Brazil: Labour Measures during period of Public Calamity due to COVID-19
In our previous newsletters (Given the dynamism of the situation, our teams are monitoring the topics in real time for constant updating of the contents. To access the latest version, click on the following link), we announced the speculation that a Provisional Measure (MP) would be issued regarding measures applicable to labor relations when dealing with the coronavirus pandemic, whose state of public calamity was recognized by the Legislative Decree No. 06/2020. Last Sunday, March 22, the Federal Government issued the MP No. 927 containing, in summary, eight (8) specific measures, five (5) of which had already been presented as recommendations in our newsletters. On Monday, March 23, the Government enacted the MP No. 928 that, among other changes, revoked section 18 of the MP No. 927 that established changes to the legislation related to suspension of the employment agreement for professional qualification.
Initial points to be observed related to the MP No. 927
- Recognizes the coronavirus pandemic as force majeure, as established in section 501 of the Labor Code.
- Allows other measures to be taken than those established in the MP (section 3 of the MP refers to “among others”) provided they follow the labor legislation in force.
- Measures already taken by employers that do not contradict the MP No. 927 will be validated provided they follow the labor legislation in force.
- The terms of the MP No. 927 are also applicable to temporary workers, rural employees and, when appropriate considering the specific legislation in force, to domestic employees.
- Telework and telemarketing work regulations do not apply to employees performing remote work in accordance with the MP No. 927.
- Its effectiveness starts from the date of its publication (i.e., March 22).
- The measures are valid while the state of public calamity lasts.
Understanding the measures brought by MP No. 927
MP No. 927 provides specific measures related to remote work, anticipation of individual vacations, granting of collective vacations, use and anticipation of holidays, bank of hours, suspension of administrative requirements related to health and safety at work, and deferral payment of Severance Pay Fund (FGTS).
REMOTE WORK (Home Office System)
MP No. 927 repeats the concept of remote work and most of the provisions established in the sections 75-A to 75-E of the Labor Code, especially in what regards expenses, infrastructure and lack of working hours control.
It innovates in the following aspects:
- It waives the requirement of performing an amendment to the employment agreement to register the remote work system.
- The prior notice required to inform employees about the transition of systems (i.e., from work in person system to remote work system and vice versa) changes from fifteen (15) days to forty-eight (48) hours.
- Conditions related to responsibility for bearing expenses, equipment and infrastructure must be agreed, in writing, in advance or in up to thirty (30) days after the change to the remote work system.
- If the employee does not have the necessary equipment or infrastructure to perform the activities, the employer will be able to provide them on a lending basis, which will not be considered as part of their salaries.
- If the employer does not opt to perform the loan of the equipment, the employee will not have means to perform the work and the regular working hours will be considered time at the employer’s service that should be duly remunerated (i.e., as there is no means to carry out the work and the employer does not want to provide the means, the employer must continue to pay the regular salary of the employee).
- Possibility of adopting the remote work system for interns and apprentices.
- Always register in writing: the transition from work in person to remote work, the lending of equipment and the return to work in person in the event of termination of the MP’s effectiveness (120 days).
- The remote work system established in the Labor Code excludes the employee from working hours control. It classifies them as exempt employees. In this period of public calamity with an almost unselective use of remote work, the employer must evaluate and agree with each employee whether they will be exempt or non-exempt employees (e.g., if there will be working hours control or not), according to the nature of the activities performed.
ANTICIPATION OF INDIVIDUAL VACATION
- It is an innovation brought by MP No. 927, as the Labor Code does not contemplate the possibility of anticipating individual vacation.
- It requires a forty-eight (48) hours prior notice in writing or by electronic means.
- Applicable also to employees who have not completed the 12-month vacation acquisition period (12-month period of work to be entitled to vacation).
- It also establishes the possibility of anticipating future vacation periods by written agreement.
- The coronavirus risk group should be priority group for anticipation of vacation periods.
- Employer may suspend the vacation or unpaid leave of health professionals or those who perform essential activities – preferably with a forty-eight (48) hours prior notice.
- Employer will be able to pay the 1/3 vacation bonus by December 20.
- The request of the employee to convert 1/3 of his/her vacation period in payment (“the sale of 10 vacation days”) depends on the employer’s acceptance.
- The payment of vacation may be performed up to the 5th business day of the month following the vacation starting month.
- In the event of termination, the employee must receive payment for the vacation to which he/she is entitled to along with the mandatory severance.
