Understand the rules of the Outsourcing Law, what subsidiary liability is, and how to structure third-party management to avoid labor liabilities.
By: Vitória Willemann
According to the National Confederation of Industry (CNI), 80% of industries in Brazil choose to outsource services to reduce costs. However, if management fails, this savings quickly turns into a million-dollar liability.
This happens because of the legal framework regulating the sector: the Outsourcing Law (Law No. 13.429/2017). It made hiring practices in the country more flexible, but consolidated a rigorous rule for the contracting company: joint liability (subsidiary liability).
In this article, we go straight to the point regarding what the legislation says, what its risks are, and how to structure your company's third-party management to guarantee total legal protection.
Objectively speaking, the Outsourcing Law allows a company to hire another to perform any type of activity within its operation.
Before the law, labor courts understood that it was only permitted to outsource so-called "middle activities" (such as cleaning, security, and reception). With the approval of the current legislation, it also became legal to outsource the "core activity". This means that an automotive industry, for example, can hire a third-party company to work directly on its vehicle assembly line.
Despite this flexibility, the law imposes clear rules to prevent the precarization of work:
Want to deepen your basic knowledge? Read our full article explaining in detail what third-party management is and how it impacts your operation.
Subsidiary liability is the point of greatest financial risk for those who decide to outsource services. It means that the contracting company acts as a sort of "guarantor" for the labor and social security obligations of the third-party company.
If the service provider you hired fails to pay salaries, overtime, FGTS (Severance Indemnity Fund), or compensation for work accidents to its employees, the courts will demand this debt first from the outsourced company. If the outsourced company goes bankrupt, disappears, or does not have money to pay, your company will have to bear 100% of the debt.
How the court defines the payment:
To ensure your company does not pay for others' mistakes, the only protective barrier is active and documentary inspection of all partners throughout the duration of the contract.
To protect your company against subsidiary liability, you need a continuous audit process. It is not enough to demand documentation only at the time of onboarding; the control must be monthly.
To outsource services with total security, your operation must focus on technical withholding and document requirements:
Know exactly what to audit: Check out our complete checklist on what documents to demand in third-party management and also see our strategic guide on how to outsource services and reduce risks.
Controlling the documentation of 50 or 500 outsourced employees using spreadsheets, emails, and physical folders opens dangerous gaps in your legal compliance. Documents expire without the manager noticing, and non-compliant workers end up accessing restricted areas.
The definitive solution to eliminate this hidden liability is automation. With specialized software, the responsibility of attaching documents and receipts becomes the third-party company's own task through an online portal. The system crosses data, alerts what is expired, and can be integrated directly with physical turnstiles, blocking access to any outsourced worker who is non-compliant.
Take the next step in your operation: Understand the technical and operational criteria to modernize your control in our article on third-party management systems: how to choose.
The Outsourcing Law requires your company's control to be impeccable. Talk to the experts at GAP Sistemas and discover how our Third-Party Management platform automates document collection, blocks irregularities at the turnstile, and shields your corporation against subsidiary liability.
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