Pejotization: How Companies Should Prepare After the National Suspension Ordered by the Brazilian Supreme Court

On April 14, 2025, the Brazilian Supreme Court (STF), in ruling ARE 1.532.603 (Theme 1389), ordered the nationwide suspension of all cases involving:

• Alleged fraud in civil/commercial service contracts,

• Legality of hiring independent contractors or legal entities (PJs),

• Jurisdiction of Labor Courts in such disputes,

• And the burden of proof regarding alleged fraud.

This decision underscores the importance of strategic legal planning for companies contracting PJ workers.

What Companies Need to Know

The STF reaffirmed that hiring PJs is valid, respecting the freedom of business organization (ADPF 324). However, noncompliance by Labor Courts has created legal uncertainty and increased litigation.

Thus, even a small mistake in contracts or management may expose companies to misclassification risks.

How to Protect Your Company

1. Draft clear and autonomous service contracts

• Emphasize the provider’s independence.

• Avoid any clauses indicating subordination or control.

• Specify deliverables and deadlines, not working hours or methods.

2. Maintain independence in practice

• Do not manage working hours or office attendance.

• Allow providers to serve other clients.

• Avoid offering employee-like benefits.

3. Conduct ongoing legal planning

• Regularly review all active service contracts.

• Train internal contract managers.

• Work closely with specialized labor law firms to prevent risks and properly structure service relationships.

Conclusion

The STF's decision doesn't forbid PJ hiring, but demands greater care. With strong contracts and ongoing legal guidance, your company can safely benefit from outsourcing models.