Court Halts Embraer Layoffs

 - February 27, 2009, 11:43 AM

A regional labor court in Brazil has forced Embraer to suspend its plan to cut 20 percent of its 21,000-strong workforce after it agreed to hear a collective lawsuit filed by the company’s unions. Any further layoffs will now have to wait at least until the unions and management enter a process of court-administered mediation, scheduled for next Thursday.

The lawsuit claims that Embraer illegally carried out the layoffs without first negotiating with the Metalworkers Union of Sao Jose dos Campos and other union organizations. The company said in a statement today that it would appeal the court’s decision and that it carried out the dismissals “in strict compliance with all applicable laws and regulations.”

It appears that the court’s intervention won’t affect the non-union employees slated for dismissal, and Embraer stressed that the decision “is preliminary and does not entail the restoration of the jobs to the dismissed persons.”

When it first announced the layoffs on February 19, Embraer said it would remove an entire layer of its management structure and an unidentified number of production workers, while keeping the “significant majority” of the engineering workforce to continue new product development and technology. The plan originally called for layoffs at every facility the company operates, except for the Harbin-Embraer joint venture in China and the majority Embraer-owned OGMA plant in Portugal.

The interim relief comes the day after Brazilian President Luiz Inacio Lula da Silva urged Embraer CEO Frederico Curado to reconsider the scope of the cuts.