GRANTING OF COLLECTIVE VACATION
The Labor Code has always allowed the granting of collective vacations, either for all employees or for a department of the company. The MP No. 927 changes part of this concept, the term for prior communication and waives formalities.
Innovations brought by MP No. 927:
- Possibility of granting collective vacation to a group of employees.
- Prior notice to the employees that will be on vacation of at least forty-eight (48) hours (and not the 15 days established by law).
- Possibility of granting vacation in more than two (2) periods.
- It excludes the minimum limit of ten (10) consecutive days for collective vacation.
- It excludes the obligation of prior notice to the Special Social Security and Labor Secretariat and employees’ unions.
HOLIDAYS USE AND ANTICIPATION
MP No. 927 allows the anticipation of holidays for the purpose of taking the employee away from the work facility, observing the following rules:
- Anticipation of federal, state, municipal or district non-religious holidays.
- Written or electronic notice to the employee, of at least forty-eight (48) hours in advance and clear indication of the holidays that will be used.
- Holidays may be offset with the balance of bank of hours.
- The anticipation of religious holidays will depend on the employee’s acceptance through written agreement.
SYSTEM TO OFFSET OVERTIME/ABSENCES (Bank of Hours)
The Bank of Hours was already allowed by the Labor Code if negotiated with the employees’ union. The Labor Reform included the possibility of negotiating the Bank of Hours individually with the offset of working hours in up to six (6) months.
Changes brought by MP No. 927:
- The balance should be offset upon the employer’s request, regardless of having a provision established by the collective bargaining agreement (ACT or CCT).
- An eighteen (18) months period counted as of the end date of the state of public calamity to offset the hours included in the Bank of Hours.
SUSPENSION OF ADMINISTRATIVE REQUIREMENTS RELATED TO HEALTH AND SAFETY AT WORK
MP No. 927 relativizes or simplifies some health and safety rules at work in order to prevent the imposition of penalties by the Labor Inspection Bodies.
Changes brought by MP No. 927:
- The obligation of performing medical examinations (admission and periodical), clinical and complementary examinations is suspended while the state of calamity lasts.
- Examinations not performed must be carried out within sixty (60) days counted as of the end date of the state of calamity.
- Examinations will be carried out on the date originally scheduled, if the physician that coordinates the company’s Occupational Health Control program (PCMSO) program understands that it is necessary.
- The medical examination performed upon termination may be waived if a medical examination has been carried out in the last one hundred and eighty (180) days.
- Periodic and occasional training for employees established in the Regulatory Norms is suspended during the state of calamity.
- Suspended courses must be taken within ninety (90) days from the date the calamity state ends.
- Training can be carried out remotely and the employer is responsible for securely ensuring compliance with practical activities.
- The Internal Commission for Accident Prevention (CIPA) may be maintained until the end of the state of calamity and the electoral process in progress may be suspended.
- Recommendation: depending on the nature of the company’s activity and the role performed by the employee, we suggest performing the admission medical examination to prevent and avoid any liability, whether of labor or civil nature.
SUSPENSION OF THE EMPLOYMENT AGREEMENT FOR PROFESSIONAL QUALIFICATION (LAY OFF)
The changes brought by MP No. 927 on suspension of the employment agreement for professional qualification were revoked by MP No. 928. Thus, the following rules provided for in article 476-A of the CLT remain in force for this situation:
• Possibility to suspend the employment agreements for a period of 2 (two) to 5 (five) months for the participation of the employee in a course or professional qualification program offered by the employer.
• The employment agreement suspension must be negotiated with the employees’ union and formalized in a collective bargaining agreement.
• After the conclusion of the collective bargaining agreement, the suspension of the employment agreement is subject to the formal pre-consent of each employee affected by the measure.
• During the suspension of the contract, the employee may apply for a professional qualification scholarship granted by the Special Secretariat for Social Security and Labor, linked to the Ministry of Economy (more details available at http://trabalho.gov.br/seguro-desemprego/modalidades / scholarship-qualification)
• In addition, during the suspension period, the employer may grant to the employees a monthly compensatory allowance (aid), without salary nature. The amount of the compensatory allowance, if granted, should be defined in the collective bargaining agreement.
• The collective bargaining agreement may establish the granting of other benefits to the employees during the suspension period. If no condition related to benefits is included in the collective bargaining agreement, the employee will receive benefits voluntarily granted by the employer.
• The program or qualification course must have the same duration of the suspension period.
• The employer must notify the employees’ union at least fifteen (15) days in advance of the employment agreements suspension.
• It will not be possible to implement a new employment agreement suspension for professional qualification in the period of sixteen (16) months.
