Bloomberg News

After-Hour E-Mail Ban Swells Brazil Cost That Business Laments

February 01, 2012

Jan. 31 (Bloomberg) -- Brazilians tired of answering their boss’s after-hours e-mails may be able to charge overtime based on a law businesses see hurting competitiveness in Latin America’s largest economy.

Using portable communications devices is equivalent to working in the office, according to legislation signed by President Dilma Rousseff last month.

The law is one more obstacle companies say they face in Brazil, where regulations mandating everything from employer- provided breakfasts to union contributions are a daily drag on efficiency bemoaned for decades as the “Custo Brasil,” or Brazil Cost. It takes less time to set up a business in Nigeria or Mongolia than it does Brazil, according to the World Bank, which ranked it No. 126 out of 183 countries in its 2012 competitiveness study.

“It’s very worrying,” Emerson Casali, head of labor relations at the National Industry Confederation, said in a phone interview from Brasilia. “If enforced, it could have an enormous impact, a large loss of productivity.”

The law coincides with a growing concern in countries ranging from the U.S. to Germany over how to set boundaries between work and leisure in an era of virtual offices and the need for 24/7 communication. Among the companies taking steps to spare workers after-hours e-mails is Volkswagen AG.

Employee-Friendly

The law has elicited concern because Brazilian law and judges tend to favor employees in disputes related to overtime pay, said Bruno Checchia, a Brasilia-based labor attorney for Pinheiro Neto Advogados. Already the country’s top labor court has agreed to study the law and decide how to enforce it. The Superior Labor Tribunal said it will also consider whether being on call with a mobile device in hand is considered work and subject to compensation.

“The law says working remotely is like clocking in,” Joao Oreste Dalazen, head of the court, said in a statement.

Employers are bracing for trouble. Checchia said he’s fielded several calls from clients worried the law could drive their personnel costs up. That would compound the woes of Brazilian manufacturers already struggling with a strong local currency and declining global demand.

Woken at Night

While it’s too early to know if the law will have any impact on share prices, it “creates uncertainty and could impact business activity,” Joao Mauricio Rosal, chief economist with Raymond James Brasil SA, said by phone from Sao Paulo.

Employers could try to offset increased overtime pay by freezing or reducing salary increases, Rosal added.

Unions say the law is essential to prevent work from further encroaching on personal time.

“With the advance of technology it’s become a necessity,” Manoel Melo, secretary for labor relations at Central Unica dos Trabalhadores, the nation’s largest union confederation, said by phone from Recife. “This issue is being discussed the world over and Brazil has taken the forefront.”

A survey by Washington-based Wakefield Research for Motorola Mobility Holdings Inc last year showed almost half of Americans say they’ve been woken at night by a call, text message or e- mail from work.

In the U.S., where managers and professionals often aren’t paid for overtime, a growing number of companies are reviewing their policies on the use of smart phones, said Eric Pelton, a partner at Kienbaum, Opperwall, Hardy and Pelton Plc.

“There’s a lot of talk right now on how to deal with this issue,” Pelton said by phone from Birmingham, Michigan. “If managers handle it smartly, they’ll avoid lawsuits.”

Lawsuits Elsewhere

Companies such as Verizon Communications Inc, T-Mobile USA Inc. and Stanley Black & Decker Inc. have already been sued for unpaid overtime related to smart phone use.

“This is likely only the beginning,” Spencer Silverglate, a lawyer at Clarke Silverglate PA in Miami, said in a telephone interview.

Wolfsburg, Germany-based VW agreed in December to stop sending e-mails to 1,150 employees in Germany 30 minutes after their shift ends and to resume half an hour before it begins the next day.

VW spokesman Markus Schlesag said last month that Europe’s largest carmaker needed to balance the benefit of being able to reach its staff at all times with the protection of employees’ private lives.

Such voluntary agreements are preferable to a nationwide law that risks ignoring each company’s specific needs and further entangling an already unwieldy web of labor laws in Brazil, said Checchia.

“There are many employers willing to negotiate flexible rules that could even generate higher income,” Checchia said. “On that point Brazil is behind because it has a rigid, outdated labor law.”

--With assistance from Michael Hytha in San Francisco, Arnaldo Galvao in Brasilia, Cornelius Rahn in Frankfurt. Editors: Joshua Goodman, Robert Jameson

To contact the reporter on this story: Raymond Colitt in Brasilia Newsroom at rcolitt@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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