Supreme Court suspends lawsuits regarding hiring professionals as independent contractors or legal entities ("PJ")

The Brazilian Supreme Court (STF) has ordered the suspension of all ongoing lawsuits in the country that discuss the hiring of professionals as legal entities or independent contractors. The decision was made under Topic 1.389 (leading case RE 1.532.603), which will be judged with general repercussion, and addresses three fundamental questions:

• Who should judge these cases: Labor Courts or Common Courts?
• To what extent is it lawful to hire legal entities/independent contractors, considering companies' freedom of organization and professionals' autonomy of will?
• Who bears the burden of proving whether fraud occurred or not: the professional or the company?

The decision exposes a scenario of growing legal uncertainty: while the Supreme Court has recognized the validity of different forms of productive organization, part of the Labor Courts continue in the opposite direction, generating conflicting decisions and instability in contractual relationships.

What this means for companies

Although the lawsuits are temporarily suspended, the legal risk persists – and how each company structures itself today can be decisive when the final judgment occurs.

More than ever, companies (through their legal, HR, and compliance departments) need to:

• Review service proposals and contracts, especially with professionals who work individually and personally: language, scope, autonomy clauses, and absence of subordination;
• Create evidence of providers' effective independence (e.g., no requirement for working hours, relativization of exclusivity obligations, and format of service execution);
• Reassess internal policies and train leadership, ensuring that practice reflects the contractual model adopted – inconsistency between the type of contract and reality is the greatest risk factor;
• Monitor suspended lawsuits and evaluate impacts on labor liabilities, with contingency plans and adequate provisioning for risk.

Future opportunities

Despite the current tension, the judgment of Topic 1.389 may represent a relevant turning point for the business environment in Brazil, with greater predictability for hiring via service provision contracts, provided it is done in a lawful and well-structured manner.

For companies with robust operations or flexible service provision models, this is a strategic moment to review structures, mitigate risks, and position themselves for a potentially more stable and legally predictable future scenario. Beyond legal protection, being prepared for this new environment can mean a competitive advantage: companies that correctly structure their hiring processes can benefit from greater operational flexibility, cost reduction, and attractiveness in the labor market.

Our team has been closely monitoring the progress of this topic in the Supreme Court and has been advising companies on reviewing contracts and internal practices – always focusing on legal protection and adapting hiring methods to business needs.