Brazilian Federal Supreme Court Decides that Employers’ Social Security Contributions are Not Due on top of the Maternity Leave Allowance

The maternity salary is the social security benefit that, with some exceptions, is paid to female employees in the event of childbirth, adoption or non-criminal abortion. The benefit must be paid for a period of 14 days (applicable for spontaneous abortions), 120 days (general rule) or 180 days (applicable to companies participating in the “Empresa Cidadã” program).

Social security legislation (Law No. 8.212/1991) sets forth that employers’ social security contributions are due on top of the maternity salary.

However, on August 4, 2020, the STF decided that such provision of Law violates the Brazilian Federal Constitution as it creates a new source of funding for the Social Security Agency, which is not in compliance with the Social Security Agency funding rules established in our Constitution. Therefore, the STF decided that no social security contributions should be paid by employers on top of maternity salaries. The decision also emphasizes that the maternity salary does not have salary nature and corresponds to a social security benefit granted when the employee is on maternity leave, hence, not linked to the provision of services.

In view of the new understanding of the STF, as of August 4, 2020, employers are released from the obligation to pay social security contributions on top of maternity salaries.

In what regards the social security contributions paid by employers prior to this decision, there is still not a decision (modulation of effects) on how the ruling will apply. Employers that do not have active lawsuits discussing the matter filed prior to this decision, may evaluate the suitability of immediate filling of a lawsuit because the modulation of effects may not authorize the recovery of the undue social security contributions paid in the last five years on top of the maternity salaries if the employer (taxpayer) is not already discussing the matter in court.

For more information on these articles or any other issues involving labour and employment matters in Brazil, please contact Mihoko Sirley Kimura (Partner) of TozziniFreire Advogados at Msk@tozzinifreire.com.br or visit www.tozzinifreire.com.br.