Fluxo ruled against by Labor Court in lawsuit filed by Gafone

has been ordered by the Brazilian Labor Court to pay compensation in a lawsuit filed by League of Legends coach Pedro “Gafone” Ramos. The case involves the recognition of an employment relationship, payment of termination-related labor benefits, FGTS (Brazil’s mandatory severance fund) and the fine provided for under Article 477 of Brazil’s Consolidated Labor Laws (CLT). At first instance, the compensation was provisionally set at round US$ 48.000, in addition to US$ 960 in court costs. The final amount will still be determined during the liquidation phase of the proceedings.

Sheep Esports obtained access to the latest ruling, issued by the Regional Labor Court of the 2nd Region (TRT-2). In an appeal filed by Fluxo, the panel upheld the decision handed down by the 34th Labor Court of São Paulo and recognized that an employment relationship existed between Gafone and the organization from October 14 to December 2, 2024, when the coach worked on building Fluxo’s League of Legends project. Fluxo sought to overturn the recognition of the employment relationship and the resulting liabilities, but its appeal was denied.

According to the lawsuit, Gafone was working as a coach for when he began negotiations to join Fluxo. On October 14, 2024, the organization’s then-manager, Carlos “Carlito” Sagrette, allegedly presented the coach with a proposal to join the 2025 project. The proposal gave Gafone access to the team’s budget, freedom to participate in roster construction, and discussed compensation that could reach R$17,000 per month. A draft contract was also reportedly sent to the coach.

Following the negotiations, Gafone ended his professional relationship with KaBuM and began participating in activities related to the construction of Fluxo’s team. The coach took part in tryouts, roster building, player evaluations and discussions regarding players and salary ranges before the project was terminated.

The case also records that Gafone had a previous contract with KaBuM. This was considered relevant, with a witness testifying that the coach left his previous position because of the proposal made by Fluxo. The court also emphasized that the employment relationship with Fluxo could be recognized despite contractual issues involving his former organization.

The relationship between both parties ended on December 2, 2024. In the lawsuit, Gafone claimed that Fluxo used his work to build the project before subsequently terminating the initiative, leaving him unable to pursue a position with another team at that time.

The Labor Court considered the timing of the termination particularly relevant. According to testimony accepted as valid, the competitive scene’s transfer window began in November and ended in early December, making signings outside that period impossible except in exceptional circumstances.

The court of first instance concluded that the hiring process, after Gafone had left his previous position as KaBuM coach, prevented him from finding a new position in the high-level competitive scene. According to the ruling, the circumstances constituted a violation of the principle of objective good faith.

One of the main points of contention was whether an employment relationship actually existed. Fluxo argued that the parties had only been negotiating a potential hiring and denied that Gafone had effectively become an employee of the organization.

The Court, however, reached a different conclusion. The ruling recognized the existence of subordination, personal service, compensation and non-occasional work, elements used under Brazilian labor law to characterize an employment relationship. The relationship was established from October 14 to December 2, 2024, with Gafone working as a coach and a base salary of US$ 2.305 being used for the calculation of the damages.

TRT-2 upheld this understanding when ruling on the appeal. The decision states that the evidence demonstrated the provision of services and that the absence of a formal employment registration does not prevent recognition of an employment relationship when the necessary elements are present.

Fluxo appealed the original ruling and sought to overturn the recognition of the employment relationship, the labor-related payments and the compensation for lost profits. TRT-2, however, rejected the appeal and upheld the first-instance decision.

Fluxo was ordered to pay US$ 960 in court costs, calculated based on the provisional amount around US$ 48.000. The claim for moral damages, however, was rejected.

The Court found that the contractual frustration and material losses were already being addressed through the financial compensation awarded in the case. It also concluded that there was no evidence of an infringement of Gafone’s honor or image that would justify additional compensation.