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MP #936/2020 – Emergency Program for Employment and Income Maintenance and Complementary Labor Measures

The Provisional Measure (MP) 936/2020 was published today, April 2nd, 2020, instituting the Emergency Program for Employment and Income Maintenance and settling complementary labor measures to deal with the state of public calamity imposed by the new coronavirus (COVID -19)

 

The objective of the MP is to contribute with the maintenance of employment and income, to guarantee the continuity of business activities and to soften the social impact raised from the social isolation necessary to combat the coronavirus.

 

We list below the main most impacting measures defined in the new legal provision.

 

  1. Emergency Benefit for Employment and Income Maintenance

 

In case of reduction in the employee's income, either through the proportional reduction of working hours and salaries, or through the temporary suspension of the employment contract, the Government will grant the Emergency Benefit for Employment and Income Maintenance, whose value is equivalent to the than the unemployment insurance to which the employee would be entitled.

 

In the event of a reduction in working hours and salaries, the benefit will be proportional. As an example, if the working period and, consequently, the earnings are reduced by 25%, the worker would be entitled to receive 25% of unemployment insurance.

 

In the case of temporary suspension of the employment contract, the benefit amount will be: i.) 100% of the unemployment insurance amount to which the employee would be entitled, for companies with annual income up to R$ 4,8 millions  in 2019; and ii.) 70% for other employers.

 

In operational terms, there is no grace period or minimum length of time. It is just a matter of having the employer informing the Ministry of Economy about the reduction of the working period and salary or the temporary suspension of the employment contract, within up to 10 days from the date conclusion of the agreement.

 

The first installment of the benefit will be paid in 30 days, counted from the date of the signing of the agreement, provided the legal communication period to the Ministry of Economy is observed.

 

  1. Working Period and Salary Proportional Reduction

 

During the state of public calamity, the parties may agree to a proportional reduction in working hours and wages, by 25%, 50% or 70%, for up to ninety days.

 

The agreement must be made in written, individual or collective, with at least 2 days in advance, and must preserve the same value of the hourly wage. The reduction percentage can be changed through collective bargaining.

 

For employees who receive up to R$ 3,117.00 or higher than R$ 12,202.12 and holds a bachelor’s degree, the implementation can be done by individual agreement. For other workers, the implementation must be done through a collective agreement.

 

The employer must notify the employees' union within 10 days of the conclusion of the agreement.

 

The working conditions originally agreed will be restored within 2 days, counted from: i.) the cessation of the state of public calamity; ii.) the date established in the individual temporary suspension agreement; or iii.) the date of the employer's unilateral communication of the anticipation of the end of the suspension.

 

  1. Temporary Suspension of the Labor Agreement

 

During the state of public calamity, the parties may temporarily suspend the employment contract for 60 days, which can be consecutive or split in 2 periods of 30 days.

 

The temporary suspension must be communicated at least 2 days in advance and must be agreed in a written agreement, individual or collective.

 

During the period of suspension of the contract, the employer must maintain all benefits granted to its employees. Companies with an annual revenue higher than the simplified tax regime cap (R$ 4.8 million) in 2019, should maintain a monthly compensatory allowance equivalent to 30% of the employee's salary, during the period of temporary suspension from work.

 

The employer must notify the employees' union within 10 days counted form the agreement sign

 

For employees who receive up to R$ 3,117.00 or higher than R$ 12,202.12 and holds a bachelor’s degree, the implementation can be done by individual agreement. For other workers, the implementation must be done through a collective agreement.

 

The working conditions originally agreed will be restored within 2 days, counted from: i.) the cessation of the state of public calamity; ii.) the date established in the individual temporary suspension agreement; or iii.) the date of the employer's unilateral communication of the anticipation of the end of the suspension.

 

  1. Compensatory Allowance

 

The employer may grant a compensatory allowance on a monthly basis due to the suspension of the employment contract and/or the reduction in the working period.

 

Although the benefit is discretionary , it must be provided in a written agreement, individual or collective, and will not be considered as compensation for the computation of payroll taxes and charges, but it will be considered as deductible expense from the income tax calculation base and from the Social Contribution on Net Profit, of legal entities under the accrual tax regime. 

 

  1. Temporary Stability

 

In return, the employee will enjoy temporary stability during the period of validity of the suspension of the employment contract or the reduction of the workday and for the equivalent time as agreed upon, when returning to employment.

 

Unjustified dismissal during the tenure period, will subject the employer to payment, of indemnity in the amount of: i.) 50% of the salary due during the period of stability, if the reduction in working hours and salary has been 25% to 49%; ii.) i.) 75% of the salary due during the stability period, if the reduction in hours and wages has been 50% to 69%; or iii.) 100% of the salary due during the period of stability, if the reduction in hours and wages has been greater than 70%.

 

  1. Intermitente Agreement

 

The employee with an intermittent employment contract signed until April 2, 2020, will be entitled to the monthly emergency benefit in the amount of R $ 600.00 (six hundred reais), for a period of three months, counted from today's date (02 / 04/2020).

 

This benefit cannot be combined with any other emergency assistance.

 

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Considering the urgency of more information regarding the impacts caused by Coronavirus on business routines, RSM is available to help solve any doubts for the adoption of best practices, duly based on current legislation.

 

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