Nathália Guedes Brum
Lawyer at Marcos Martins Advogados.
In the midst of the national economic crisis and the growing drop in industrial productivity[1], companies have been looking for legal alternatives to maintain their businesses and cope with this troubled period.
To this end, some mechanisms for making labor relations more flexible can be used as a way of reducing costs and meeting the company’s current reality, without the need for mass layoffs and job cuts.
However, it is important that the company observes the legal requirements necessary for these measures to be valid, in order to avoid future labor liabilities.
Collective bargaining with the category’s union, authorized by article 7, items VI, XIII, XXVI and article 8, item III, of the Federal Constitution of the Federative Republic of Brazil, becomes fundamental in this period of crisis and appears to be a legal requirement for the adoption of most of these measures.
Some flexibilization mechanisms have proved to be suitable and efficient for dealing with periods of low productivity and idleness caused by the national economic crisis and will be briefly presented in this article. These are: the Suspension of Employment Contracts (Layoff), the Employment Insurance Program (PSE), the Reduction of Working Hours and Wages and Collective Holidays.
The Suspension of Employment Contract, also known as Layoff, is provided for in article 476-A of the Consolidation of Labour Laws and authorizes employers to suspend their employees’ employment contracts for a period of at least two and at most five months, in order to take part in a professional qualification course or program offered by the company, subject to a provision in a collective bargaining agreement and the employee’s formal agreement.
During the suspension of the employment contract, the employee will be entitled to receive a professional qualification grant, funded by the Workers’ Support Fund (FAT), under the terms of art. 2-A of Law 7.998/1990.
The Employment Insurance Program (PSE), which was recently instituted by Provisional Measure No. 761 of December 22, 2016, which amended Law No. 13,189 of November 19, 2015, allows for the temporary reduction of up to 30% (thirty percent) of working hours and salary, through the signing of a specific Collective Bargaining Agreement, approved by a meeting of workers covered by the program.
Employees whose wages are reduced as a result of the PSE will be entitled to cash compensation to be paid by the government, through the Workers’ Support Fund (FAT), equivalent to 50% (fifty percent) of the amount of the wage reduction and limited to 65% (sixty-five percent) of the maximum amount of the unemployment insurance installment, for as long as the temporary reduction in working hours lasts.
According to the first paragraph of article 2 of Law No. 13,189/2015, the deadline for joining the PSE is December 31, 2017 and the maximum period to remain in the program is twenty-four months, respecting the date of extinction of the program provided for in clause 11 of the same Law, i.e. December 31, 2018.
The Reduction of Working Hours and Wages, regulated by Article 2 of Law No. 4,923 of December 23, 1965, allows for a reduction in working hours or days worked and wages of up to 25% (twenty-five percent), within a period of three months, extendable under the same conditions, by signing a specific Collective Agreement, approved by a meeting of employees and ratified by the Regional Labor Office.
Finally, Collective Holidays, which are provided for in articles 139 et seq. of the Consolidation of Labor Laws, are an employer’s prerogative and can be granted to the entire company or just to one or a few sectors, in up to two annual periods, provided that neither is less than ten days.
In this case, there is no need for collective bargaining. All that is required is for the employer to formally notify the Ministry of Labor and Employment and the employees’ union, and to post a notice in the workplace to employees fifteen days before the collective vacation is granted, informing them of the start and end dates and the sectors covered by the measure.
The application of the mechanisms presented in this article aims to create alternatives for dealing with the economic crisis and maintaining business activity, avoiding the dismissal of employees at a time of economic downturn, fluctuating production volumes and/or structural or cyclical changes in the market.
Marcos Martins Advogados Associados is able to advise companies that find themselves in this situation, seeking the most appropriate alternative and ensuring full compliance with legal requirements to avoid future labor liabilities.
[1] IBGE. Brazil Productivity 2013 to 2015. Available at: <http://brasilemsintese.ibge.gov.br/industria/produtividade.html>. Accessed on: August 2, 2016.
