Brazil Supreme Court lifts suspension on pejotização lawsuits

The Supreme Federal Court (STF), in a decision authored by Minister Gilmar Mendes, has ended the nationwide suspension of cases dealing with "pejotização" – the practice of hiring workers through legal entities. The ruling restores the ability of first‑instance labor courts and Regional Labor Courts to collect evidence, hold hearings and issue decisions, although the ultimate merit of the issue will still await a final STF judgment on Tema 1.389.

Analysts note that the STF also reaffirmed the competence of the ordinary judiciary to adjudicate contractual disputes involving persons juridical, based on a review of ministerial votes on the same theme. The practical impact is expected to be limited: less than 5 % of current labor actions involve pejotização, and related franchise cases are even fewer. Companies are advised to review contracting practices, but no binding legal doctrine has yet been established.