Government edits new provisional measure that institutes the “Emergency Program for Maintenance of Employment and Income”

At the end of yesterday (01/04/2020), in an extra edition of the Federal Official Gazette, the Government published Provisional Measure No. 936/2020, which institutes the Emergency Program for the Maintenance of Employment and Income and brings complementary labor measures to cope with the state of public calamity and the public health emergency of international importance resulting from the coronavirus.

The measures of the Emergency Program are:

Payment of an Emergency Benefit for Maintenance of Employment and Income;
The proportional reduction in working hours and wages;
Temporary suspension of the employment contract.

It is important to note that these measures do not apply to the bodies of direct and indirect public administration, public companies and mixed capital companies, including their subsidiaries and international organizations.

EMERGENCY BENEFIT FOR MAINTENANCE OF EMPLOYMENT AND INCOME

The benefit, created by PM 936/2020, will be funded with Union resources in the following cases:

a) Proportional reduction of working hours and wages; and

b) Temporary suspension of the employment contract.

The benefit will be provided on a monthly basis and due from the date of commencement of the reduction of the working hours and wages or the temporary suspension of the employment contract, subject to the following provisions:

The employer will inform the Ministry of Economy of the reduction of the working hours and wages or the temporary suspension of the employment contract, within 10 days, counted from the date of the entering of the agreement;
The first installment will be paid within 30 days, counting from the date of entering of the agreement, provided that the entering of the agreement is informed within the above period; and
The benefit will be paid exclusively for the duration of the proportional reduction in the working hours and wages or the temporary suspension of the employment contract.

If the employer does not provide the necessary information within the period established above:

Will be responsible for the payment of the remuneration in the amount prior to the reduction of the working hours and wages or of the temporary suspension of the employment contract, including the respective social charges, until the information is provided;
The benefit start date will be fixed on the date the information was actually provided, being due for the remainder of the agreed period; and
The first installment, subject to the provisions above, will be paid within 30 days, counting from the date on which the information was actually provided.

ATTENTION: It is important to note that an act of the Ministry of Economy will discipline (i) the form of transmission of information and communications by the employer and (ii) the form of concession and payment of the benefit. In other words, we still depend on the publication of said act so that companies can effectively apply the provisions contained in PM 936/2020.

The benefit amount will be based on the monthly unemployment insurance amount to which the employee would be entitled, subject to the following provisions:

In the event of a reduction in working hours and wages, it will be calculated by applying the percentage of the reduction to the calculation basis; and
In the event of temporary suspension of the employment contract, it will have monthly value:

a) Equivalent to 100% of the unemployment insurance amount to which the employee would be entitled, in the hypothesis provided for in the caput of Article 8 (maximum term of 60 days, which can be divided into up to two periods of 30 days); or

b) Equivalent to 70% of the unemployment insurance to which the employee would be entitled, in the hypothesis provided for in § 5 of Article 8 (companies with gross revenue greater than BRL 4,800,000.00 in the calendar year of 2019 should complement the benefit in the amount of 30% of the employee’s salary).

The benefit will be paid to the employee regardless of:

Compliance with any acquisition period;
Employment duration; and
Number of wages received.

On the other hand, the benefit will not be due to the employee who is:

Occupying a public office or job, a position on a free appointment and dismissal position or holder of an elected mandate; or
In enjoyment of:

Benefit from continued provision of the General Social Security Regime or the Social Security Own Regimes, with the exception of the death pension and accident allowance;
Unemployment insurance, in any of its forms; and
The professional qualification scholarship paid by the Workers’ Support Fund (FAT), to which will be entitled to the worker who has a suspended employment contract due to participation in a course or professional qualification program offered by the employer, in accordance with the provisions of a collective agreement signed for this purpose.

PROPORTIONAL REDUCTION IN WORKING HOURS AND WAGES

During the state of public calamity, the employer may agree to a proportional reduction in the working hours and wages of its employees, for up to 90 days, subject to the following requirements:

Preservation of hourly wages;
Settled by individual written agreement between employer and employee, which will be sent to the employee at least 2 calendar days in advance; and
Reduction of working hours and wages, exclusively, in the following percentages:a) 25%;
b) 50%; or
c) 70%.

The working shift and the salary previously paid will be reestablished within 2 calendar days, counting of:

The cessation of the state of public calamity;
The date established in the individual agreement as the end of the period and reduction agreed; or
From the date of communication from the employer informing the employee of his decision to bring forward the end of the agreed reduction period.

TEMPORARY SUSPENSION OF THE WORK CONTRACT

During the state of public calamity, the employer may agree to temporarily suspend the employment contract of its employees, for a maximum period of 60 days, which may be divided into up to two periods of 30 days.

The temporary suspension of the employment contract will be agreed upon by individual written agreement between employer and employee, which will be forwarded to the employee at least 2 calendar days in advance.

During the period of temporary contract suspension, the employee:

Will be entitled to all benefits granted by the employer to its employees; and
Will be authorized to collect social security contributions to the General Social Security System as an optionally insured worker.

The employment contract will be reestablished within 2 calendar days, counting:

The cessation of the state of public calamity;
From the date established in the individual agreement as the end of the suspension period agreed; or
From the date of communication from the employer informing the employee of his decision to bring forward the end of the agreed suspension period.

