The Federal Regional Court of the 3rd Region (TRF-3) has reversed a previous ruling, reinstating a liability claim against Palmeiras involving more than R$ 6 million in unpaid Fundo de Garantia do Tempo de Serviço (FGTS) contributions. The legal dispute concerns 89 former employees, including athletes, coaches, and staff members who were contracted by the club between 2006 and 2009.
Court Ruling on Image Rights and Salary
The decision, led by federal judge Herbert Cornelio Pieter de Bruyn Junior, concluded that the payments made by Palmeiras during that three-year period, which the club classified as “image rights,” functioned effectively as salary. According to the court, the fiscal inspection conducted by the Ministry of Labor demonstrated that these payments were made on a fixed, habitual, and monthly basis, rather than being linked to the actual commercial exploitation of the individuals’ images.
The court further clarified that the practice of using private companies owned by the athletes to receive these payments did not alter their fundamental nature as remuneration. Consequently, the TRF-3 determined that the club failed to meet its obligations regarding the FGTS and social contributions that apply to standard salary payments.
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Legal History of the Case
This case originated from an action filed by the Brazilian Federal Revenue (Fazenda Nacional) in 2016. In the initial proceedings, the lower court had ruled in favor of Palmeiras, dismissing the government’s claim and ordering the Fazenda Nacional to pay approximately R$ 385,612 in legal fees. The federal government appealed that decision, leading to the current reversal by the 1st Panel of the TRF-3.
Throughout the legal process, Palmeiras has maintained that its image rights contracts were civil in nature and operated independently from employment contracts. The club has consistently argued that these arrangements did not constitute labor or tax fraud. Despite the recent loss, the club’s legal department has indicated its intention to challenge the decision once more by filing a new appeal with the Superior Court of Justice (STJ) in Brasília.
Financial Implications and Next Steps
The R$ 6 million figure represents the base value of the unpaid contributions identified by the court. This amount does not include the additional interest and monetary corrections that will be applied to the total debt. As the case moves to the STJ, the focus will remain on whether the classification of these payments as image rights can withstand the scrutiny of the higher court or if the appellate ruling will stand, forcing the club to fulfill the payment of the backdated FGTS and associated social charges.
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