The supply chain act and its implications in Brazil

published on 15 September 2022 | reading time approx. 3 minutes

Despite not having specific legislation regarding the Supply Chain, Brazil has, in its several legislations, legal provisions for the protection of human, environmental, and children's rights, among others. All of them are based on the principles brought by the North American Convention on Human Rights (Pact of San José of Costa Rica) signed among the US-American countries, guaranteeing a regime of personal freedom and social justice, based on the respect for essential human rights such as the right to liberty, prohibition of slavery, personal integrity, among others.

• Human Rights »

• Other impacts on Supply Chain »

• How legal advice can help »

Regarding the supply chain, for many years it has been discussed the liability of companies when they outsource their activities or part of their production, as well as the liability of those who are subcontracted for the business to generate revenue. In Brazil, although there is still a need for investment in the identification of legal parameters of accountability, it is common for the courts to recognize civil, criminal, and labor liability for companies that do not pay attention to this when outsourcing their activities. The argument of "not knowing" is not accepted by the courts, often leading to fines and public recognition of the error, as well as the listing of these companies as "unreliable" for adopting illegal practices.

Human Rights

At the civil-labor level, some theories seek to explain the role of each of the stakeholders in the various pro­ductive layers within a supply chain in which there is the exploitation of labor analogous to slavery or child labor, for example. Based on these findings, the attempt is made to delimit the responsibility of those benefited by this type of violation of fundamental labor rights and human dignity.

Labor analogous to slavery is that which results from the following situations, either jointly or separately: the submission of a worker to forced labor; the submission of a worker to an exhausting workday; the submission of a worker to degrading working conditions; the restriction of the worker's locomotion, whether due to debt, or by restricting the use of any means of transportation by the worker, or by any other means with the purpose of retaining him or her in the workplace. Child labor is any form of work performed by children and adolescents under the minimum age, according to each country's legislation. In Brazil, work is generally prohibited for those who have not yet turned 16. When performed as an apprentice, it is permitted from the age of 14.

It is important that one of the most complicated situations regarding slavery and child labor are those related to rural areas, farms, and the clothing industry. In the past, it was common to have cases of "debt bondage" where a person worked and had part of his salary deducted to pay off a non-existent housing debt, for example. These are cases that are still found in rural regions and that are not legalized since they are often analogous to slave labor.

One of the objectives of the Labor Ministry and Social Security is to eradicate slave and degrading work, as well as child labor, through fiscal actions coordinated by the Secretariat of Labor Inspection, in the previously mapped focus areas. The aim of Labor Inspection is to regularize the employment relationships of the workers found and to free them from such conditions.

Other impacts on Supply Chain

It is also possible to identify the responsibility of companies when evaluating environmental and fair business practices of the supply chain. When a service is outsourced, the company must guarantee that the business is fair and the rules are being followed, not only regarding labor and human rights but also environmental obli­ga­tions since the company must have enough documents and governmental approvals explaining negative impact on the environment and the preventive measures taken to prevent damage.

How legal advice can help

Considering this scenario, legal advice is necessary in such a complicated and delicate subject. From imple­men­tation, review, maintenance to due diligence, and internal audits, legal advice is valuable in the evaluation of labor issues that must be proven by service providers or application model and minimum necessary evidence or the application of labor legislation, and respect to human rights. Support is offered by legal firms on mapping processes and identification of the entire supply chain, internal adjustments in the company's culture and philosophy, develop internal controls, as well as the implementation of the headquarter rules and pro­ce­dures in subsidiaries; In stipulation with the company measures for risk reduction and the identification of po­tential violations, the monitoring of their effectiveness on an ongoing basis and the development of a channel to inform and communicate all stakeholders and finally the implementation and management of a whistle­blowing channel where any stakeholder can claim rights are subjects where legal advice might be helpful.