Sayonara Grillo^[1] and José Luiz Soares^[2]

Abstract

This article examines the notion of institutional instability, understood as the combined effect of austerity policy and of the rapid pace of regulatory change. Beyond the erosion of rights associated with austerity, institutional instability entails a profound form of normative insecurity that destabilizes legal certainty itself. The concept is developed through an analysis of the “permanent reform” imposed on the Brazilian labor market between 2016 and 2022. The article argues that institutional instability both reflects and reinforces the gray zone in work and employment, as it undermines labor protections, leaves social actors disoriented, and leaves labor relations subject to raw power struggles, thereby rendering the boundaries of wage labor increasingly blurred and flexible.
  

Keywords: Gray zone of wage labor in Brazil; institutional instability; labor law reform; permanent reform; austerity policies; acceleration of legal time.

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Introduction

The world of work is no longer what it was. Scholars have long pointed to shifts in the dominant model of capitalist accumulation, to the flexibilization of employment relations, the deregulation and erosion of employment rights, the reconfiguration of labor discipline, the decline of workplace democracy, and corporate strategies’ increasing reliance on digital technologies. More directly relevant to our discussion here, today’s labor markets are significantly more unstable and unpredictable than in the past. Employment relations and the institutions that govern them tend to be more mutable and impermanent, in stark contrast to the stability and clearly defined boundaries that characterized the Fordist-Taylorist age and the heyday of the Welfare State. These developments have posed problems for social-scientific analysis, requiring the adoption of conceptual frameworks more capable of dealing with mutability and diversity: to fully capture the instability and uncertainty that characterize work today, scholars have had to move beyond traditional binary distinctions such as formal vs. informal, secure vs. insecure, socially protected vs. unprotected, rule of law vs. legal vacuum, transparency vs. opacity.

Approaches based on the concept of the gray zone in work and employment reflect such an effort to come to grips with the new situation (Carelli, Cingolani, and Kesselman 2022; Azaïs 2010a, 2010b; Azaïs and Carleial 2007, 2017; Silva et al. 2012). The concept represents an attempt to understand changes in the world of work in terms of the socio-economic dynamics that have disrupted traditional patterns of employment. Driven by a sustained effort to circumvent the institutional protections afforded by employment (through the reorganization of production, together with regulatory reform and associated changes in the operation of public institutions) and the gradual blurring of the boundary between employment and self-employment—a global trend over the past five decades—these changes have resulted in an increase in the diversity and indeterminacy of work situations and the rise of hybrid forms.^[3] Factors contributing to this hybridization include lacunae in employment legislation, legal unclarity, confusion in implementation, and practices in which the law is strategically exploited or circumvented to serve particular interests.

In this situation, the notions of uncertainty, instability, and indeterminacy become central. If one is to understand the world of work in all its contemporary diversity and dynamism, one has to recognize, on the one hand, the historical break represented by the shift from the relative stability of Fordism and the Welfare State to the more fluid and unstable socio-economic dynamics of today, and on the other, the existence of a growing disconnect between categories and practices, as the binary and dualistic categories of the Fordist era increasingly fail to capture the complexities of work. In escaping the constraints of traditional ways of analyzing employment, the concept of the gray zone in labor and employment (hereafter “the gray zone”) highlights how binary and dualistic frameworks overlook the existence of a broad continuum of work situations, as diverse as they are mutable, as witnessed by the changing contractual arrangements and modes of remuneration that have emerged over recent decades.

This article develops the idea that institutional instability can be understood as both a manifestation of the gray zone and as a driver in its exacerbation. Originating in earlier studies (Grillo and Soares 2022; Cavallazzi and Silva 2019; Soares 2021), the concept of institutional instability aims to capture the combined effects of two key factors: austerity policy on the one hand, and the acceleration of legal time (Ferreira 2016; Ost 2005) on the other. Grounded in empirical analyses of the Brazilian labor market, the argument we made is that the effects of policy in eroding employment rights came on top of the effects of regulatory reforms introduced at a rapid and unpredictable pace, so leading to regulatory uncertainty. Taken together, austerity policy and the uncertainty attributable to the acceleration of legal time have not only weakened the protections associated with employment but also fostered institutional instability. This instability of institutions^[4] has undermined the very notion of legal certainty, making employment relations increasingly often the object of simple power struggles.

