The contract manager, who often has different designations across organizations—being referred to as technical manager, operational manager, service manager, among others—is responsible for the outcomes of contracts related to the activities they oversee and/or develop, operating either individually or with a support team (administrative, technical, tax, etc.).
Service agreements that directly involve professionals are referred to as outsourcing contracts.
Outsourcing, under current regulations (TST Precedent 331), encompasses any activity that a company assigns to another (Legal Entity or Individual) to perform. This activity must be secondary (non-core); that is, it cannot be the primary activity that the company sets out to perform internally. For example, a bank may outsource branch cleaning, but not the bank teller service.
In this regard, the most common challenges companies have faced concerning the management of their outsourcing contracts, under the lens of labor and social security risk, are:
1. Contract managers being unaware of the legislation (TST Precedent 331);
2. Outsourcing rules not established or poorly communicated within the company;
3. Flawed controls regarding the quantity and identification of third-party personnel and outsourcing contracts;
4. Flawed controls regarding the monitoring of labor, social security, and Occupational Health and Safety obligations;
5. Flawed controls regarding the monitoring of the service provider (financial health and economic dependency);
6. Uncertainty regarding the identification of services that can or cannot be outsourced.
If we consider other perspectives, such as contract execution, we can additionally mention:
1. Flawed controls over contract terms and the application of price adjustments;
2. Flawed controls over service measurement;
3. Flawed controls over delivered service levels (SLAs or Service Level Agreements);
4. Flawed controls over ancillary documentation, difficulties in applying penalties, etc.
In order to achieve efficient management of outsourcing processes, we must focus on labor and social security risk. In this regard, a Bill of Law (4330/2004) is currently being processed in the National Congress aimed at promoting more appropriate regulation for the contracting of outsourced services, providing greater legal certainty for companies hiring such services.
Adriano Dutra, a specialist in outsourcing management, labor lawyer, and Consultant at Level Group, explains below the potential impacts on outsourcing contract management should this Bill of Law be approved:
If approved, the bill will trigger significant changes in the landscape, among which we highlight (based on the text under discussion):
1. The possibility of outsourcing any company activity;
2. The service provider company must be specialized and have a sole corporate purpose;
3. The requirement of a guarantee for the payment of labor obligations;
4. The requirement that service-contracting companies perform effective oversight and monitoring of compliance with labor and social security obligations regarding employees assigned to the service provision;
5. Mandatory equal treatment between direct employees and third-party contractors regarding meals, transportation, and outpatient healthcare.
Indeed, whether in the current scenario or in the projected scenario, should the law be approved, there is a clear need for companies to carry out effective outsourcing planning, as well as efficient contract management and monitoring of compliance with labor and social security obligations (Contractor Management).
Adriano Dutra
Attorney (PUCRS) and business consultant specializing in outsourcing risk management across various organizations, with a specialization in Business Management (UNISINOS). He is a Consultant at Level Group, speaker, and author of four books on this subject.
Walter Freitas
Bachelor in Computer Science (IME-USP), with an MBA in Technology (FIA-USP) and executive education in Business Administration (FGV-SP). He is a member of IACCM – International Association for Contract and Commercial Management - USA, CEO of ANGC – National Association of Procurement Managers - Brazil, and Business Director at Level Group. He is the author of two books on this subject: Gestão de Contratos – Melhores Práticas para os Contratos Empresariais and Compras Estratégicas – Gestão de Contratos em Compras.
