The 2024 Annual Report of the Brazilian Labor Court System, released on July 1, 2025, confirms a growing concern among HR leaders and legal departments: labor litigation is on the rise. More than 4 million cases were adjudicated last year, a 14.3% increase compared to 2023.
Over the past two decades, this upward trend has remained steady, with the same recurring issues dominating court dockets: overtime claims, severance payments, hazardous work allowances (similar to hazard pay), the 40% FGTS penalty, and claims for moral damages.
The message is clear: Brazil’s labor courts remain overwhelmed by repetitive claims, many of which could be avoided with stronger internal controls and a preventive compliance strategy.
Disputes over unpaid overtime remain the most litigated issue. The underlying causes are familiar: ineffective time tracking systems and the lack of reliable records. When a company is unable to prove the actual hours worked, courts almost always rule in favor of the employee. To address this, many employers in Brazil are turning to AI-powered time management tools that can flag irregularities, send alerts, and generate real-time reports, providing both legal protection and better visibility over work hours.
Another ongoing source of risk involves claims for additional compensation for unhealthy or hazardous working conditions. A typical example includes employees assigned to clean restrooms and remove waste. While Brazilian regulations require that such tasks be explicitly listed by the Ministry of Labor to qualify for hazard pay, the courts have adopted broader interpretations, often taking into account the number of people using the facilities and the frequency of exposure. This issue is currently under review by Brazil’s Supreme Federal Court (STF) in case ADPF 1083, and its outcome may significantly affect similar claims nationwide.
A substantial number of claims related to severance payments, FGTS fines (a Brazilian termination penalty), and moral damages stem from poorly handled terminations. Inaccurate calculations, missing documents, or inadequate communication during offboarding can open the door to litigation. Implementing standardized checklists, clear procedures, and well-documented processes are simple yet powerful ways to mitigate exposure.
The report reinforces a key point: companies with solid labor compliance practices are better equipped to navigate Brazil’s complex employment landscape. Regularly reviewing internal policies, keeping documentation up to date, investing in technology to manage people, and staying aligned with current case law are essential pillars to reduce legal risks and build a more resilient operation.