Here we will expand upon our initial argument that institutional instability both reflects and reinforces the historical processes giving rise to the gray zone, more particularly those in which the State also has a role. We outline, in fact, how institutional instability reinforces the tendency towards the erosion of employment protections, fostering employment relations that are increasingly unclear and makeshift in character. At the same time, we hope to contribute to the debate on more specific questions, such as: What practices, experiences and representations contribute to the perpetuation of gray zones? What role does the State play in their creation and persistence? What are the impacts of institutional instability and the existence of gray zones on the different social actors, and what part do those actors play in maintaining, reducing, or amplifying the centrifugal tendencies of employment law? What is the character of their interaction under conditions of institutional instability? To what extent are gray zones arenas of conflict and legal dispute?

The Gray Zone and Institutional Instability

Over the past five decades, the institutions designed to protect employment have been gradually destabilized, resulting in a marked decline in their capacity to regulate the social relations of labor, and, with them, social relations more widely. Employment law has been systematically circumvented, inadequately enforced, or rendered effectively inapplicable. The tension between the corporate endeavor to evade the law and the public regulation of employment has led to reforms of varying degrees of radicalism, shaped by the power dynamics at the time and the extent of political and institutional consensus regarding the need to restructure the regulatory framework.

The gray zone has its origins in these broader transformations. Beyond the erosion of established rights, these changes have rendered the institutions governing employment increasingly unstable. As a result, employment relationships have become more various and more ambiguous, combining elements of formality and informality, protection and precarity, security and insecurity, transparency and opacity. In other words, the gray zone reflects a widespread erosion of the protections associated with employment, the constant reconfiguration of regulation, and the destabilization of employment institutions^[5]—conditions under which employment relations become increasingly diverse, mutable and indeterminate in character.^[6]

The emergence of the gray zone can be attributed to a combination of economic and legal-political factors. On the economic front, factors such as the advent of flexible accumulation, technological advance (in the field of ICTs in particular), globalization, and the financialization of the economy have all played an important role. Equally significant, however, have been developments in the legal and political spheres, where State actors have actively contributed to the reshaping and destabilization of employment relations. The ambivalent posture of the public authorities—oscillating between affirmation of their role as the guarantors of employment rights and the promotion of deregulation—has been a decisive factor in both the creation and the persistence of gray zones (Kesselman 2022; Bisom-Rapp and Coiquaud 2017). In a range of different countries, the State—through its executive, legislative and judicial branches—has played a central role in the growth of work situations that deviate from traditional waged employment and in the increase in precarity, whether through the creation of new regulatory frameworks or alterations in the operation of public institutions. The State fosters the emergence of the gray zone when it promotes a neoliberal conception of free enterprise and economic growth at the cost of weakened employment rights and without providing alternative frameworks of protection. In other words, by withdrawing from its role as the regulator of employment relations, the State becomes jointly responsible for the creation of the gray zone, alongside corporate strategy and the impact of technology on the world of work. In most cases, the weakening of State regulation leaves workers with fewer rights, fewer social protections, and lower incomes.

The erosion of the protections associated with employment, the weakening and destabilization of employment protection institutions and the shift to increasingly mutable employment relations owe much to the influence of powerful lobbies that pressure democratic regimes to prioritize private over public interests, driving a constant unmaking and remaking of legal frameworks. These actors thus decisively reshape legal time (Ost 2005), determining what should be preserved and what should be changed in the regulation of economic activity in general and the regulation of employment in particular.

The reproduction of capital requires a certain degree of predictability and legal certainty but not necessarily stability. In the era of flexible accumulation, in which mutability and diversity have supplanted stability and uniformity, what matters most to capital is the ability to impose its own temporality, such that its own maneuvers dictate, to some extent, the pace and direction of changes in the law. Failing this, capital seeks to circumvent legal constraints in pursuit of its interests.^[7] Both scenarios are characterized by deliberate efforts to do away with the fixity of legal norms and social relations—to dismantle established institutions and so reconfigure the social order as to maximize profit. The aim is not to construct a more stable institutional framework; rather, instability itself appears to be the goal, coupled with the power to continually make and remake the world of work in line with market imperatives.

