Maria Eduarda X. Soares and Heloísa Nogueira
On April 12, 2025, the Supreme Federal Court (STF) recognized the general significance of Theme 1,389, which addresses the validity of hiring workers through a legal entity—a practice popularly known as "pejotização"—which has become one of the most controversial topics in labor law.
Upon recognizing the general significance of the issue, the Supreme Federal Court (STF) suspended proceedings addressing the matter at all court levels and assumed the role of settling the issue, which currently divides courts, companies, and workers, including questions regarding the jurisdiction of Labor Courts, the legality of the hiring arrangement, and the burden of proof.
It is worth noting that once the STF establishes a settled understanding—whether by recognizing the validity of hiring workers as legal entities (*pejotização*), or by rejecting this model—the effects of the STF's decision will reverberate throughout the country, impacting both ongoing and future cases.
On one hand, proponents of the practice argue that it "pejotização" reflects the dynamic reality of the market, allowing for greater contractual flexibility, cost reduction, and, in some cases, higher net remuneration for the professional. From this perspective, it is a legitimate alternative to the traditional employment model governed by the CLT (Consolidation of Labor Laws), particularly in sectors such as technology, healthcare, communications, and service provision, where autonomy and specialization are highly valued.
However, from another perspective, critics point out that, in most cases, the practice "pejotização" serves merely as a mechanism for labor fraud, masking relationships characterized by subordination, personal service, regularity, and remuneration—elements typical of an employment relationship.
It is undeniable that by removing guarantees such as paid vacation, the 13th-month salary, FGTS (Severance Indemnity Fund) contributions, and social security coverage, various risks are shifted to the worker, and the network of rights ensured by the CLT is weakened. However, some argue that "pejotização" this could represent a legitimate hiring alternative, especially for highly specialized activities involving a lower degree of subordination.
The debate reached the Supreme Federal Court (STF) precisely because Labor Courts—even in light of prior rulings that relaxed the rigidity of the CLT (Consolidation of Labor Laws) in favor of free enterprise—continue to recognize employment relationships in situations previously viewed as a type of “"pejotização" abusive” practice. This tension highlights the conflict between the Brazilian legal tradition of worker protection and the need to modernize hiring practices.
The ruling on Theme 1389 will have a definite impact on thousands of pending lawsuits and could redefine the contours of the relationship between capital and labor in Brazil. Beyond the legal issue itself, what is at stake is the very concept of decent work in an economy that is modernizing and increasingly driven by technology and informality.
To illustrate the impact of the Supreme Court (STF) decision, let’s look at the numbers. The difference between the CLT (standard employment contract) and PJ (independent contractor/legal entity) models goes beyond the status of employee versus service provider; it directly affects the amounts received and the capacity to build wealth.
In the CLTmodel, a gross salary of R$ 5,000.00 results in a net amount of approximately R$ 3,939.86 for the employee, after deductions for Social Security (INSS) and Income Tax. The company, in turn, bears costs such as the FGTS (Severance Indemnity Fund) and the 13th-month salary—benefits for the employee that do not add to the monthly take-home pay.
In the PJmodel, however, the same R$ 5,000.00 remuneration would incur lower fixed tax costs, resulting in higher net pay—around R$ 4,700.00—assuming a tax payment of R$ 300.00 under the *Simples Nacional* tax regime.
Here, we see a clear difference in the worker's net pay; furthermore, a frequently raised point is that while the FGTS funds of a CLT worker yield low returns (around 3% per year), a PJ professional has the opportunity to take the difference between their PJ earnings and the amounts that would have gone toward FGTS and INSS, and invest that money independently.
In this context, the debate reveals a rarely discussed aspect: the worker's freedom to manage their own financial resources. While the standard employment regime (CLT) offers minimum guarantees regarding compulsory savings via the FGTS (Severance Indemnity Fund) and social security contributions, the "legal entity" (PJ) model shifts the responsibility for social protection, building a financial reserve, and private pension planning onto the professional.
If a PJ professional were to invest this amount monthly in a fixed-income product yielding 100% of the CDI rate (approximately 10.75% per year), the total accumulated over three years would be R$ 41,800.00. This figure is significantly higher than the R$ 15,011.00 that a CLT employee would have in their FGTS account after the same period.
Furthermore, it is worth noting that the INSS (National Social Security Institute) no longer commands the same level of trust and credibility. In the first half of this year, a fraud scheme at the institute caused a national outcry; the scheme involved monthly withdrawals from the accounts of retirees and pensioners without their consent or knowledge. The severity of the incident highlights serious internal control failures and heightens the sense of insecurity among those who rely on the benefit.
It is precisely against this backdrop of distrust regarding social security that the "pejotização" model finds fertile ground to take hold. By opting out of the standard employment relationship and contributing independently, workers could better manage their resources, invest in private pension plans, and build their own safety net, without being held hostage by the instability and weaknesses of the public system.
In light of this, the "PJ" model (contracting workers as legal entities) emerges as a viable alternative across various economic sectors, given a State that fails to provide social security or safeguard workers' rights, and a society that values freedom and informality over security.
Ultimately, the Supreme Court’s ruling could signal either a shift toward the full flexibilization of labor relations or a reaffirmation of the central role of social protection within the Brazilian legal framework. Thus, striking a balance between economic efficiency for companies and worker dignity will undoubtedly be the key to this debate.
It is therefore necessary to consider whether the rigid model of the CLT (Consolidation of Labor Laws)—conceived over 80 years ago—is still the one that best meets the demands of a globalized, digital, and dynamic market. "pejotização", often cast as a villain, can also represent freedom of choice, autonomy over one’s own career, and the chance to avoid dependence on an inefficient State and increasingly fragile social security institutions.
Relying on the government to manage every aspect of one's professional life may be riskier today than taking individual control of one's own future. Faced with formal guarantees that prove increasingly fragile in practice, it may be time to recognize that true economic security lies less in legal promises and more in the freedom of the parties to consciously define the course of their own relationship.
OLIVEIRA, M. INSS scam: retirees targeted by false promises of refunds. Available at: <https://www.cnnbrasil.com.br/economia/financas/golpe-do-inss-aposentados-sao-alvo-de-falsas-promessas-de-devolucao/>. Accessed on: Aug. 27, 2025.
IBRAHIM, F. "Pejotização" [contracting as a legal entity] and social protection: Social Security challenges in Brazil – Migalhas. Available at: <https://www.migalhas.com.br/coluna/previdencialhas/435450/pejotizacao-e-protecao-social-desafios-da-previdencia-no-brasil>. Accessed on: Aug. 27, 2025.
SPONZA, C. Is "pejotização" to blame for the Social Security deficit? Available at: . Accessed on: Aug. 27, 2025.
