Conversion into Law of PM 936/2020 (Labor Measures to Reduce Salaries and Working Hours and Suspension of the Employment Contract)

Conversion into Law of PM 936/2020 (Labor Measures to Reduce Salaries and Working Hours and Suspension of the Employment Contract)

It was published on 07/07/2020, the Law 14,020/2020, which deals with the conversion of the PM 936/2020 published by the Federal Government to face the crisis brought by COVID-19 in the labor area.

The main aspects of PM 936/2020 were discussed by our office when it was published in April of this year, through a memorandum that was made available (click here).

With the conversion into Law, part of the text of PM 936/2020 was maintained, especially regarding the modalities of reduction of working hours and salaries (limits of 25%, 50%, and 70%), suspension of the employment contract, structure of negotiation, compensatory aid and stability.

On the other hand, with the procedure of PM 936/2020 for conversion into Law in the National Congress, some provisions were added, with emphasis on:

  • Application of the modalities of suspension and reduction of working hours for apprentices and part-time employees (article 15). This topic was discussed at the beginning of the PM and, on the apprentices, there was recently a technical instruction from the social security and labor office.
  • The expected extension of periods for proportional reduction of working hours and wages and suspension of the employment contract will depend on an act of the Executive Branch, which is still pending publication. Therefore, at this moment, there is only one guideline that the reductions and suspensions may be postponed, but without information on how to proceed.
  • With regard to pregnant women, rules for counting the term of temporary stability of employment (article 10, III) and for payment of the emergency benefit (article 22);
  • Possibility of renegotiating loans, financing, credit cards, lease operations for employees who (i) suffer a proportional reduction in working hours and wages, (ii) suspension of the employment contract and (iii) who are contaminated by the new coronavirus, as long as it is duly proven by a medical report (article 25).
  • Non-application of the government authority act (article 486 of the CLT) for cases of paralyzation or suspension of business activities determined by an act of municipal, state or federal authority due to the confrontation of the new coronavirus. This topic caused a long discussion, as article 486 of the CLT brings the possibility of termination of the employment contract, with payment of part of the severance payments (FGTS indemnity), when activities are stopped due to an act by the government (article 29).
  • Inclusion of a new range limitation for the possibility of negotiation of the measures through an individual agreement, especially for cases of salary equal to or less than BRL 2,090.00 instead of 3,132.00, when the employer has earned, in the calendar year of 2019, a gross revenue higher than BRL 4,800,000.00;
  • Even for those salary ranges not included in items I to III of article 12, individual negotiation is possible in cases where the measures provided for in the aforementioned legislation do not imply in a decrease in the total amount received monthly by the employee, considering the amount of the Emergency Benefit of Employment and Income Preservation, the monthly compensatory aid and, in case of a reduction in the working hours, the salary paid by the employer due to working hours;
  • An issue that had been raised during the validity of PM 936 was the possibility of adopting measures in relation to retired employees, with a provision being introduced in paragraph 2 of article 12 regarding the procedures to be adopted, in order to enable the respective applicability;
  • Insertion of item V of article 17 in order to prohibit the discharge without cause of an employee with a disability; and
  • Stipulation of specific rates for the optional contribution to the INSS in cases of reduction of working hours and wages (in relation to compensatory aid), suspension of the employment contract and intermittent worker.

The Azevedo Sette’s Labor Team continues to monitor the topic, remaining available for any further clarifications.