This dynamic gives rise to what Ost (2005) and Ferreira (2016) call an acceleration of legal time—a form of “temporal pathology” in which legal norms are produced at a pace that is both excessively rapid and unstable. In aligning itself with market imperatives, the law becomes caught in a continual tinkering or worse, a state of constant reform (Grillo and Soares 2022). As Cavallazzi and Silva (2019) have observed in the domains of labor and consumer law, it is as though norms established during the day are dismantled by night, generating a kind of programmed legislative obsolescence.

When legal production accelerates, the institutional world it helps shape becomes correspondingly volatile, inherently unstable. More than a matter of institutional change, the notion of institutional instability reflects a deeper erosion of rights, undermined by the normative uncertainty—at both legislative and judicial levels—induced by the rapid and irregular pace of legal change. Social actors are left disoriented, unsure of what norms are in effect, what those norms entail, and how public authorities are expected to act. Ultimately, this tends toward legal vacuum, in which the relationship between capital and labor is reduced to the fiction of free and voluntary exchange, governed solely by the invisible hand. In effect, labor relations risk being reduced to mere expressions of power.

The normative uncertainty that comes with institutional instability represents a distinct form of insecurity in the world of work—one that typically differs from the more familiar insecurities associated with unemployment or precarious employment. It is not just a matter of legal change or the regressive substance of new legislation, but rather the loss of legal certainty itself: the diminishing ability of employment law to stabilize expectations, regulate behavior, and structure the relations of work. The acceleration of legal time is a central driver of this broader tendency. Institutional instability stems from the rapid succession of changes in legislation or case-law that destabilize established institutional frameworks, producing a landscape in which individuals lose key reference points and face heightened insecurity and social vulnerability. In contrast, the representatives of capital gain significant advantage from this situation. While workers lose the guarantees historically associated with employment together with the institutional reference points that once oriented their actions, and consequently find themselves in a more insecure position, the representatives of capital find that the legal and institutional conditions they consider favorable to the reproduction of business remain firmly in place.

The concept of institutional instability might be said to be a correlate of that of the gray zone, in that both capture the unstable, uncertain, and indeterminate character of institutions and of the practices of social actors in the world of work today. More specifically, institutional instability is driven by interactions between legal change and the labor market that render even more indefinite the fluid and ambiguous boundaries of employment in the gray zone—either by creating uncertainty over what regulations are applicable or by disrupting the established operations of the institutions of employment protection. In these circumstances, government officials, union leaders, and rank-and-file workers in particular may be confused about what the law requires or the functioning of employment protection institutions, about how to use the law to resolve labor disputes, and how to strategically navigate labor relations in light of the prevailing legal framework. By contrast, the representatives of capital—better positioned, strategically, in relation to the processes of legislation and reform—are often better equipped to either use the law to their advantage or to circumvent it in pursuit of profit. In practice, this asymmetry exacerbates the fragmentation and hybridization of different forms of labor market participation, blurring the boundaries between protected and unprotected situations, security and insecurity, law and legal vacuum.

Permanent Reform and Institutional Instability in the Brazilian Labor Market

The recent history of Brazilian employment law has been characterized by sweeping reforms associated with austerity policy. Regulatory frameworks and social protections established since the early twentieth century have been ever more rapidly dismantled, driven by a hegemonic public discourse that frames employment law and its institutions as impediments to the efficient buying and selling of labor power, constraining business competitiveness in a globalized economy and stifling job creation. Given that “excessive regulation” hinders the proper functioning of the market, a “modernization” of laws and institutions is called for. The discourse often adopts a salvific tone, depicting the State as over-indebted and mired in bureaucratic corruption, a situation for which cuts to public spending and the policy measures associated with them are the only viable political and economic solution.

Between 2016 and 2022, Brazil thus experienced deep cuts in public spending and sweeping employment and social security reforms that rolled back rights, dismantled public welfare, and weakened trade unions (Silva et al. 2018; Krein et al. 2019; Cavallazzi and Silva 2019; Dutra and Matos 2019; Soares 2021). In addition, changes to employment regulations and corresponding institutional arrangements unfolded at a breakneck pace, effectively turning reform into a near-permanent state of affairs.

