Ariadne Fabiane Velosa
Lawyer at Marcos Martins Advogados
In view of the difficult economic and financial situation in Brazil due to the Covid-19 pandemic, President Jair Bolsonaro signed a new Provisional Measure No. 1,045 establishing the new BEm ( Emergency Program to Maintain Employment and Income), which allows companies to reduce working hours and wages.
The aim of Provisional Measure 1.045/2021 is to preserve jobs, maintain employees’ incomes and continue business activities in order to reduce the socio-economic impact of the restrictions imposed on the operation of commerce and the movement of people.
MP 1.045/2021 is valid for 120 (one hundred and twenty) days, under the terms of Article 2. However, it provides in its text that the BEm measures may be extended by the President of the Republic, in accordance with budgetary provisions. However, it is important to note that article 62, § 3 and 7 of the Federal Constitution states that Provisional Measures are valid for 60 days and can be extended for a further 60. Therefore, if Provisional Measure 1.045/2021 is not converted into law, it will lose its effectiveness within 120 days.
In order for Provisional Measure No. 1.045/2021 to be effective, whether it’s a contract suspension or a reduction in working hours and wages, certain requirements must be met, such as an individual written agreement between employer and employee or a collective bargaining agreement.
In the event of an individual written agreement between employer and employee, the proposal must be sent to the employee at least two calendar days in advance.
In relation to the reduction in working hours and wages, the value of the hourly wage must be preserved, and the percentages of 25%, 50% and 70% may be applied.
In the event of a reduction in working hours and wages, for the purposes of receiving emergency aid, the amount that the employee would be entitled to when using unemployment insurance will be taken into account, and the percentage of the reduction will be applied to the calculation basis, for example, if an employee is entitled to unemployment insurance of R$1,911.84 and has their working hours and wages reduced by 50%, the government will pay 50% of this portion.
To clarify, let’s use a hypothetical case: Employee “A” works for company “X” and receives a salary of R$3,000.00, working 8 hours a day. In this case, he would be entitled to unemployment insurance of R$1,911.84. “A” had his working hours and salary reduced by 50%, i.e. he started working 4 hours a day and would receive R$1,500.00 from his employer. With the emergency benefit, he will receive R$1,500.00 from company “X” plus R$955.92 (50% of the R$1,911.84), totaling R$2,455.92.
In the event of a temporary suspension of the employment contract, under the terms of Article 8 of the Provisional Measure, the employer may agree to the temporary suspension of the employment contract of its employees, on a sectoral, departmental, partial or total basis.
The employee whose contract is suspended will receive the monthly amount equivalent to 100% of the unemployment insurance to which the employee would be entitled. In this case, it is worth remembering that an employee whose contract has been suspended does not receive any pay from the employer and does not work, as well as not having a service record.
For example, employee “A” works for company “X” and receives R$3,000.00. During the pandemic, his contract was suspended for 60 days, in which case he will not work and will receive the emergency benefit of R$1,911.84.
There is an exception to the amount of 100% unemployment insurance workers can receive in the event of a suspension of the employment contract, provided for in Article 6 of Provisional Measure 1,045/2021. The article states that companies that earned more than R$4,800,000.00 in 2019 may only suspend their employees’ employment contracts by paying monthly compensation of 30% of the employee’s salary during the period of temporary suspension of the employment contract.
Thus, the employee will only receive 70% of the amount of unemployment insurance to which they would have been entitled, plus the company’s 30% compensation payment of their salary.
During the period of temporary suspension of the employment contract, the employee will be entitled to all the benefits granted by the employer to its employees and will be allowed to pay into the General Social Security Scheme as an optional insured person.
Provisional Measure 1.045/2021 also provides in its article 8, paragraph 5 and subsections, a penalty for companies that, by suspending the employment contract of their employees, maintain work activities, even partially, by means of teleworking, remote work or distance work, the temporary suspension of the employment contract being uncharacterized, being subject to the immediate payment of remuneration and social charges for the entire period, the penalties provided for in the legislation and the sanctions provided for in a collective bargaining agreement.
The reduction in salary and working hours and the suspension of the employment contract will be re-established within two calendar days of the date established as the end of the agreed reduction period or the date of the employer’s communication informing the employee of its decision to bring forward the end of the agreed reduction period, which may not exceed the last day of the 120-day period, except in the event of an extension by the President of the Republic.
The employer will have 10 days from the date of signing the agreement to reduce or suspend the employment contract to inform the Ministry of Economy. The deadline for payment by the Federal Government will be 30 days from the date the agreement is signed, as long as it is informed within the 10-day period mentioned above. In addition, this emergency benefit will be paid for the duration of the proportional reduction in working hours and wages or the suspension of the employment contract.
However, if the employer fails to inform the Ministry of Economy, the company itself will be responsible for paying the remuneration for the period prior to the reduction in working hours and wages or the temporary suspension, including social charges, until the information is provided.
It is important to note that the receipt of the Emergency Employment and Income Maintenance Benefit will not prevent the granting of unemployment insurance and will not alter the amount to which the employee may be entitled, provided that the requirements set out in Law No. 7,998, of January 11, 1990, are met at the time of any dismissal.
There is also a provision in Provisional Measure No. 1,045/2021, in its article 9, which establishes a monthly compensatory aid by the employer that can be accumulated with the emergency benefit for maintaining employment and income, as a result of the proportional reduction in working hours and wages or the temporary suspension of the employment contract.
To this end, the amount must be defined in collective bargaining or in the individual written agreement, it will be of an indemnity nature and will not form part of the basis for calculating withholding income tax or the employee’s annual personal income tax return, will not form part of the basis for calculating the social security contribution and other taxes levied on the payroll, will not form part of the basis for calculating the value of FGTS deposits and may be considered a deductible operating expense when determining the actual profit and the basis for calculating the Social Contribution on Net Profit (CSLL) of legal entities taxed on actual profit.
In the event of a proportional reduction in working hours and salaries, the compensatory aid provided for in the caput will not be part of the salary owed by the employer.
Article 10 of the Provisional Measure also states that employees will have a job guarantee during the agreed period of reduction in working hours and wages or temporary suspension of the employment contract and after the working hours have been re-established for a period equal to the duration of the reduction or suspension of the contract. For example, if the reduction is for 30 days, the employee has a guarantee for that period and a further 30 days, making a total of 60 days. Dismissal without just cause that occurs during the period of the provisional job guarantee will subject the employer to payment of compensation, in addition to the severance payments provided for by law. This only does not apply if the worker resigns or if the dismissal is for just cause or by agreement between the parties.
It should be noted that in the case of pregnant women, the guarantee provided for in Provisional Measure 1,045 will only start after the end of the stability due to pregnancy.
To see the full Provisional Measure, just go to the Planalto website at: http://www.planalto.gov.br/ccivil_03/_Ato2019-2022/2021/Mpv/mpv1045.htm.
It is therefore highly recommended that companies seek legal advice on how to comply with the provisions, which Marcos Martins Advogados is able and prepared to offer.
