On July 6th, Law number 14.020/20 was sanctioned, originating from Provisional Measure 936, which created the Emergency Program for the Maintenance of Employment and Income. With the presidential sanction, companies will be able to suspend labor contracts and/or reduce working hours and salaries until the end of the year, while the state of public calamity decreed because of the pandemic lasts.
The measure allows a 25%, 50%, or 70% reduction in working hours, with a proportional cut in salary, for up to three months. It is also possible to suspend the contract for up to two months. The agreements can be made collectively with unions or individually with each employee. To compensate the affected workers, PM 936 created the BEm, an emergency benefit paid by the Government, which can reach up to R$1,813.03 per month.
The Act allowed the Executive to increase these deadlines, which is expected soon. The extensions will not be automatic, as they will depend, in any case, on further negotiations.
Law 14,020 also brought other relevant changes to the text of PM 936.
Among the main changes brought by Law No. 14,020/2020, we have:
- Agreements signed before Law 14.020/20: Establishes that the agreements signed based on MP 936/2020 are governed by the provisions of said Provisional Measure. In other words, all the increases brought by Law 14.020/2020 will only apply to adjustments entered into after the publication of the law (art. 24);
- Extension of the Crisis Countermeasures Period: Although Law No. 14,020/2020 does not extend the terms of duration of the coping measures brought by MP 936 (60 days for suspension and 90 days for reduction or combination of the two regimes), it grants the Executive Branch the power to extend the maximum term for proportional reduction of working hours and salary and/or suspension of contracts initially provided for (sole paragraph, art. 16);
- Non-Isonomic Application: Law 14,020/2020 puts an end to any controversy on the subject, expressly establishing that the employer may apply the measures on a sectorial, departmental, partial, or totality of the jobs basis (arts. 7 and 8);
- Individual agreements according to company turnover: If the employer had gross revenues in 2019 greater than 4.8 million reais, individual agreements may only be concluded with employees earning wages equal to or less than R$2,090.00. For companies with gross revenues equal to or less than R$4.8 million, there is no change in the rule, and individual agreements may be entered into with employees who earn wages equal to or less than R$3,135.00 (art. 12);
- Individual agreements in any case: The execution of individual agreements is authorized, regardless of the employee’s salary and the income earned by the employer, when the final amount to be received, adding the Emergency Benefit and the Compensatory Assistance, does not result in a decrease in the employee’s monthly earnings (inc. II, § 1st art. 12);
- Individual agreements and supervening collective rule: In the case of a collective rule entered into after an individual agreement has been reached, the conditions established in the individual agreement will prevail with respect to the period prior to the collective bargaining period. As of the effectiveness of the collective norm, the rules stipulated therein will prevail over the individual agreement, except in that which is more favorable to the employee (§§ 5 and 6, art. 12);
- Prior Notice: By mutual agreement, the company and the employee may choose to cancel the prior notice in progress, and may also agree to suspend or reduce wages (art. 23);
- Retired employees: The implementation of measures to reduce working hours and salary and suspend the contract of retired employees is authorized, when there is payment, by the employer, of a monthly compensatory allowance, under the conditions defined in Law No. 14,020/2020 (§2 art. 12);
- Pregnant women: Confirmed the possibility of pregnant women adhering to agreements on reduction of working hours and salary or suspension, establishing that the provisional employment guarantee starts to count from the end of the gestational stability period, that is, from the 5th month after delivery (art. 22);
- Disabled employee: Disabled employees cannot be dismissed during a state of public calamity (sub V, art. 17);
- Optional social security contribution: Employees submitted to a reduction in salary and working hours may complement their social security contributions, and those submitted to a contractual suspension may contribute as optionally insured (art. 20);
- Income tax deduction: The monthly compensatory allowance paid by the employer may be considered a deductible operational expense from the taxable income and the Social Contribution on Net Profit (CSLL) calculation basis of legal entities taxed by the taxable income (line a, inc. VI, art. 9).
- Loans, financing, debt and leasingThe employee may opt for the renegotiation of loans, financing, credit cards, and leasing operations granted by financial institutions and leasing companies contracted with the discount in the payroll or in the available remuneration dealt with in Law 10820/2003 (art. 25);
The above text is not exhaustive and does not represent or replace a specific recommendation from an analysis of the case. DDSA Advogados will be available to guide its clients.