This state of constant reform was rapidly attained, in two distinct phases. The first began with the impeachment of Dilma Rousseff and Michel Temer’s assumption of the presidency (2016–2018). A pivotal moment was the enactment of Constitutional Amendment No. 95/2016, which established a new fiscal regime that capped public spending. This measure represented a significant milestone in the adoption of austerity policy, resulting in the contraction of public services, including a reduction in the capacities of both the employment inspectorate and the judicial system. The reforms enacted by Laws Nos 13.429/2017 and 13.467/2017 dealt significant blows to workers’ rights. They also considerably curtailed the powers of the Labor Courts by narrowing the scope for recourse to them and imposing a tighter time-limit on the making of claims, so making workers’ access to justice more difficult, and introducing regressive union reforms that accelerated the decline of organized labor. Meanwhile, the pension system underwent a sweeping restructuring, bringing new restrictions on entitlements and benefits.

The second phase of reform took place under the Bolsonaro administration (2019–2022). In 2019 alone, the government enacted a swift and wide-ranging set of measures: a constitutional overhaul of the pension system (Constitutional Amendment No. 103/2019); the dissolution of the Ministry of Labor by (interim) emergency presidential order (Provisional Measure [PM] No. 870 ); a broad revision of numerous Occupational Health and Safety Regulatory Standards (Normas Regulamentadoras – NRs) initiated by the federal executive; and the enactment of the Declaration of Economic Freedom (Law No. 13.874/2019), a revised version of PM No. 881 of May 1, 2019, introducing new safeguards for the free market. In addition, PM No. 873, in effect from March to June 2019, prohibited the collection of membership fees and other union dues without prior individual authorization, thereby constraining union activity. PM No. 905, meanwhile, introduced the so-called Green and Yellow Employment Contract, which aimed to reduce hiring costs by lowering employer contributions. Notably, the eventual expiry of PMs 873 and 905 without their conversion into permanent law further contributed to the broader climate of permanent legal and institutional volatility.

This pattern persisted during the Covid-19 pandemic. Confronted by a public health and economic emergency, the government implemented legal and policy changes that scaled back employment protections in order to offer greater legal certainty for businesses in pursuing their accumulation strategies. A wave of emergency measures ensued, characterized by the accelerated issue of provisional measures, laws, decrees, administrative orders, and court judgments. Justified in terms of the need to improvise a response to an urgent and exceptional situation, these measures suspended existing employment legislation, eroded constitutional principles, and curtailed institutional mechanisms of employment protection. A striking example of this dynamic was a series of provisional measures on employment relations issued by the federal presidency. Noteworthy among these were PM No. 927, which limited employment inspections, allowed individual agreements to override both statutory employment protections and collective bargaining agreements, enabled the bringing-forward of vacations and public holidays, and authorized remote work without requiring amendments to employment contracts; PM No. 936 (later converted, with modifications, into Law No. 14,020/2020), which established the Emergency Employment and Income Maintenance Program and allowed the temporary suspension of employment contracts and reductions in working hours and wages; PM No. 945 (converted into Law No. 14,047/2020), which authorized the hiring of employees in place of casual dockworkers at recognized national ports and expanded the list of essential occupations under strike law (Law No. 7,783/1989); PM No. 1,045, which reintroduced a revised version of the Emergency Employment and Income Maintenance Program; PM 1,046, which reinstated several provisions from PM No. 927; PM No. 1,108, which modified regulations regarding remote work and meal voucher benefits under the CLT; and PM No. 1,109, which implemented measures to mitigate the social and economic consequences of officially declared public calamities. In the same vein, the Federal Supreme Court (STF), in its judgements in actions challenging the constitutionality of certain provisions in PM No. 927 (ADIs 6342, 6344, 6346, 6348, 6349, 6352, and 6354) and PM No. 936 (ADI 6363), ultimately upheld the validity of nearly all of them, despite the provisional measures being considered unconstitutional by qualified commentators (ANAMATRA 2020; ANPT 2020; REMIR 2020; Grillo 2020).

