Brazil's STF Rules Mato Grosso's Suspension of Public Servant Contracts UnconstitutionalIn a unanimous decision, Brazil's Supreme Federal Court (STF) has declared unconstitutional the measures adopted by the state government of Mato Grosso in 2025. These measures had suspended consigned credit contracts and other payroll deductions for public servants for a period of 120 days.
The ruling came during the judgment of two legal actions: ADI 7900 and ADPF 1306. The court found that the state government overstepped its constitutional authority by interfering in private contracts between public servants and banking institutions.
Justice André Mendonça, in his opinion, emphasized that the state's actions constituted an improper intervention into private legal relationships. The decision reinforces the principle that state governments cannot unilaterally suspend contractual obligations that are governed by federal law and private agreement.
This ruling has significant implications for public sector labor relations and financial contracts in Brazil, clarifying the limits of state power in regulating employment-related financial instruments.