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News
STF Prohibits Automatic Inclusion of Third-Party Companies in Labor Judgment Execution Proceedings
The recent decision of the Brazilian Federal Supreme Court (STF) in Extraordinary Appeal No. 1,387,795/MG represents an important milestone in the judgment execution phase of labor proceedings. By a majority vote (7 – 2), the Full Court ruled that companies allegedly jointly liable that were never a party during the cognizance phase of the case cannot be automatically included in the execution phase.
The opinion of the rapporteur, Justice Dias Toffoli, was adjusted following contributions from Justices Cristiano Zanin, Flávio Dino, and André Mendonça, resulting in a legal thesis that reinforces the principles of the rights to a fair hearing and adversary proceedings from the outset of the lawsuit.
The three pillars of STF’s new ruling:
1. Mandatory prior participation: Labor judgment executions may not be directed against companies that were not a party during the cognizance phase. Claimants must identify in their statement of claim the potentially all companies that are potentially jointly liable (including those within an economic group) and present the legal grounds for such liability.
2. Exceptions and the piercing of the corporate veil (IDPJ): The inclusion of third parties will only be allowed in exceptional circumstances, such as corporate succession (Article 448-A of the Labor Law) or misuse of legal personality (Article 50 of the Brazilian Civil Code). In such cases, the filing of an incident for the piercing of the corporate veil (IDPJ) is mandatory, ensuring the right to defense before any assets are frozen.
3. Temporal application: The piercing of the corporate veil procedure applies even to judgment execution proceedings initiated before the 2017 Labor Reform, except for cases with final and unappealable judgment, settled debts, or executions that have already been completed.
The new understanding reinforces legal certainty and prevents companies from being subject to having their assets frozen without prior opportunity to a defense, and it is expected to guide judicial decisions nationwide.