The judiciary, in fact, played a decisive role in both waves of constant reform. The Supreme Federal Court (STF) relaxed established case-law and reinterpreted the constitution in ways that led to the erosion of substantive rights, the strengthening of employers’ authority, the validation of precarious contractual arrangements, the recognition of the notion of individual autonomy in labor relations, the curtailment of union rights, and expansion of the possibilities for derogation from collective agreements. The combined effect of legislative reforms and developments in case-law has been problematic in two respects: not only were the new norms regressive in their impact but so too was the acceleration of legal time. On the one hand, beyond simply altering legal provisions and shifting the initiative in legal production from the public to the private sphere, these reforms saw systematic and fundamental shifts of legal interpretation by the courts—ultimately undermining core pillars of the rule of law, including the principles of non-retroactivity, constitutional supremacy, and legal certainty. On the other hand, the acceleration of legal production itself, the relentlessness of reform, regardless of its specific content, sees legal certainty transformed into uncertainty of both law and life (Ferreira 2012, 2016; Ost 2005). For when the tempo of legal change becomes too rapid and unpredictable, law loses its capacity to provide structure and orientation to social life. Since the force of law is gauged by its efficacy and its ability to structure social relations over time, the acceleration of legal time generates, at the very least, uncertainty about what rules are in fact in force. This uncertainty, in turn, leads to confusion, increased vulnerability, and the risk that employment relations are reduced to expressions of raw power.

A concrete case may help clarify this dynamic: during the Covid-19 pandemic, the Brazilian government enacted a series of legal measures to address the effects of the health crisis. In the early days, new employment regulations were issued at an extremely rapid pace.^[8] Taken together, these formed a kind of emergency regulatory framework that introduced widespread legal instability into the world of work, in terms of legislation, case-law, and collective bargaining alike. At the same time, the so-called Emergency Employment and Income Maintenance Program^[9] was introduced, which allowed companies to suspend employment contracts and implement reductions in working hours and wages for a certain maximum period, either by individual agreement or through collective bargaining. Where wages were reduced or not paid by employers, workers would be entitled to receive a monthly payment from the federal government. However, the hurried implementation of the program, amid a public emergency and without public debate, left many workers confused about what regulations were currently in effect. Many were unsure of their rights and of how their wages were calculated.^[10] Given their disorientation and vulnerability amid the pandemic and the authorization of individual negotiation, the Emergency Program was implemented in the workplace under conditions not far from the exercise of raw power. In many cases, the terms were dictated unilaterally by employers, often to the detriment of workers who frequently lacked a clear understanding of the agreements they were signing. Some employers even subverted legal protections, for instance, by officially reducing working hours and wages paid under the terms of the Emergency Program while forcing employees to work the same hours as before.

This is what we refer to as institutional instability in the world of work. The instability represented by regulatory changes bringing the loss of employment rights (sometimes driven by radical shifts in principles of legal interpretation) has been compounded by the rapidity and unpredictability of change itself. As a result, actors have increasingly lost the sense of certainty and reliability ideally associated with the rule of law, and are faced by a twofold vulnerability, stemming on the one hand from the unreliability of rights, and on the other from the acceleration of legal time. Institutional instability can result in labor disputes and legal conflicts, as it did in the case of the Covid crisis discussed above, but it also affects the operation of the institutions responsible for employment protection, whose actions can be afflicted by confusion and uncertainty. A clear example of this is the operation of the employment inspectorate in Brazil during the Bolsonaro administration (2019–2022).

The employment inspectorate was deeply affected during this period by a series of changes introduced by the federal government. Firstly, the working routines and working conditions of the inspectors were disrupted by the dissolution of the Ministry of Labor and Social Security on which they depended,^[11] which was merged into the Ministry of Finance.^[12] Just over two years later, there came another “institutional shift” with the reestablishment of the Ministry of Labor and Social Security.^[13] On top of this came multiple revisions of the Regulatory Standards^[14]—the legal framework the inspectors are responsible for enforcing—on the grounds that employment legislation needed to be streamlined and modernized. Finally, one should note that several provisional measures issued by the federal government during the pandemic introduced innovations that directly affected employment inspection (notably PMs Nos 905, 927, and 936). These changes forced inspectors to rapidly reframe the conditions under which inspections were to be carried out, on both the introduction and the eventual expiry of the interim decrees.^[15] Taken as a whole, this wave of regulatory change generated confusion and uncertainty in the work of the inspectorate.^[16] Some of the new regulations made novel demands on inspectors, who were unable to rely on guidance from headquarters or local offices to resolve uncertainties or establish consistent procedures. The rapid pace of regulatory change, coupled with the interim nature of provisional measures, required of them considerable efforts of interpretation and frequent adjustments to practice. This institutional instability made itself felt in the loss of clear points of reference, leading to uncertainty and unclarity in their professional practice.

