Provisional Measure No. 936/2020 and the labor changes for companies

Ariadne Fabiane Velosa
Lawyer at Marcos Martins Advogados

On April 1, 2020, Provisional Measure No. 936/2020 was published, establishing the Emergency Employment and Income Maintenance Program to deal with the state of public calamity recognized in Legislative Decree No. 6 of March 20, 2020.

But the measures provided for in this Provisional Measure in relation to companies go beyond the emergency benefit of preserving employment and income, and to this end also deal with the proportional reduction of working hours and wages and the temporary suspension of employment contracts.

The emergency job and income preservation benefit is a monthly payment, to be paid by the Federal Government, due from the date of the start of the reduction in working hours and wages or the temporary suspension of the employment contract.

Thus, in order to be granted this benefit, certain requirements must be met, such as observing the basis for calculating the value of the emergency benefit for preserving employment and income, which will be the monthly amount of unemployment insurance to which the employee would be entitled, and cannot be less than the minimum wage or more than R$1,813.00.

In the event of a reduction in working hours and salary, this will be calculated by applying the percentage of the reduction to the calculation base, for example, if an employee is entitled to unemployment insurance of R$1,813.03 and has his working hours and salary reduced by 50%, the government will pay 50% of this portion.

The reduction parameters for individual agreements are:

25% of the unemployment insurance amount if the reduction is equal to or greater than 25% and less than 50%.
50% of the unemployment insurance amount if the reduction is equal to or greater than 50% and less than 70%; and
70% of the unemployment insurance amount if the reduction is equal to or greater than 70%.

It will not be paid if the reduction is less than 25%.

In the case of a collective bargaining agreement, different percentages of reduction in working hours and salary may be established.

The Provisional Measure sets out how this proportional reduction in working hours and salary will be organized, establishing two hypotheses in its article 12: a) that those who receive a salary equal to or less than R$3,135.00 and b) those who receive a salary equal to or less than R$12,202.12 (twice the RGPS ceiling) and have completed higher education, may establish this reduction by individual agreement or collective bargaining.

On April 6, 2020, the Federal Supreme Court issued an injunction in ADIN 6363, requiring that individual agreements be communicated by employers to the respective labor union, within ten calendar days from the date of their conclusion, so that the union can initiate collective bargaining if it wishes, and if it does, the individual agreement will not be valid. However, if it remains inactive, it is understood that the parties have agreed to it.

For employees not covered by Article 12 of the Provisional Measure, the measures provided for can only be established by collective bargaining agreement, with the exception of a 25% reduction in working hours and wages, which can be agreed by individual agreement.

It is important to note that the reduction measure can be maintained for up to 90 days, as long as the working hourly wage is respected. For example, employee “A” is paid R$50.00 an hour for 8 hours a day. If he works 4 hours a day, he must continue to receive the same hourly rate.

In the event of temporary suspension of the employment contract, he will receive the monthly amount equivalent to 100% of the unemployment insurance to which the employee would be entitled, if the contract is suspended for a maximum of 60 days during the period of public calamity. In this case, it is worth remembering that the employee whose contract is suspended does not receive any pay from the employer and does not work, in addition to not having any service counted.

Another possibility within the temporary suspension of the employment contract is for the employee to receive the equivalent of 70% of unemployment insurance, if the company they work for has earned gross revenue of more than four million eight hundred thousand reais in 2019. In this situation, the Federal Government will pay 70% of the benefit and the employer will pay the other 30%.

It’s important to note that if you opt for one of these measures, you must make an individual agreement with the employee and send it to them at least two calendar days in advance.

In these cases, 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 way in which the company must inform and how the benefit will be paid will still be regulated by the Ministry of Economy.

The deadline for payment by the Federal Government will be 30 days from the date the agreement is signed, provided that it is informed within 10 days, as 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.

Article 10 of the Provisional Measure also states that employees will have a job guarantee during the period in which the company uses the mechanism and after the working day has been re-established for a period equal to the duration of the reduction.

For example, if the reduction is for 30 days, the employee will have a guarantee for that period and a further 30 days, making a total of 60 days. Unjustified dismissal during the period of the provisional job guarantee will oblige the employer to pay compensation, in addition to the severance payments provided for by law. It only does not apply in this case if the employee resigns or if the dismissal is for just cause.

Therefore, these are new situations, and there are not only doubts, but also a lot of criticisms about emergency measures and the guarantee of individual rights, which could certainly reach the doors of the Labor Courts in the near future. However, taking into account the serious economic and health scenario in the country, it is believed that everything will be analyzed within the reasonableness and common sense that is expected in these difficult times we are living through.