Meanwhile, Brazil awaits with apprehension the outcome of this ruling that could forever change employment and social protection in the 21st century.
What do you believe the STF should prioritize — the business freedom to hire or the social protection that ensures balance between capital and labor?
Se a Justiça do Trabalho não é capaz de reconhecer uma fraude trabalhista, quem será? Juízes com altos salários, altas mordomias e benefícios, com investimentos valiosos com certeza não estão ali pra defender trabalhador.