Digital Work Platforms and the Gray Zone in Employment in Brazil

Uncertainty and indeterminacy of employment status are characteristic of platform-mediated work, even when features of waged employment are present. This includes work with companies that provide ride-hailing services, such as Uber, Cabify, and 99, as well as delivery platforms for goods and food, like UberEats and iFood.

Dieuaide and Azaïs (2021) analyze digital work platforms’ role in the creation of gray zones in terms of the private appropriation of the social fabric, the deregulation of work, and competition with public authority. The recourse to social dumping and forum shopping driven by platforms’ quest for competitiveness; their refusal to recognize employment and social security rights, a key factor contributing to deinstitutionalization; and their private appropriation of the social wealth represented by public space and infrastructure and the data collected by digital platforms; all these fuel dispute over rules and frameworks of regulation. They conceive of the gray zone as an intermediate space of regulation characterized by atypical forms of regulation that escape the established legal frameworks and by the loss of efficacy of existing norms.

Companies in this sector often employ strategies to evade employment legislation and regulations—what some scholars have described as new forms of illegality (Silva et al. 2012; Azaïs 2010b) or “cold flexibilization” (Cardoso 2003). App-based delivery workers and ride-hail drivers face precarious conditions of life and work, operating without social protections, with working-time and movements controlled by systems of algorithmic management. These conditions illustrate the insecurity inherent to the informality of platform work in Brazil (Fioravanti, Martins, and Rizek 2023) and to uberization more generally (Abílio 2023). This insecurity is exacerbated by the institutional instability that contributes to regulatory disputes, legal conflicts and the erosion of legal certainty.

More than a decade after Uber began operating in Brazil, and despite a high level of litigation over how to classify workers’ relationship with the platform, interpretative disputes persist, while the Labor Courts have yet to establish consistent case-law on the matter. Unlike in other countries, where higher courts have recognized a presumption of employment, in Brazil the success of Uber’s strategic litigation has led to the creation of a body of case-law that strains to favor corporate interests, undermining both the development of national employment law and the independence of the courts (Iturraspe Oviedo, Cabral Silva, and Santos 2023).

In contrast to the uncertainty surrounding workers’ entitlement to the protections of employment and the persistent insecurity of both employment and life that is amplified by the legal anomie, platforms enjoy a legal certainty that allows them to operate freely and without regulation, thanks to key judgments responding to the earliest attempts at the public regulation of ride-hailing services.

The passivity of most Brazilian labor courts in the face of the manipulation of judicial decision-making through jurimetrics (Iturraspe Oviedo, Silva, and Santos 2023) does more than reveal platform companies’ success in circumventing the established legal frameworks. It also highlights mechanisms of institutional instability that contribute to the expansion of the gray zone around work for digital platforms that impose a certain subordination on supposedly independent contractors.

On one hand, it shows how the institutional parameters and foundational principles of Brazil’s Labor Law once relied upon by judges to distinguish employment relationships have become permeable and hollowed out, creating the legal-institutional conditions that allow platform companies to continue operating without regulation. On the other, it contributes to the erosion of legal certainty among social actors, reinforcing political and union strategies that seek the regulation of platform work outside the traditional framework of represented by employment, in search of some “third way” (Silva 2024; Lourenço Filho and Porto 2024; Magaldi et al. 2024).

To lack of clarity regarding the law, social actors’ confusion over what rules are currently in effect and doubts about the government’s ability to address precarious work in the digital ecosystem are now added further uncertainties. There is doubt, for instance, about which judicial forum has jurisdiction in disputes between workers and digital platforms. In 2023, a justice of the Supreme Federal Court (STF) sitting alone ruled that such disputes did not fall under the jurisdiction of the Labor Courts. In Complaint 59.795, filed by Cabify in response to a lower court ruling that recognized the existence of an employment relationship between platform and driver, Justice Alexandre de Moraes not only rejected the claim of employment but also transferred the case from the Labor Court to the civil courts that handle private and commercial matters. Added to the existing legal uncertainty, then, there is growing confusion about what institutional forums are responsible for resolving such disputes, leaving public officials and worker representatives increasingly disoriented.

