Friday, September 23, 2011

Brazil: News Laws on Electronic Time Control

By Leticia Ribeiro C. de Figueiredo, Labor Practice Group of Trench, Rossi e Watanabe (associated with Baker & McKenzie International, Swiss Verein)

As of October 2011, Brazilian employers will need to adapt their electronic time control systems to the ensure compliance with the new rules created by the Brazilian Labor Department. These rules aim at providing more safety to employees that their work schedule (and potential overtime) is being properly and accurately controlled, but it will create a significant burden for employers to comply with the new requirements.

The requirement to control working hours of employees in Brazil is not new. It is actually provided in the Labor Code enacted in 1943. But the Labor Code only provided, in Article 74, paragraph 2, that companies with more than 10 employees were legally required to control their work schedule, through a manual (e.g. handwritten time control book), mechanical (e.g. old fashion punch card clocks) or electronic form (e.g. electronic badges).

Thus, one important aspect to stress is that in Brazil an employer can choose to adopt other forms of time control – manual or mechanic, instead of electronic. However, as of October 2011, if an employer decides to use or maintain an electronic time control system, the company will have to comply with the rules provided in Ruling 1,510 issued by the Brazilian Labor Department.

Ruling 1,510 requires all employers with an electronic time control system to use a specific equipment (called “REP”) to control the employees’ work schedule. This equipment also has capacity to print time control statements to employees, regarding each of their entrance and departure times.

Among the conditions relating to the new system, Ruling 1,510 provides that the REP must observe the following requirements:

(I) it cannot allow changes or cancelation of data;
(II) it cannot allow any form of violation of data, in order to guarantee that the time computed is accurate and consistent with the times actually registered;
(III) it cannot have any devices that might allow restrictions of time control;
(IV) it cannot have any devices that might allow automatic time control registrations;
(V) it must be properly identified with the tax ID and name of the manufacturer, brand, make and series number; and
(VI) the REP must also print the Employee Time Control Registration Report, so that employees can check if each of their entrance and departure times are correct.

The REPs can only be acquired from manufacturers that have been duly registered with the Brazilian Labor Department. In addition to acquiring the equipment from authorized manufacturers only, employers must also have certificates issued by the manufacturers of the equipment and make the required registrations with the Brazilian Labor Department, through the official website, to record the data, equipment and software used.

In addition to providing more safety to employees that their work schedule is being properly and accurately controlled, the creation of the REP also aimed at facilitating periodic inspections by the auditors of the Brazilian Labor Department, to monitor whether employers are complying with all required labor rules and regulations. Thus, Ruling 1,510 provides that the REP shall be available in the work place for checks by the auditors of the Brazilian Labor Department in case of inspections.

In case of a breach of any of the provisions of Ruling 1,510, the time control system in place shall be disregarded by the auditor, who shall then assess the company and impose a fine. The actual amount of the fine imposed will be determined at the discretion of the auditor conducting the inspection, based on the nature of the infraction, its extension and the intention of the party who committed the infraction. As per the current chart of the Labor Department, administrative fines may range from R$40.25 to R$ 4,025.33. Also, the penalty can be doubled in the event of repeated infraction.

Finally, if the auditor of the Brazilian Labor Department verifies that there was an improper manipulation of the information stored in the REP or the existence of devices that might alter or block time control registration, the auditor can seize documents and equipment to evidence the employer's illegal action, and seek all appropriate legal actions.

To avoid litigation relating to lack of proper electronic time control, companies must be aware of and observe, as of October 2011, all the provisions of Ruling 1,510. Taking steps to ensure compliance has already caused a lot of work, expense and concern to Brazilian employers.