Rafael Tridico Faria
Lawyer at Marcos Martins Advogados
On June 30, Provisional Measure 944/20 (“MP 944/20”) – published in April 2020 – was approved by the Plenary of the Chamber of Deputies. MP 944/20 grants a line of credit for small and medium-sized companies to pay salaries during the pandemic, through the banking network, but its transformation into law is still pending approval by the Senate.
The initial deadline for financing salaries was extended from two to four months, and access to the credit line was also extended to simple companies, civil society organizations and rural employers (individuals or companies). Previously, only entrepreneurs, companies and cooperatives (except credit unions) had access to this line of credit.
To be eligible to apply for the credit line, the interested party must have had annual gross revenue of between R$ 360,000 and R$ 50 million in 2019 and can apply until October 31, 2020.
The loan agreement must set out the company’s obligations, including the obligation not to dismiss employees without cause within 60 days of the release of the last installment of the credit line. This obligation extends only to employees covered by the credit line contracted by the company.
Also included in the text of Provisional Measure 944/20 was the possibility for companies to use funds from the credit line to settle final and unappealable labor judgments relating to foreclosures that began during the period of public calamity (March 20) or that occur up to 18 months after the end of the state of calamity (provided for in a decree on December 31, 2020). In addition, the funds may be used to pay severance pay or pending severance pay resulting from dismissals without just cause that occurred on March 20 and the date of publication of this future law, provided that the dismissed employee is rehired.
The interest rate on this line of credit will be 3.75% per year and the payment period will be 36 months, with a 6-month grace period for the first installment.
According to data from the Central Bank, so far more than 100,000 companies have taken out this loan, benefiting around 1.8 million workers.