While not binding precedent, this Supreme Court ruling that the relationship between app-based drivers and platforms was cognate with that between self-employed transport workers and their clients, being a commercial rather than an employment relationship, has significantly influenced public and judicial debates, reinforcing a pro-market regulatory approach precisely when the bench of the Superior Labor Court (Tribunal Superior do Trabalho) was leaning toward requiring companies to recognize these workers as employees. Institutional instability thus entails uncertainty not only about the substance of judicial decisions, but also over jurisdiction and what cases the labor courts can hear.

In 2026, the Supreme Federal Court (Supremo Tribunal Federal) will hear an Extraordinary Appeal (RE 1446336) that addresses the legal classification of the relationship between app-based drivers and the companies that operate the platforms. By recognizing the case as having general importance (as Tema 1291), the Court aims to standardize case-law and establish binding precedent for over 10,000 similar cases currently moving through the system. The tendency of the current court to take more market-liberal approaches suggests that such standardization will only amplify institutional instability, presaging as it does an interpretation of the law that fosters a hybridity of employment status, expanding the gray zone in disavowing existing judgments that equate algorithmic control with direct, personal supervision as a criterion of legal subordination. In doing so, it would ultimately broaden the scope for contractual arrangements resembling bogus self-employment that in this way escape the regulation associated with employment. The public hearing convoked by the judge-rapporteur in the case served as a forum for debate but did not otherwise impinge on the Court’s review of the issues pending in the Labor Courts.

The Supreme Federal Court’s pro-market decision-making (Grillo et al. 2023) between 2015 and 2025, permitting the full outsourcing of services, promoted the uberization of work previously done by motoboys—the office employees who acted as motorcycle couriers (Abílio 2023). These rulings on outsourcing accelerated the de-institutionalization of traditional employment relationships, fostering social insecurity and paving the way for platformization. At the same time, the legal certainty promised by binding precedents from higher courts has failed to materialize in the face of constant reform and unending legal dispute (Grillo and Carelli 2021). Instead of stabilizing the legal landscape, the Court has become a co-producer of instability in matters of employment and a driver of institutional instability.

The persistence of legal uncertainty and judicial ambiguity over more than a decade has undermined both unions’ confidence in employment law and the judiciary’s ability to stabilize expectations, behaviors, and employment relationships. Meanwhile, institutional instability—fueled by the erosion of legal certainty, coupled with the failure to establish consistent case-law on whether platform-based drivers and delivery workers qualify as employees—has introduced new dimensions to public, legislative, and governmental debates. The growing number of bills in Congress aimed at regulating app-based drivers (Lourenço Filho and Porto 2024), the lack of consensus within the tripartite workgroup established by the federal government to draft a proposal for regulating platform-based transportation of goods and passengers,^[17] and the stalled progress on the supplementary bill introduced by the Lula administration—which seeks to extend social security and union rights to platform drivers while still classifying them as self-employed—all contribute to the prevailing climate of legal uncertainty and undermine public trust in the ability of state institutions to effectively address these conflicts.

Final Considerations

To sum up: the acceleration of legal time represents a significant challenge in its own right, having tangible impacts on workers, regardless of whether newly emerging regulatory frameworks may be more or less protective than the ones they replace.

Institutional instability exacerbates the gray zone in employment, creating uncertainty and confusion both in the institutions responsible for employment protection—such as the employment inspectorates and the labor courts—and among workers and the organizations that represent them, ultimately amplifying the insecurity and vulnerability of those engaged in platform-mediated labor.

In contexts of institutional instability, interactions between actors are shaped by uncertainty as to the law and the instability of the normative frameworks governing the operation of public institutions, such that workers find themselves engaged in what is more or less a straightforward power struggle, as employers seek to impose their will unilaterally.

The State, then, is jointly responsible for the creation of the gray zone, through its production of institutional instability. This instability is fundamentally anti-democratic, not only eroding both the idea and the practice of democracy as a means to social justice, but also allowing the emergence of a sphere of unchecked power relations where the rule of the strongest prevails and democracy is voided of substance and meaning.

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