A Brazilian labor court upheld, on Monday (24), a ruling that suspends the layoffs of 1,900 workers at retail chain Casas Bahia and orders their provisional reinstatement, with salaries and benefits restored. The decision was signed by judge Sandra Nara Bernardo Silva of the 10th Regional Labor Court (TRT-10), according to G1.
The company had filed a writ of mandamus seeking to overturn the reinstatement order, but the case was dismissed because required documents were not submitted within the deadline. As a result, the court never examined the merits of the company's request. According to the judge, the required documents should have been filed at the start of the case, and no extension could be granted to fix the omission.
According to Jorge Soares, a lawyer and partner at the IW Melcheds Advogados firm, the ruling ensures the dismissed workers covered by the order remain, for now, employed by the company. "This does not mean permanent job security: layoffs may still happen in the future, provided they are preceded by real dialogue with the union," Soares told G1. He noted the union does not need to approve the dismissals, but must be consulted beforehand in talks that could address alternatives to layoffs, dismissal criteria and ways to soften the impact. "If no agreement is reached, the final validity of the layoffs will still be decided in the main case," Soares said.
In a statement sent to G1, Casas Bahia said it respects the judiciary and is taking the appropriate legal steps in response to the ruling. "The ongoing decisions are part of a broad restructuring process, necessary to ensure the continuity and sustainability of the business, as well as the preservation of the jobs that remain," the company said.
A deeper financial crisis
The labor dispute unfolds amid a severe financial crisis at the retailer. Casas Bahia, one of Brazil's largest household appliance and furniture chains, filed for judicial reorganization (a Brazilian bankruptcy-protection process similar to Chapter 11) on August 16, reporting debts of 17.3 billion reais (roughly 3 billion dollars), according to newspaper Folha de S.Paulo. On the same Monday the labor court confirmed the reinstatement order, the company also asked a São Paulo court to force Banco do Brasil to return 422 million reais the bank had unilaterally debited from its accounts, after covering guarantees the retailer had contracted with suppliers including Apple and insurer Mapfre. The company argues the move violates the principle of equal treatment among creditors that governs the reorganization process.