By: Dr. Cintia Carvalho
The third sector, composed of associations and nonprofit entities — including non-governmental organizations (NGOs) and civil society organizations of public interest — plays a vital role in society by promoting social, cultural, and environmental causes that often go unaddressed by the public or private sectors.
These organizations are known for their work in areas such as education, health, human rights, and sustainability. However, employment relations in the third sector bring unique challenges, primarily due to their reliance on external funding such as donations, partnerships, and public incentives.
As a result, beyond voluntary labor, and in order to meet their demands and “balance the books,” these entities often turn to hiring service providers through the Individual Microentrepreneur model (MEI).
Indeed, the MEI allows self-employed professionals to formalize their work, with lower tax costs and flexibility for both parties. However, this practice can become a legal and labor-related minefield for third-sector organizations.
One of the main risks of hiring MEIs is the phenomenon known as “pejotização” — a term used in Brazil to describe the misclassification of employment. In this scenario, although the service provider is formally hired as a legal entity, they perform daily tasks that characterize an employment relationship, such as subordination, regularity, personal service, and compensation — as outlined in Article 3 of the Consolidation of Labor Laws (CLT). In such cases, labor courts may reclassify the MEI contract as an employment relationship, potentially generating labor liabilities for the organization.
Another issue to consider is that MEI hiring may compromise the worker’s protection. Without the rights guaranteed by a formal employment contract under the CLT — such as paid vacation, 13th salary, and FGTS (Severance Fund) — professionals are more vulnerable. This may contradict the very values many entities advocate for, such as dignity and social well-being.
On the other hand, it is important to acknowledge that NGOs face significant financial constraints, which may justify the search for less costly alternatives like the MEI. Nonetheless, the sustainability of such practices must be evaluated from a long-term perspective, balancing financial efficiency with legal and ethical compliance.
In short, employment relations in the third sector require careful attention and responsibility. The practice of hiring through MEIs should be approached cautiously, ensuring that neither the professional nor the integrity of the organization is harmed. Strengthening dialogue among entities, workers, and legal experts may be the path to aligning the principles of these organizations with fair and sustainable labor practices.