• If during the suspension period, no professional qualification course/program is provided, or if the employee remains working for the employer, the employment agreement suspension will be disregarded, and the employer will have to pay salaries and fines established by law or/and in the collective bargaining agreement.
• If the employee is terminated without cause during the suspension period or in the three (3) months after his/her return to work, in addition to the mandatory severance package established by law, the employer will pay to the employee a fine that should be established in the collective bargaining agreement and must be at least equivalent to the employee’s last monthly remuneration prior to the suspension of the employment agreement.
• The original term of the suspension period may be extended by means of a collective bargaining agreement to be executed with the employees’ union and provided the employer assumes the costs related to the professional qualification scholarship during the additional period of suspension.
DEFERRAL PAYMENT OF SEVERANCE PAY FUND (FGTS)
Important changes were implemented by the MP No. 927 regarding the payment of FGTS deposits:
- The obligation to pay FGTS amounts related to March, April and May of 2020 is suspended.
- The suspension benefits all employers, regardless its legal nature, business activity, taxation regime, number of employees and prior implementation of suspension system.
- The FGTS payment of March, April and May of 2020 may be made in up to six (6) installments with expiration date up to the 7th day of each month, starting on July 20 of this year, without any monetary adjustment, interest and fine.
- To take advantage of the installment plan, the employer must declare the respective information in the SEFIP by June 20, 2020, under the penalty of having the amounts not declared considered delayed, which will result in fines and other charges.
- In the event of termination of the employee, the adjusted suspension is resolved and pending payments must be performed without incurring in fine and charges, subject to the deadlines for payments established by law.
- The statute of limitation of FGTS debts is suspended for a period of one hundred and twenty (120) days, counted as of the effective date of the MP.
“OTHER PROVISIONS” ESTABLISHED BY THE MP NO. 927
- Working hours in health facilities (possibility to extend the working hours for employees that work on the 12×36 system, even in hazardous activity with the possibility of offsetting in an 18-month period);
- Suspension of one hundred and eighty (180) days of the deadlines to present defenses and administrative appeals, counted as of the effective date of the MP.
- Non-recognition of the coronavirus as a work-related disease, except if it is possible to evidence the work-related cause.
- Possibility for the employer to extend the validity of collective bargaining agreements (ACTs or CCTs) that have expired or will expire for up to ninety (90) days, within the period of 180 days counted as of the effective date of the MP.
- Suspension of notices of infractions by auditors and labor inspectors, allowing them to only instruct the companies about the irregularities, for one hundred and eighty (180) days counted as of the effective date of the MP. This rule is not applicable in cases where serious and imminent risks are verified, lack of employee’s registration, work in conditions similar to slavery, child work and work-related accidents with death.
- Possibility of payment in two (2) installments of annual allowance to the ones that in 2020 were on sick leave, work-related accident leave, retirement, pension due to death or imprisonment allowance by the Federal Government.
Recommendations regarding these “other provisions”:
- We call the attention to the risk of extending rules contained in collective bargaining agreements (ACTs or CCTs) only at the discretion of the employer. There is a disconnection with section 8, items III and VI, of the Federal Constitution, which is why we recommend that the extension of collective agreements be defined by negotiation with the employees’ union.
- In what regards the premise that the coronavirus will not be considered a work-related disease, unless there is evidence of link between the work and the disease, the MP No. 927 is only confirming how it works in practical terms. Our recommendation is for the company to maintain and strengthen the promotion of prevention and precautionary measures, as well as measures of action in the case of a symptomatic employee, treating the employee, initially, like having an ordinary disease.
MP No. 927 brings important tools for implementing in a simpler and faster way some alternatives to reduce payroll costs and adjust or even interrupt production in these times of public calamity.
Contrary to expectations, MP No. 927 did not change the existing legal parameters for reducing salary and/or working hours. There is indication that the Federal Government may deal with such subjects and the anticipated access to unemployment insurance in a specific new Provisional Measure.
Nevertheless, until there is no news about the matter, our previous guidelines on the topic remain valid.
We are closely following the discussions, consequences and effects of the MP No. 927 to keep our clients informed on the best way to apply these labor measures in each specific case.
TozziniFreire Advogados attorneys are available to assist you with these and other workplace issues. For more information, please contact Mihoko Sirley Kimura (Partner) of TozziniFreire Advogados at Msk@tozzinifreire.com.br or visit www.tozzinifreire.com.br.
For more information please contact Joseph Granato, Communications Manager at L&E Global at email@example.com.