A recent decision by the 10th Regional Labor Court (TRT-10) suspended the effects of a mass layoff in the retail sector due to a lack of prior union consultation, based on STF Precedent No. 638.
In this case, the closure of hundreds of stores and the termination of thousands of workers, without prior notice to the union, led to the granting of a preliminary injunction ordering the reinstatement of employment relationships until the union procedure was brought into compliance – under penalty of daily fines. STF Precedent No. 638 established prior union intervention as a procedural requirement for collective layoffs.
In practice:
(i) The following is required: timely notification to the union prior to implementing the measure, including essential information on the scope, affected locations, affected positions, and relocation alternatives;
(ii) The following are not required: union authorization, the execution of a specific collective bargaining agreement, or the union’s consent to the measure.
To reduce the risk of judicial reversal, restructuring involving the closure of facilities or a significant reduction in the workforce should be legally evaluated as early as the planning phase, with attention to three points:
(i) Initiating dialogue with the union well in advance, never on the eve of or after implementation;
(ii) Preservation of documentation related to the process (invitations, minutes, emails, objective criteria for termination); and
(iii) Extra caution when the transaction coincides with corporate events, such as judicial reorganization, mergers, or acquisitions.
Given the absence of a specific penalty established by the Federal Supreme Court (STF) for noncompliance – which creates a degree of uncertainty in case law – it is recommended that companies in the retail sector, especially chains with a large workforce, incorporate labor law analysis into their restructuring plans from the outset.
