On 04/06/2020 the Federal Supreme Court published an injunction decision in Direct Unconstitutionality Action 6363/2020, proposed by Rede Sustentabilidade, which makes the individual agreement to reduce salary and working hours and the suspension of the labor contract unviable, under the terms of MP 936/2020.

According to Justice Ricardo Lewandowski – the appointed reporter, who issued the preliminary injunction decision – individual agreements to reduce salaries and suspend contracts will only produce full legal effects after the manifestation of the employees’ unions. Therefore, while the decision is in effect, individual agreements will only be valid after collective bargaining with the union or if the union and respective federation (or confederation) do not manifest themselves after being notified.

Companies and lawyers know from experience that collective bargaining can be a complex and not very agile process. Many unions don’t even have the resources for negotiation to take place, due to the government’s determination of social isolation and distancing, which will inevitably cause more companies to opt for greater financial and legal risks, or for more drastic measures, such as layoffs.

It is expected that this decision will be altered by a collegiate decision of the Plenary of the STF, with the trial of the action anticipated for April 16.

DDSA will follow the judgment of ADI 6363/2020 and is available to advise its clients on this matter.

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