By Brazil Stock Guide – A Brazilian labor court ordered Grupo Casas Bahia SA (B3: BHIA3) to provisionally reinstate about 3,000 employees dismissed between Thursday (Aug. 13) and Monday (Aug. 17), restoring their employment contracts, pay and benefits. The ruling also requires the retailer to negotiate with labor unions before carrying out further collective layoffs.
The order, issued by the TRT-10 regional labor court on Tuesday (Aug. 18), gives Casas Bahia five days after formal notification to comply. The company may face a daily fine of R$500 for each affected worker, capped at the equivalent of 10 monthly salaries per employee. New collective dismissals without prior union negotiations could trigger a fine of R$10,000 per worker.
The injunction does not require the reopening of 298 stores announced for closure and does not guarantee permanent employment for the workers involved. Casas Bahia may transfer employees to compatible positions in its remaining operations or place them on paid leave while the decision remains in force. The order is provisional and subject to appeal.
Three-year workforce reduction
The latest dismissals came after a broader cost-cutting program that eliminated 11,749 positions between June 2023 and June 2026, equivalent to a 28% reduction in the company’s workforce.
Casas Bahia employed 41,866 people in June 2023, when it launched a transformation plan focused on reducing expenses and improving profitability. Headcount fell to 37,958 by the end of that year and to 31,739 in 2024.
The retailer had about 30,300 employees at the end of 2025. Its workforce stood at 30,306 in the first quarter of 2026 and declined to 30,117 three months later. The additional 3,000 dismissals announced in August are not reflected in the second-quarter headcount because they occurred after the reporting period.
Casas Bahia cut 4,576 positions in 2025 alone, reducing its workforce to 30,492 from 35,068. At the time, the company said it was removing structures that failed to generate value and seeking greater operating efficiency.
The store network also shrank. The number of locations fell to 1,078 from 1,127 in 2023. After closing 34 stores in 2025, the group operated 1,042 units before announcing another 298 closures this year.
Court limits new mass layoffs
The labor court did not prohibit Casas Bahia from reducing its workforce, closing stores or changing its structure. Instead, it required any new collective or mass dismissal to be preceded by effective discussions with labor unions.
“The union does not have veto power. The only requirement is that a collective decision be preceded by information and a real opportunity for dialogue before it is implemented,” the judge wrote.
The decision also ordered the immediate preservation of digital evidence related to the layoffs, including corporate emails, internal platform messages, access logs, version histories and backups dating from January 2026.
“The defendant must halt automated deletion routines for corporate emails, messages on internal platforms, access records, version histories and backups dating from January 2026,” the decision said.
Financial results improve, but pressure persists
The transformation plan coincided with improvements in some operating indicators. Casas Bahia’s adjusted Ebitda margin rose to 9.8% in the fourth quarter of 2025 from 6.1% in the first quarter of 2024.
Free cash flow to the firm reached R$2.2 billion in 2025, an increase of R$1.2 billion from the previous year. The gains, however, were not enough to resolve the company’s financial problems.
Higher interest rates and intense competition continued to weigh on results. The average CDI rate rose to 14.3% in 2025 from 10.8%, increasing the cost of financing.
Adjusted Ebitda reached R$597 million in the first quarter of 2026, while free cash flow totaled R$852 million. Casas Bahia still posted a R$1.06 billion loss, largely because of its financial result.
Credit restrictions deepen crisis
The company’s situation worsened in the second quarter after insurers reduced trade-credit coverage available to suppliers. An attempt to raise money internationally also failed to materialize.
With less access to capital, Casas Bahia purchased fewer products. Inventory fell by R$1.16 billion between the first and second quarters, to R$4.23 billion from R$5.39 billion.
The retailer then launched a second phase of its transformation plan to align staffing, stores and expenses with a lower level of business activity. It set aside R$502 million for restructuring costs, including workforce reorganization.
Casas Bahia sought court protection on Sunday (Aug. 16), covering approximately R$17.3 billion in debt. The filing followed the August dismissals and planned store closures as the company attempted to reorganize its finances and preserve operations.
Unions seek negotiations and compensation
Labor groups are seeking enforcement of Topic 638, a Supreme Court precedent requiring companies to engage unions before mass dismissals. They want employers to explain the reasons for the cuts and negotiate the terms of severance and other guarantees.
Guiomar Vidor, vice president of the CNTC, said the ruling would help prevent workers from being dismissed without warning and give unions a chance to negotiate immediate payments rather than leave employees waiting in a general creditor list.
The injunction “is fundamental so that workers are not taken by surprise, as generally happens, and so that unions can negotiate in advance how the dismissals will be carried out and how employees will be compensated, with immediate payment of the amounts owed, rather than being included, as they normally are, on the general list of creditors and waiting four to five years to receive their severance payments,” Vidor said.
Meetings among the unions involved are scheduled for the coming days. In addition to reinstatement and a halt to further layoffs without negotiations, the labor groups plan to seek an additional payment over what they consider a breach of the Supreme Court precedent.
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