Brazil: Brumadinho: An Analysis Of Potential Indemnities Under The Labor Perspective

Brumadinho's disaster completed 50 days this week and one of the main discussions in vogue is with respect to the indemnities that shall be paid to the victims' families or to the victims themselves, if they survived.

Because of this, the 5th Labor Court of the city of Betim (State of Minas Gerais) determined the blocking of BRL 1.6 billion to assure labor payments and indemnities.

However, so far, the parties did not reach an agreement on amounts to be paid.

Under the labor perspective, we understand that several damages are susceptible for indemnification, taking into account exclusively Vale's employees.

On one hand, there are the patrimonial damages, characterized by some type of financial loss to the victims and/or their families.

Among such damages, we may quote: (i) future earning and (ii) prospective damages.

  • Future earning is the damage caused by the interruption of an economically profitable activity, necessary for the maintenance of a family. It is, in essence, an indemnity for what the injured party fails to win, as a result of guilt, omission, negligence, fraud or malpractice of a third party.In the case under analysis, the future earning shall result, at least, in the payment of an indemnity calculated on the basis of the average life expectancy of the Brazilian citizen, according to the Brazilian Institute of Geography and Statistics (IBGE), that is, by multiplying the employee's annual remuneration for the number of years he/she failed to work.
  • Prospective damages are characterized by immediate and measurable material damage suffered by the victim and/or his/her family, consubstantiated by hospital expenses, medical fees, health care, funeral, removal of the body, etc.

On the other hand, we have the non-pecuniary damages, that are, those that are monetarily immeasurable and affect the principles related to the dignity of the human person.

At this point, it is important to highlight the Labor Code, after the Reform that came into force in November/2017, brought a whole new Chapter to exclusively treat about this modality of damage.

It should also be noted that the law adopts the term "non-pecuniary damages" and not "moral damages". The use of this expression is not unreasonable. The legislator intended to extend the comprehensiveness of the law for all and any damage that is not patrimonial. In summary, if the damage is not characterized as future earning or prospective damage (subtypes of patrimonial damages, as outlined above), article 223-E of the Labor Code shall be applicable, for all non-pecuniary damages identified.

At this point, we may affirm that the non-pecuniary damage is divided into the following subtypes: (a) moral damage; (b) aesthetic damage; (c) existential damage; and (d) social harm.

  • Moral damage is a lesion of rights, a violation of a psychic state of the individual. Although it is usually bound to the suffering, pain, sadness, the moral damage is not restricted to these elements, being extended to all exclusive rights, constitutionally protected.
  • Aesthetic damage is the injury to the physical integrity of the victim. It is, therefore, defined by the doctrine as any morphological alteration of the individual, which, in addition to a deformity, comprises all deformations, marks and defects, even minimal, that imply, under any aspect, an "ugliness" of the victim, consisting in a simple disgusting lesion or in a permanent reason of exposure to the ridiculous or inferiority complex, exercising or not an influence on the victim's labor capacity.It is important to clarify that this modality of damage shall only be indemnable in case of the surviving victims of the disaster were left with some kind of apparent physical sequel.
  • Existential damage is configured by the lesion that affects the personal life perspectives of the human person, creating a vulnerability to their modus vivendi, frustrating the expectations and life goals pursued by the individual.Although having very close concepts, it is possible to differentiate existential damages from moral damages, since this is related to the subjective aspect, to the psychological suffering cause by the harmful act, while the other is related to the objective aspect, since stems from the modification of external aspects, the individual's behavior, who is forced to live with an unwanted and sometimes unbearable perspective.
  • Finally, we have the social harm, which stems from repeated behaviors that cause social unrest, resulting in a lowering in community's life standard. The doctrine translates social harm as an injury to society, in its standard of living, both by lowering its moral patrimony – especially in respect to safety – and by diminishing the quality of life. Social damages are the main cause of punitive damages for malice or serious guilt, especially, we repeat, whether by acts that reduce the collective security conditions or that bring a decrease in the quality of life index of the population. Bringing this definition to the concrete case, we have that the population of the surroundings of the dam was extremely impaired in the social scope, since houses, trades and productive properties were destroyed, decimating the economic activity of the city, which should be object of indemnification. Specifically in relation to this damage, because there is a coincidence between the agent causing the damage and the employer, the surviving victims that were employed may also claim compensation for social harm, like other people injured, but not employed by Vale.

Another type of damage, arising from doctrinal and jurisprudential construction and based on comparative law (since the origin of this theory occurred in France) is the loss of a chance1, which is the frustration of an opportunity for equity gain or reduction of an advantage, by an unlawful act of a third party.

This theory constitutes a situation in which the practice of an unlawful act or the abuse of a right makes it impossible to obtain something that was expected by the victim, either a positive result or the non-occurrence of a loss, causing damage to be repaired.

Thus, when an unlawful act is provoked, it is notable that this act unexpectedly interrupts the modus vivendi of the victim, frustrates him/her an opportunity to obtain a benefit, in which case the indemnity is due to the lost opportunity and not to the expected final advantage.

In conclusion, it is a fact that the labor reform brought parameters for the calculation of the compensation resulting from damages in the non-pecuniary sphere, which did not exist previously (the arbitration was in charge of the judge). However, it is not correct to affirm that each victim and/or family will receive only 50 time the employee's wage as indemnity, since, for each subtype of non-pecuniary damage duly proven, a corresponding amount of compensation should be levied.

Another point of attention in relation to this question concerns the controversy that hangs over the modality of termination of the employment agreements of the deceased employees.

In theory, in the event of the employee's death, the employment agreement automatically terminates, with the consequent payment of the severance pay equivalent to the request for dismissal (salary balance, 13th salary, proportional vacation + 1/3, family salary, expired leave + 1/3 for employees with more than one year of contract).

In addition to the sums listed above, the family is authorized to withdraw the balance of the linked account of the FGTS.

However, we understand that, for the case under analysis, it would be possible to support the existence of a "just cause" of the employer, which gave rise to the death of the employee, being the termination faced as a termination for cause by the employer, being owed, in addition to the sums listed above, the payment of notice and the FGTS fine.

Finally, it is also necessary to analyze how the situation of the surviving employees will remain, since the workplace has been completely destroyed and there is no prospect of reconstruction in the near future.

In these cases, we envisage two scenarios: (1) the termination of employment agreements which, in our opinion, must occur through termination for cause of the employer; or (2) the transfer of employees to other establishments of the company, which may occur without the consent of the employee, as it is one of the exceptional cases (extinction of the establishment where the employee worked).

In addition, we believe that it is possible to claim the Theory of the Sovereign Act (factum principis) to sustain that the employer, through its guilty conduct, caused an imbalance in the contractual relationship, preventing the fulfillment of obligations by the employees, being responsible for paying the salaries, to the surviving employees, until one of the above scenarios is implemented.

From a labor perspective, we understand that these are the most relevant questions arising from the Brumadinho's disaster. As discussed above, these are controversial issues and have not yet been pacified by our legal system and will soon have several new developments.

Footnote

1. It is important to emphasize that the jurisprudence has not yet established an understanding about the classification of the indemnification by the loss of a chance, granting them sometimes as a non-pecuniary damage, sometimes as a patrimonial damage, which is why we chose to highlight it independently.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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