If you engage contractors in Brazil, the litigation pause is over. On 18 June, Brazil's Supreme Court lifted the freeze on misclassification cases. Around 50,000 claims that had sat frozen since April 2025 can now move through the labour courts again.

The court restarted the cases without answering the question that froze them in the first place. Brazil still has no binding test for when a contractor engagement is a legitimate business relationship and when it's a misclassified employee.

WHAT ACTUALLY CHANGED ON 18 JUNE

The unfreeze applies only to the first two levels of the labour courts. The court found that pausing cases still in the evidence phase had produced a "significant backlog", so trial courts and regional labour courts can now hear evidence and rule.

It's a partial reopening, not a full one. Cases at the top labour court stay frozen, and once a regional court rules, that case freezes again until the Supreme Court delivers its final position. So claims will be litigated, evidence will be locked in, and judgments will be issued, all while the standard those judgments should apply is still being written.

THE RULEBOOK STILL DOESN'T EXIST

The freeze came from a single test case at the Supreme Court, the one that will set the national rule on contractor classification. It will answer three questions at once. Is it lawful to hire a PJ or self-employed worker for services, which courts hear claims about those contracts, and who has to prove the arrangement is genuine.

The court started hearing that case in late 2025, then paused when one of the justices asked for more time to review. As of June there was still no date to resume. The 18 June order changes none of that. The court was explicit that unfreezing the docket doesn't touch the main question, so every case now moving forward is being built without knowing the test it will eventually be judged against.

WHAT THIS MEANS FOR AOR PROVIDERS

The sectors where PJ engagement is standard practice are the same ones the court itself links to these disputes, including IT, healthcare, sales representation, and delivery services. If you run AOR in Brazil, or your EOR clients keep a contractor layer alongside employed headcount, your exposure just went from theoretical to scheduled.

For over a year, a misclassification claim against a Brazilian contractor engagement sat in suspension. That changes the commercial conversation with clients who chose PJ engagement for the cost gap against CLT employment. The structure they bought is back in front of judges, and the price of getting it wrong (reclassification, back pay for holidays, 13th salary, FGTS and social contributions) is being tested case by case rather than settled by one ruling.

BRAZIL'S VERSION OF A DEBATE EVERY MAJOR MARKET IS HAVING

The US, the UK, and the EU are wrestling with the same issue. Who counts as a contractor, and who decides. Brazil hasn't resolved it either, but it has chosen a different route. Instead of years of piecemeal case law, one binding Supreme Court ruling will settle the question for the whole country. However that ruling goes, it will reset the economics of contractor engagement in Latin America's largest market in one decision.

For workforce solutions firms, the same ruling creates risk for some and opportunity for others.  

WHERE TO FOCUS FIRST

Start with the disputes you already have. Any live or threatened misclassification claim touching your Brazilian operations can now be scheduled for a hearing, and the evidence gathered in those cases will be judged against a test that hasn't been set yet. That makes the quality of your files today more important than the arguments you make later.

From there, look at the engagements themselves. The classification question is open, but the fact patterns that lose are well known, so review your Brazilian contractor relationships for subordination, exclusivity and who really controls the work. While you're at it, check the indemnities and liability caps in your client contracts, because claims can now reach judgment at the regional level rather than sitting in suspension.

Keep your evidence organised per engagement rather than per client, with contracts, invoicing history and proof the contractor works for others. Who has to prove legitimacy is one of the questions the final ruling will decide, so assume it might be you.

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