Brazil’s Highest Labor Court Rules Caixa Strike ‘Non-Abusive,’ Bars Wage Discounting

Brazil’s Superior Labor Court (TST) has ordered an immediate end to the strike by employees of the federal bank Caixa Econômica Federal, but delivered a major victory to the workers by ruling the protest was "non-abusive" and protecting them from pay penalties. The TST's Specialized Section for Collective Disputes fixed a salary adjustment and barred the state-owned bank from discounting wages for the days workers were on strike, a decision that establishes a significant precedent for labor disputes involving Brazil's large public sector and state-owned enterprises.

The ruling, delivered on Tuesday, September 29, 2026, requires the immediate return of all employees but granted a two-year salary adjustment of 100% of the INPC (National Consumer Price Index) plus a 0.6% real increase for the category. While the bank is prohibited from a direct wage discounting, the court ruled that the missed time must be compensated by the employees within 180 days.

This decision is especially consequential because of the nature of the institution involved. Caixa Econômica Federal is the country's largest 100% government-owned bank and the primary administrator of numerous federal social programs, including the Bolsa Família welfare payment, the FGTS worker severance fund, and is the largest single mortgage lender in Brazil. The employees' strike, which began on September 10, had disrupted crucial public services and put pressure on the federal government, which relies on the bank to execute key social and economic policies.

The Superior Labor Court (TST) is the highest appellate court for labor issues in the country, and its role is to standardize labor case law across Brazil. By declaring the strike "non-abusive," the TST affirmed the workers' right to strike despite the bank's request to declare it illegal. The ruling sends a strong signal to other state-owned enterprises and their workers that the court will uphold the right to collective action when negotiations fail, especially in the absence of excessive action or operational violations by the union during the stoppage.

The immediate next step is the full return of the Caixa workforce and the implementation of the negotiated compensation for the strike days. The broader consequence will be seen in upcoming negotiations between other large federal companies and their powerful employee unions, who will now enter bargaining with a reinforced position against the threat of outright pay cuts for time on strike.

What it touches

The TST's decision is relevant for state-owned banks and other federal enterprises in Brazil, signaling a higher cost and greater difficulty in resolving collective bargaining disputes by limiting management's tools like automatic wage discounting. This reinforces the labor risk associated with the federal government's direct employment costs and operational stability at major state-controlled entities like Banco do Brasil, Petrobras, and Eletrobras.