The Brazilian Supreme Court reached on Monday a 10-1 majority to uphold the constitutionality of union assistance contributions. The ruling means that all workers, unionized or not, will be required to pay this fee unless they annually express their desire to opt-out through a formal document.
In practical terms, the Supreme Court’s decision essentially revives the previous union tax system. Any union can now convene an annual assembly and, with any number of workers present, decide to impose this fee, applicable to all workers within a particular profession.
Such decisions are to be communicated to companies, which will deduct the designated amount from workers’ pay and transfer it to their sector’s union.
The exact process for indicating one’s intent not to contribute to unions is yet to be clarified. Initially, it appears that each worker will be required to submit a written declaration if they choose to opt out of paying the contribution. Otherwise, the deduction will be automatically processed from their salary, and the funds will be directed to the corresponding union organization.
It is estimated that the potential revenue for unions could reach the BRL 3 billion (USD 305 million) mark annually, equivalent to the amount collected before the labor reform in 2017. This would be a significant boost for unions, which have seen their financial resources decline in recent years.
After the implementation of the 2017 labor reform, unions experienced a significant decline in revenue. That year, trade associations collected slightly over BRL 3 billion. This amount plummeted to BRL 411.9 million the following year, and by 2022, the figure had dwindled to BRL 53.6 million.
The mandatory union contribution was abolished in 2017 by then-President Michel Temer, who signed a labor reform bill that made it optional for workers to pay the fee. The rationale behind this decision was that no compulsory fee should be imposed on workers. Prior to this change, all employees, regardless of their union membership status, were obligated to pay the so-called union tax, equivalent to one day’s salary per year.
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