It is important to point out that if, during the period of temporary suspension of the employment contract, the employee maintains working activities, even if partially, through teleworking, remote work or distance work, the temporary suspension of the employment contract will not be characterized, and the employer will be subject to:

Immediate payment of remuneration and social charges for the entire period;
The penalties provided for in the legislation in force; and
Sanctions provided for in collective agreements.

Finally, we reinforce that, as already mentioned above, companies with gross revenue greater than BRL 4,800,000.00 in the calendar year of 2019 should complement the benefit in the amount of 30% of the employee’s salary.

MONTHLY COMPENSATORY AID

For cases in which the employer must pay the monthly compensatory aid, cumulatively with the payment of the benefit, it is important to note that this aid:

Should have the amount defined in the individual agreement or in collective negotiation;
Will have an indemnity nature;
Will not be included in the calculation basis of the income tax withheld at source or of the annual tax return adjustment statement for the employee’s individual income;
Will not be included in the calculation basis of the social security contribution and other taxes levied on the payroll;
Will not be included in the basis for calculating the amount due to FGTS; and
May be excluded from net income for purposes of determining corporate income tax and Social Contribution on Net Income of corporate entities taxed by real profit;
Will not integrate the salary due by the employer.

JOB SECURITY

To the employee who receives the benefit, as a result of the reduction in working hours and wages or the temporary suspension of the employment contract, is guaranteed a provisional job security is recognized, in the following terms:

During the agreed period of reduction of working hours and wages or temporary suspension of the employment contract; and
After the re-establishment of the working shift and wages or the end of the temporary suspension of the employment contract, for a period equivalent to that agreed for the reduction or suspension.

The termination without cause implemented during the job security period will subject the employer to payment, in addition to the severance allowances provided for in the current legislation, an indemnity in the amount of:

50% of the salary to which the employee would be entitled in the period of provisional job security, in the event of a reduction in working hours and wages equal to or greater than 25% and less than 50%;
70% of the salary to which the employee would be entitled during the period of provisional job security, in the event of a reduction in working hours and wages equal to or greater than 50% and less than 70%; or
100% of the salary to which the employee would be entitled during the period of provisional job security, in the event of a reduction in the working hours and wages in a percentage higher than 70% or temporary suspension of the employment contract.

It is important to highlight that the payment of said indemnity does not apply to the hypotheses of (i) resignation and (ii) termination for cause of the employee.

POSSIBILITY OF COLLECTIVE NEGOTIATION

Measures to reduce working hours and wages or temporarily suspend the employment contracts referred to in PM 936/2020 may be implemented through collective negotiation, if it is in the company’s interest, aiming at greater safeguarding and mitigation of risks, observing the requirements foreseen for each hypothesis.

At this point, collective bargaining may establish percentages of reduced working hours and wages different from those provided for in the PM (25%, 50% or 70%).

In this case, the benefit will be due under the following terms:

No perception of the Emergency Benefit for the reduction of working hours and wages below 25%;
25% of the monthly unemployment insurance amount to which the employee would be entitled to a reduction in working hours and wages equal to or greater than 25% and less than 50%;
50% of the monthly unemployment insurance amount to which the employee would be entitled to a reduction in working hours and wages equal to or greater than 50% and less than 70%; and
70% of the monthly unemployment insurance amount to which the employee would be entitled to a reduction in working hours and wages over 70%.

The measures referred to in Article 3, of PM 936/2020 (payment of the benefit, proportional reduction of working hours and wages and temporary suspension of the employment contract), will be implemented through an individual agreement or collective bargaining agreement to employees:

With a salary equal to or less than BRL 3,135.00 (three thousand one hundred and thirty-five Reais); or
Holders of higher education degrees and who receive a monthly salary equal to or higher than twice the maximum limit of benefits under the General Social Security System.

For employees not covered by the above hypotheses, the measures provided for in Article 3 can only be established by collective agreement, except for the reduction of working hours and wages of 25%, which can be agreed individually.

The collective bargaining agreements previously entered into may be renegotiated to adapt their terms, within 10 calendar days, counted from the publication date of PM 936/2020 (01/04/2020).

UNION COMMUNICATION

Individual agreements to reduce working hours and wages or temporarily suspend the employment contract, agreed under the terms of PM 936/2020, must be communicated by employers to the respective labor union, within up to 10 calendar days, counted from the date of its celebration.

PROVISIONAL MEASURE SCOPE

The provisions of PM 936/2020 also apply to apprenticeship and part-time work contracts.

FINAL PROVISIONS

During the state of public calamity:

The course or professional qualification program covered by the Labor Code, may be offered by the employer exclusively in the non-presence mode and will last no less than 1 month and no more than 3 months;
Electronic means may be used to meet the formal requirements provided for in the Labor Code for negotiating collective labor agreements, including for calling, deliberating, deciding, formalizing and publicizing the collective agreement; and
The deadlines foreseen in the Labor Code for negotiating collective rules are reduced by half.

EMPLOYEE WITH INTERMITTENT EMPLOYMENT CONTRACT

The employee with an intermittent employment contract formalized until the publication date of PM 936/2020 (April 1, 2020), under the terms of the provisions of § 3 of Article 443, from Labor Code, will be entitled to the monthly emergency benefit in the amount of BRL 600.00 (six hundred Reais), for a period of 3 months.

The benefit, in this circumstance, will be due from April 1, 2020 and will be paid within 30 days.

The existence of more than one employment contract under the terms of § 3 of Article 443, of Labor Code, will not generate the right to grant more than one monthly emergency benefit.