Northern Brazil capitals face massive labor debt from irregular hiring

Municipalities and state governments in Northern Brazil face significant financial risks due to accumulated labor liabilities from irregular temporary hiring. Many administrations have relied on Simplified Selection Processes (PSS) to fill vacancies in the health and education sectors without conducting official public exams.

Based on binding precedents from the Supreme Federal Court (STF), specifically Themes 916 and 551, workers hired through these irregular means are entitled to retroactive FGTS deposits and unpaid wages, even if the contracts are deemed null under the Constitution. In cases where temporary contracts were repeatedly extended, courts may also mandate payments for 13th-month salaries and proportional vacation pay.

Major regional capitals, including Manaus, Belém, Porto Velho, and Palmas, are particularly vulnerable to these judicial claims, which typically cover the previous five years due to statutes of limitations.