The Federal Government published, on April 1, the provisional measure 936/2020, establishing the Emergency Employment and Income Maintenance Program, in order to preserve the employment and income, in addition to assuring the continuity of the business in virtue of the difficulty caused by the COVID-19 pandemic. That governmental plan supplements the flexibilizations previously enabled by the Provisional Measure 927/2020, which continues to be in force throughout these times of public calamity.
For the companies, the new program is comprised of two possible decrees:
- Proportional reduction of hours and salary:
- It preserves the employee’s hourly salary.
- It is limited to 90 days throughout the public calamity status.
- It may be agreed through an individual written agreement, and the proposal shall be submitted to the employee within at least two calendar days in advance.
- It provides the employee with, as a corresponding entry, a provisional job security for as long as the salary reduction endures and for the equivalent period after the re-establishment of the regular working hours. E.g.: 2 months arising from the period reduction and 2 months after the return to the regular work conditions, amounting to 4 months.
- The employee’s dismissal without just cause during the period shall subject the company to the payment of, in addition to the severance pays, the indemnity in the amount of:
- 50% of the employee’s salary, in event of reduction of working hours and salary from 25% to 50%.
- 75% of the employee’s salary, in event of reduction of working hours and salary from 50% to 60%.
- 100% of the employee’s salary, in event of reduction of working hours and salary over 60%.
In summary, the possibility of reducing the working hours and salary works as follows:
- Employment agreement suspension
- It is limited to 60 days.
- It suspends the employment agreement and shall be made through individual written agreement, and the proposal shall be submitted to the employee within at least two calendar days in advance.
- Throughout the agreement suspension period, the employer shall keep the benefits paid to the employees.
- Throughout the suspension, the employee shall not be able to work, not even partially or remotely.
- It provides the employee with, as a corresponding entry, a provisional job security for as long as the suspension endures and for the equivalent period after the re-establishment of the employment agreement. E.g.: 2 months arising from the period suspension and 2 months after the return to the regular work conditions, amounting to 4 months.
- The employee’s dismissal without cause under the agreement suspension shall subject the company to the payment of, in addition to the severance pays, the indemnity in the amount of 100% of the employee’s salary.
The companies with annual gross revenue under BRL 4.8 million are not required to pay 30% of the salary of employees whose employment agreement was suspended.
The benefit to be received under such modality shall be funded as follows
Further information:
1. Within 10 days of the execution to the agreement for salary reduction or employment agreement suspension, the companies shall inform both the Ministry of Economy and the trade union.
2. In both events, the company may grant the employee with a “compensation allowance”, which shall have the amount set in the individual agreement or collective bargaining. Such allowance shall work as an indemnity and shall not be part of the calculation base for the Withholding Tax, social security contribution, FGTS (Guarantee Fund for the Length of Service), and other taxes levying upon the payroll.
3. The information transmission method chosen by the employer shall still be regulated by the Ministry of Economy, which shall take place within the next few days.
The Labor and Employment team at L.O. Baptista remains available to clarify this and other matters.
