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Conciliation is the act by which the judge offers the employee and the company the opportunity and bases for the composition of their conflicting interests.

The Consolidation of Labor Laws (CLT) makes the proposal of conciliation mandatory in two moments in the process, and if these opportunities do not occur, the judgment of the case may be considered invalid. The agreement in the Labor Court has absolute priority.

Conciliation can take place at any time during the process, whether in the knowledge phase (everything that occurs before the first-instance judgement), after the judgment (appeal) and even during the execution phase. The fact is, that the formalization of agreements can be quite advantageous for the company, as we will see below.

The agreement reached before the first-instance judgement is undoubtedly what can bring the greatest advantages, as at this stage of the process, the parties have greater freedom to agree on the amounts to be paid, as well as the liberality to discriminate the amounts. that make up the agreement, and it is normally possible to considerably reduce the incidence of tax and social security contributions. In addition, the amount to be paid to the employee may be paid in installments in the most convenient way for those involved.

After the first-instance judgement, the parties can still reconcile, but with some restrictions, as they must follow the terms of the sentence, that is, the nature and proportionality of the amounts contained in the first-instance decision must be respected. In this case, the parties may decide who will be responsible for the social security and tax payments, but they must be paid. However, it is important to highlight that even at this procedural stage, there is a lot of advantage in carrying out the agreement, since the amount owed to the employee may be paid in installments – with his approval, of course. Another advantage is that after the agreement is made, there is no longer any addition of interest and monetary correction to the amount owed.

Finally, as can be easily seen, with the completion of an agreement there will certainly be financial savings for the company, either because of the liberality in carrying out the agreement before the first-instance judgment, or because of the payment of the agreement in installments without interest and monetary correction or with the “freezing” of the amount due after the first-instance judgement.

For more information on the subject, please contact our Labor Team.

Raquel Selene Rizzardi