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03 Apr

Emergency Employment and Income Maintenance Program – Provisional Measure 936/20

Provisional Measure 936/20 (the “Provisional Measure”) instituted the Emergency Employment and Income Maintenance Program, which shall remain in force during the state of public calamity in Brazil. The Provisional Measure provides the rules for (i) payment of the Emergency Employment Maintenance Benefit and Income (“Benefit”); (ii) the proportional reduction working hours and wages; and for (iii) the temporary suspension of the employment contract (the “Measures”).

The Benefit will be paid in monthly installments and due from the date of the beginning of the reduction in the working day and salary or the temporary suspension of the employment contract, subject to the conditions provided in the Provisional Measure. The first installment, subject to the fulfillment of the conditions provided therein, will be paid within thirty days from the date on which the workload and wage reduction information was effectively provided. The Ministry of Economy will regulate the manner in which information will be sent by companies and the granting and payment of the Benefit.

The amount of the Benefit will be based on the calculation of the monthly amount of unemployment insurance (paid by the government) to which the employee would be entitled, under the terms of article 5 of Law No. 7,998/90, and in the event of a reduction in working hours and wages, it will be calculated by applying the reduction percentage to the calculation base of the unemployment insurance; and in the event of temporary suspension of the employment contract, it will have a monthly amount equivalent to one hundred percent of the amount of unemployment insurance to which the employee would be entitled or equivalent to seventy percent of the unemployment insurance to which the employee would be entitled.

The Benefit will not be due if the employee is in a public position or job, nominee position (in government), in dismissal of such position, holder of an elective mandate or enrolled in as a beneficiary of continued provision of the Social Security regimes, except for the provisions of article 124 of Law 8,213 / 91, a beneficiary of unemployment insurance, in any of its forms, and the professional qualification scholarship referred to in article 2 of Law 7,998/90.

The proportional reduction in working hours and wages must be agreed between employer and employee and may extend for a maximum period of ninety days, subject to: (i) the preservation of the hourly wage; (ii) the individual agreement, in writing, between employer and employee, which will be sent to the employee at least two calendar days in advance; and (iii) the reduction in working hours and wages, exclusively in the percentages of twenty-five, fifty and seventy percent, subject to determined events provided in the Provisional Measure.

The working hours and the wages previously paid will be reestablished within two calendar days of (i) the cessation of the state of public calamity; (ii) the date established in the individual agreement as an end of the period and reduction agreed; or (iii) the date of communication of the employer informing the employee regarding employer’s decision to anticipate the end of the agreed reduction period.

During the state of public calamity, the employer may also agree to temporarily suspend the employment contract of its employees, for a maximum period of sixty days, which may be divided into up to two periods of thirty days. Such suspension must be agreed upon by individual agreement, in writing, between employer and employee, which shall be sent to the employee two days in advance.

During the temporary suspension of the contract, the employee will be entitled to all benefits granted by the employer to his employees (e.g. food and transportation vouchers, insurance) and will be authorized to collect (pay) social security as an optional insured. The employment contract will be reestablished within two calendar days, counted from (i) the cessation of the state of public calamity; (ii) the date established in the individual agreement as the end of the agreed suspension period; or (iii) the date of communication from the employer informing the employee regarding employer’s decision to anticipate the end of the agreed suspension period.

The maintenance of work activities during the suspension period, even if partially, through telework, remote or distance work, will mischaracterize the temporary suspension of the employment contract, and employer will be subject to immediate payment of remuneration and labor charges referring to the entire period, penalties in current legislation and any sanctions possibly provided for in conventions or collective agreements.

Companies that earned, in the calendar year of 2019, gross revenue exceeding R$ 4,800,000.00 (four million and eight hundred thousand reais), may only suspend the employment contract of its employees by paying monthly compensatory aid in the amount of thirty percent of the employee’s salary, during the agreed period of temporary suspension of the employment contract. Companies with gross income at lower levels such as Clever Devices will be able to opt for the granting or not of monthly compensatory aid, which will not be part of the salary due to employee by employer. The employee may cumulate the compensatory aid with the Benefit.

Employee who receives the Benefit will have the right to temporary job guarantee, either due to reduction in the working hours and salary or temporary suspension of the employment contract, during the agreed period of reduction of the working day and salary or temporary suspension of the employment contract and after the re-establishment of the working hours and salary or the end of the temporary suspension of the employment contract, for a period equivalent to that agreed for such reduction or suspension. Employer’s unjustified dismissal (as per our labor law) within the provisional employment guarantee period will subject employer to the payment of indemnity and severance payments, pursuant to the terms provided for in the provisional measure.

Measures to reduce working hours and wages or temporarily suspend the employment contract referred to in the Provisional Measure may be entered into through collective bargaining, subject to the provisions applicable thereto, as provided for in the provisional measure, and labor conventions or labor collective agreements may establish percentages of reduced working hours and wages different from those provided for in the provisional measure. In this case, the Benefit: (i) will not be due for reduction of working hours and salary less than 25% (twenty-five percent); (ii) will be due in amount equivalent to 25% (twenty-five percent) on the calculation basis provided for in Article 6 for the reduction of hours and wages equal to or greater than 25% (twenty-five percent) and less than 50% (fifty percent); and (iii) will be due in amount equivalent to 70% (seventy percent) on the calculation basis provided for in Article 6 for the reduction of working hours and wages over 70% (seventy percent).

The labor conventions or collective bargaining agreements previously entered into may be renegotiated to adapt their terms, within ten calendar days, counted from the date of publication of this Provisional Measure. Individual agreements to reduce working hours and wages or temporarily suspend the employment contract, pursuant to the terms of Provisional Measure 936/20, must be communicated by employers to the respective labor union, within up to ten calendar days, counted from its date of execution.

The Measures will be implemented by means of an individual agreement or collective bargaining agreement for employees with a salary equal to or less than R $ 3,135.00 (three thousand one hundred and thirty-five reais) or to holders of higher education degrees and who perceive monthly salary equal to or greater than twice the maximum limit of the benefits of the General Social Security System (R $ 12,202.12). For employees not covered above, the Measures can only be established by labor convention or collective bargaining agreement, except for a reduction in working hours and wages of 25% (twenty-five percent), which may be agreed upon by individual agreement.

BGA is at the disposal of its clients to analyze the Provisional Measure in the context of client’s business and reality. Please e-mail contato@bglaw.com.br for more information.

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