The airline industry expects STF’s binding decision on outsourcing
The airline industry – just like other industries such as paper and cellulose, juice, construction, telecommunications, energy, and banking – has a lot of interest in the outcome of the outsourcing case that is currently being heard by the Brazilian Supreme Court (STF). In such case, Cenibra – a cellulose company that outsources the planting, cutting and transportation of eucalyptus wood for the production of cellulose – is challenging the prohibition to outsource imposed by a decision issued by the Brazilian Superior Labor Court (TST).
In accordance with the Brazilian Association of Air Transport Auxiliary Service Companies (Associação Brasileira das Empresas de Serviços Auxiliares de Transporte Aéreo – ABESATA) at the end of 2013 there were 211 companies providing air transportation auxiliary services (locally referred to as ‘ESATAS’) in Brazil which together employed 28,736 individuals and had a total annual turnover of R$ 3.12 billion.
Outsourced services are not regulated in Brazil, and the relating guidelines are based upon a number of Superior Labor Court (TST) decisions on the matter. As a general rule, TST is opposed to the outsourcing of companies’ core business’ activities.
In relation to outsourcing through ESATAs, there is a body of case law that is both favorable and unfavorable to this type of employment, even though the Brazilian Civil Aviation Agency’s Resolution 116/2009 regulates the rendering of air transport auxiliary services by ESATAS. The lack of consistency found in the TST’s case law and in the guidelines for defining the core activities demonstrates definite risks for the airline companies.
The Federal Supreme Court (STF) should now be preparing to make a more objective announcement on these guidelines for the identification of a company’s core activities, within the sphere of the decision to be published on the appeal filed by Cenibra, against the TST order to pay a R$ 2 million penalty due to outsourcing in a lawsuit filed by the Labor Public Attorney’s Office. In its appeal to the STF, Cenibra alleged that no legal definitions exist for “support services” or “core activities”, insisting that this type of distinction is not compatible with modern forms of production.
The STF has already stated that the case meets the so called widespread repercussion requirement, meaning that the decision to be issued on the case shall be applied by all the lower courts whenever identical cases arise. As such, companies are hoping that the decision will reverse the currently dominant understanding in labor courts that establishes outsourcing as being illegal.