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Pejotização: risks and best practices according to the STF and TST

  • Elton Martins
  • 10:41 am
A hand with a pen signs a service agreement at a meeting table

Hiring a professional through their own company (in Brazil, a "PJ", or legal entity) can be legitimate, but it requires legal attention. Recent moves by the Federal Supreme Court (STF) and the Superior Labor Court (TST) signal both progress and requirements.

Recent developments

  • The STF recognized general repercussion in Theme 1389, suspending related cases until a new judicial ruling.
  • The TST, in turn, is already addressing the subject through Repetitive Appeal Incidents (IRR) aimed at standardizing case law.

Current understanding

  • The STF has upheld hiring through a PJ even for core activities, provided there is no fraud or disguised subordination.

The TST keeps its classic approach: an employment relationship exists when the four requirements of the Brazilian Labor Code (CLT) are present, namely subordination, personal performance, regularity and payment. The legal form alone is not enough.

An independent consultant works on a laptop inside a company's office while a manager looks on

Recommendations

  1. Put in place contracts that ensure autonomy, multiple clients and business risk on the service provider's side.
  2. Review control systems: the use of the hiring company's tools may be evidence of an employment relationship.
  3. Reassess PJs that look like "mirror PJs" (exclusive providers under direct subordination).

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