Brazil's Supreme Court (STF) rules that IPCA-e and Selic rates should be applied for the monetary correction of labor debts.

The Brazilian Supreme Court (STF) decided last Friday (18) that the application of the Reference Rate (TR) for the monetary correction of labor debts and appeal deposits within the scope of the Labor Court is unconstitutional. Until the Legislative Branch deliberates on the matter, the Special Broad Consumer Price Index (IPCA-E) should be applied in the pre-judicial phase, and, from the citation onwards, the Selic rate, monetary correction indices in force for civil convictions in general. The decision was taken in the joint judgment of the Declaratory Actions of Constitutionality (ADCs) 58 and 59 and the Direct Actions of Unconstitutionality (ADIs) 5867 and 6021.

Modulation

According to the Supreme Federal Court's decision, all payments made in a timely and appropriate manner using the TR (Reference Rate), IPCA-E (Extended National Consumer Price Index), or any other index shall be considered valid and cannot be re-litigated. On the other hand, for ongoing cases that are suspended in the discovery phase, regardless of whether there is a judgment, the Selic rate (interest and monetary correction) shall be applied retroactively. The modulation also stipulates that the decision has binding effect and will apply to all cases, including cases with a final decision (res judicata) in which there is no express statement regarding the monetary correction indices and interest rates.

Understand the case

Since 1991, the Economic De-indexation Law (Law 8.177/1991) mandated the updating of amounts owed in Labor Courts using the Daily Reference Rate (TRD). In 2015, the Superior Labor Court ruled that labor credits should be updated based on the variation of the IPCA-E, and this index began to be used by the Superior Council of Labor Justice (CSJT) for the monetary update table of the Labor Courts (Single Table). The understanding was that it was necessary to correct the lag in the monetary correction index. However, this decision was suspended by the Supreme Federal Court (STF) until December 2017.

In the same year, the Labor Reform (Law 13.467/2017) defined the TR (Reference Rate) as the index for updating both credits arising from judgments (article 879, paragraph 7, of the CLT) and appeal deposits (article 899, paragraph 4). These two provisions were then challenged in the Supreme Federal Court (STF) by the National Association of Labor Magistrates (Anamatra), which requested their unconstitutionality in ADIs 5867 and 6021, and, conversely, by business associations, which sought recognition of their constitutionality in ADCs 58 and 59. These were the actions judged by the STF on Friday. In June of this year, the rapporteur, Minister Gilmar Mendes, had ordered the suspension of the processing of all cases in which the topic was being discussed.

Source: tst.jus.br