Supreme Court, Congress debate transition rule on perks

The case comes a day after Chief Justice Edson Fachin met with Chamber of Deputies Speaker Hugo Motta (Republicans of Paraíba) and Senate President Davi Alcolumbre (Brazil Union of Amapá) to discuss a transition rule for the add-ons.

At the meeting, it was agreed that a proposal for a “transition rule” on the “limits of the constitutional salary cap” would be drafted “in the coming days.” Also in attendance were Dino and Justices Gilmar Mendes and Alexandre de Moraes, Deputy Prosecutor-General Hindenburgo Chateaubriand, and the president of the Federal Court of Accounts (TCU), Vital do Rêgo.

Dino’s decision gives the three branches of government 60 days to reassess all remuneration payments and suspend those not expressly provided for in federal, state or municipal rules. A transition rule is expected to be adopted because there would not be sufficient time to comply with the order within two months.

The justice issued the ruling on February 5. The injunction was submitted to the Supreme Court’s full bench, which will now decide whether to uphold the order issued earlier this month. Valor has learned that the Court is likely to uphold the measure. However, adjustments are expected to the deadlines set by Dino, taking into account the agreement reached at Monday’s (23) meeting regarding the “transition rule.”

Supreme Court justices admit behind the scenes that the matter is sensitive and overturning a colleague’s decision could further intensify criticism of the Court, which has grown amid developments in investigations involving Banco Master.

On Monday (23), Justice Mendes also issued a ruling on the add-ons. He determined that indemnity payments may only be made to members of the Judiciary and the Public Prosecutor’s Office when expressly provided for in a law approved by Congress.

Valor has learned that the decision may also be brought before the full bench on Wednesday, so that both Mendes’s and Dino’s orders can be reviewed jointly by the other justices.

That will depend, however, on Fachin. The chief justice may opt not to review any of the cases dealing with the add-ons until progress is made on the transition rule for indemnity payments.

The adoption of a transitional regime for changes to the add-ons is supported by professional associations and by the São Paulo State Court of Justice (TJ-SP), which requested a “reasonable deadline” for the approval of guidelines on the matter.

At the meeting held at the Supreme Court, the speakers of the Chamber and the Senate said it will not be possible to pass a specific law on the add-ons in 2026, given the elections and the priorities already set for this year. Behind the scenes, the possibility was raised that a solution could be addressed within the administrative reform under discussion in the Chamber, though there is still no date for a vote.

Speaking to Valor, Federal Deputy Pedro Paulo (Social Democratic Party, PSD, Rio de Janeiro), coordinator of the administrative reform working group in the Chamber, defended including the issue in the proposal. “We will have to deliberate on this, and now there is pressure from outside in. There are bills under consideration, but I believe we should promptly discuss the administrative reform, which also addresses this [the add-ons], and resolve it at once,” he said.

On Tuesday, Motta said he rules out any possibility of the Chamber legalizing above-cap salaries through bills already under consideration or that may be introduced. “What we have said is that this discussion needs to be carried out in a much broader way. Dino’s decision, now reaffirmed in another case by Justice Gilmar, was appropriate and brings to the table of real Brazil, which faces many challenges, the incompatibility of continuing to pay these add-ons across various levels of the public administration,” he said.

Finance Minister Fernando Haddad said the Supreme Court’s recent decisions represent a “window of opportunity” for Congress to advance a bill aimed at curbing above-cap salaries, sent by the ministry to the Legislature in 2024.

In the Finance Ministry’s view, progress on the bill to curb above-cap salaries is also a way to begin the administrative reform debate in a “proper” manner, targeting public servants with the highest pay—often above constitutional limits.

In his ruling earlier this month, Dino ordered Congress to specify which indemnity payments qualify as exceptions to the public service salary cap. He said that although the Court has already established consolidated case law, there has been an “extraordinary” spread in the payment of installments of an “indemnity nature.”

According to him, the Supreme Court has ruled “hundreds (perhaps thousands) of times” on this type of payment, always upholding constitutional parameters.