STF decides that franchising does not constitute an employment relationship

In a decision contrary to the Regional Labor Court of the 1st Region (Rio de Janeiro), the STF defined that labor relations in the franchise system can be different from the CLT.

Minister Alexandre de Moraes, of the Federal Supreme Court, annulled a ruling by the Regional Labor Court of the 1st Region of Rio de Janeiro that recognized an employment relationship between franchisor and franchisees.

In this system, the franchisor assigns the right to use the trademark or patent to the franchisee and receives direct or indirect remuneration. In the res judicata, the TRT-1 removed the effectiveness of a certain contract made by a dental office. In the judges’ view, employees needed to become legal entities.

However, the Supreme Court recognized the possibility of organizing the division of labor, not only through outsourcing, but also other precedents that validated labor relations other than employment governed by the CLT (Consolidation of Labor Laws).

According to lawyer Luiz Eduardo Amaral, from FAS Advogados, “this is the old craze of wanting to apply the CLT to all forms of employment relationships”. Franchise contracts are lawful forms of providing services and Minister Alexandre de Moraes highlighted that it is correct to establish different ties from the employment relationship, legitimizing the choice for the organization of its activities.

“We are talking about dentists who were fully aware of what they were doing”, explains the lawyer. According to Amaral, the decision of the STF “is the victory of the autonomy of the will of the parties that occurred in the conclusion of the contract and of legal security”.

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