Loggi Forced to Hire Couriers Under Brazil’s Labor Laws, Court Decides

RIO DE JANEIRO, BRAZIL – A Labor Court decision released on Friday, December 6th, prohibits Loggi from maintaining its couriers as self-employed: they must instead be hired as employees under the CLT (Consolidation of Labor Laws) regime by May 2020; otherwise, the company will be fined R$10,000 (US$2.500) for noncompliance.

This applies to the whole of Brazil. In addition, it will be required to pay compensation of R$30 million.

Judge Lávia Lacerda Menendez, of the 8th Labor Court of São Paulo, states in her decision that “recognizing the employment bond between employees of small freight companies and not with the largest in the segment would imply an open endorsement of disloyal competition between companies”.

She believes that Loggi should be subject to the same rules as traditional courier companies. “The law preserves free competition, but not unfair competition,” the judge adds.

Thus, Loggi is required to hire all of its motorcycle couriers working between October and December 2019 under the CLT regime. In addition, it must ensure all labor rights: a working day of up to 8 hours, weekly break for 24 consecutive hours, hazardous duty pay, among others.

In the event the company retains the motorcycle couriers as self-employed, it will be subject to a fine of R$10,000 for each violation. It will also be required to pay R$30 million as “pecuniary compensation”; the money will be allocated to charitable institutions.

According to Sindimoto (Syndicate of Motorcycle Couriers of the State of São Paulo), Loggi has 25,000 motorcycles registered only in the capital of São Paulo.

The judicial proceeding began with a class action brought by the Labor Prosecutor’s Office in São Paulo (MPT-SP), but the ruling is applicable to the whole national territory.

The MPT-SP also brought a lawsuit against iFood, demanding that the company recognize the employment bond with its couriers, and pay compensation of R$24 million for collective moral damages.

Loggi to appeal the ruling

Loggi says in a statement that it will be appealing the decision. It believes that “in business models that promote innovation, it is inevitable that there will be questions about how they work”.

Since 2018, “the company has been holding talks with the Labor Prosecutor’s Office and the other bodies involved, clarifying doubts about how its platform works”. This year, Loggi exceeded US$1 billion in market value.

An STJ (Superior Court of Justice) ruling seemed to determine that there was no employment bond between drivers and platforms – in this case, this concerned Uber. However, experts believe that this was misinterpreted.

The STJ justices said only that the case did not involve labor rights, but civil rights (moral damages), so it should not be tried in the Labor Court. That is, this decision does not prevent the recognition of employment in other lawsuits.

Source: MPT-SP, G1, Estadão, Reuters