Over the next weeks, we will introduce you to several success cases that StarkHR was able to conduct worldwide.

Today´s case analysis involves a Brazilian infrastructure company, with USD 76 Mio Revenue.

Our Challenge

The company had 160 labor claims in progress, all of them outsourced to a single law practice with a litigation provision of USD 2,0 Mio.

Scope

The project was divided in 2 subprojects:

Litigation provision calculations – analysis of the past labor claim history and current claims statuses (pre-trial, appeal, execution), to determine the likelihood and calculate the potential financial impact of the risk occurrence.

Labor liability prevention – Conduct an accurate and thorough assessment of the potential risks and vulnerabilities.

Methodology:

  • Reading of all the documentation related to the process.
  • Collection of points considered critical (indefensible and high loss risk).
  • Calculation of updated financial impact values based on indefensible and high loss risk points.
  • Analysis of ongoing appeals and calculation of potential financial impact based on previous convictions.
  • Collection and documentation of existing evidences to support legal in future cases.
  • Delivery of risk assessment report containing risk, legal basis, conviction potential and recommended actions for risk mitigation.

Project Team:

Cost-benefit analysis:

Summary of the project:

 

The project was not just about recalculating of current litigation but also about reducing and preventing company´s exposure, so we gathered a team with payroll and labor safety experts in order to establish whether there were defensible points and if the evidence for such existed or if the risk points could be treated.

To reduce the current exposure and avoid similar issues in the future was our goal and for this, we started by understanding the operations M.O., the tasks delegated to each function and the costs involved in each of the suggested corrective actions. Se we allocated advisors with relevant experience in each of the areas involved, making sure we would have the knowledge needed to audit and suggest actions based on the law AND the business needs.

By evaluating the risk and the reasons why they existed as a whole we could ensure that the analysis was appropriate and that the corrective actions would reduce the liability but would not interfere in the business results as well.

27 risks were identified in total, then classified by company´s exposure as certain/likely/null, based on the existing (or possible implementation) of evidences that the company was following the law, presented as shown in the following report extract:

Unhealthy working conditions

Demand:

“The company wouldn’t pay the complainant the dirty work bonus as it should. He was exposed to unhealthy agents like smoke; noise, dust; heat; cold, since he worked as (deleted) and in the performance of his duties inhaled large quantities of smoke. He also suffered from cold and heat, by working almost in the open. No one can say that a cabin can protect someone from cold, heat and permanent smoke, as this was the place where the complainant worked. “

Chances of conviction:

Remote since the reports are up to date and correct, showing limits below the tolerance.

Legal basis:

The legal concept of dirty work comes from the art. 189 of the Brazilian consolidation of labor laws, which rules as follows:

Defensive documentation:

  •  Updated ERPP (Environmental Risk Prevention Program) and MCOHP (Medical Control and Occupational Health Program) documents
  • Personal protective equipment (PPE) delivery receipt if applicable
  • Occupation Health certificates

In a second step, we negotiated agreements with the union on overtime and bank of hours and the audit of all physical records of employees to ensure that all documentation required for labor risk mitigation was available.