6/30/2020
On 06/16/2020, the Brazilian Senate approved Conversion Bill No. 15/2020, arising from Provisional Presidential Decree (MP) No. 936/2020. The MP instituted the Emergency Program for The Maintenance of Employment and Income, which allows the reduction of wages and working hours and temporary suspension of employment contracts during the Covid-19 pandemic to maintain employment.
The original language of the Provisional Presidential Decree has gone through some changes by the Congress and then headed to the president for sanctioning, which is expected by entrepreneurs and employees to happen for the next few days, since the said law will allow the maintenance of employment and the income of workers.
The Provisional Presidential Decree prescribes the payment, by the federal government, of a part of the unemployment compensation, for up to 60 days, to workers whose employment contract is suspended or for up to 90 days if the wage and working hours are reduced. Workers may also stay in their jobs for twice the period during which their wages were reduced.
The allowed reduction of working hours can be 25%, 50% or 70% – the rules vary according to the employee’s wage bracket. The Bill innovates by making it possible to extend the periods of suspension and reduction covered by the program through Executive decree and for the duration of the pandemic – initially, these periods were 60 days.
Another innovation represented by the Bill is related to Profit Sharing (PLR), providing that, if the company decides to pay the interest in a single installment, the agreement must be executed at most 90 days before payment.
On the other hand, if the amount stipulated as PLR is split, and a part of such amount is advanced by the company, the MP prescribes that the parties must execute a collective-labor agreement before, which can occur in the same year, however, and not necessarily in the calendar year.
It is worth remembering that the law currently prohibits the advance payment or distribution of PLR more than twice in the same year or for less than one quarter, so that it is not deemed a wage and all tax charges are preserved.
In any case, as the Bill still depends on the presidential sanction, it is important to await and always look for legal advice in order to find the best options, thus avoiding economic, labor, and fiscal impacts.
Author: Peterson Muta
