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Brazil: Law to Regulate Payment to Employees of All Forms of Gratuities

(Mar. 17, 2017) A new law enacted on March 13, 2017, amended article 457 of the Consolidation of Labor Laws to regulate the apportionment among employees of the additional expenses charged to patrons of bars, restaurants, hotels, motels, and similar establishments.  (CONSOLIDAÇÃO DAS LEIS DO TRABALHO [C.L.T.], Decreto-Lei No. 5.452, de 1 de Maio de 1943, PLANALTO.)

According to the new law, not only the amount of money spontaneously given by the client to the employee, but also the amount of any fees levied by the company, as a service or an additional charge, for any purpose and intended for distribution to employees is considered to be a gratuity (gorjeta).  (Lei No. 13.419, de 13 de Março de 2017 [Law No. 13,419 of March 13, 2017], PLANALTO, amending C.L.T., art. 457 § 3.)

The newly defined gratuity does not constitute the employer’s revenue; it is money destined for the employees and must be distributed to them according to any criteria defined in an agreement or collective bargaining agreement. (Amended C.L.T., art 457 § 4.)

For companies that charge the gratuity-related fees and that are registered under the differentiated federal tax system (regime de tributação federal diferenciado), the charge must be included in the respective bill, with the possibility that the company could withhold up to 20% of it, provided that there is an agreement or collective bargaining agreement, to cover social security and labor charges attributable to the employees’ compensation package.  The remaining 80% of the charges must be fully given to  the employees.  (Id. art. 457 § 6(I).)

For companies that charge the gratuity-related fees but are not registered under a differentiated federal tax system, the withholding may be up to 33% of the corresponding charge, with 67% of the amount of charges being given to the employees. (Id. art. 457 § 6(II).)  If the company stops charging the fees attributed to employees as gratuities, the average amount of the monies that would have been charged during the last 12-month period, except as otherwise established in an agreement or collective bargaining agreement, must be incorporated in the employees’ salaries.  (Id. art. 457 § 9.)

The criteria for gratuities given by the consumer directly to the employee will be defined in an individual agreement or a collective bargaining agreement, with the permitted retention amount based on the parameters indicated above. (Id. art. 457 § 7.)