international employment law firm alliance L&E Global

New Executive Orders aim to Preserve Employment as Brazil’s COVID-19 crisis continues

On 28 April, the Brazilian Federal Government issued two new Executive Orders (otherwise known as “MP”) in order to preserve employment (job retention and protection measures) and sustain incomes (salary continuation and variable compensation plans) during the pandemic.

The first, MP No. 1045/2021, regulates the new emergency employment and employees’ income maintenance program. In summary, it reestablishes the possibility of the employers to:

  • reduce salary and working hours; and
  • suspend employment agreements

Both alternatives were in force last year in view of MP No. 936/2020 and law 14.020/2000. As in 2020, employees who are affected by such measures are entitled to receive an emergency benefit on a monthly basis, paid by the Federal Government.

The measures may be adopted by individual and/or collective bargaining agreements depending on some circumstances (i.e., employee’s monthly salary, percentage of reduction of salary and working hours that will be adopted, employer’s revenue in 2019, and payment of a monthly allowance by the employer).

Employees who have their working hours and salary reduced or their employment agreement suspended, are entitled to job stability during the reduction/suspension period and an equal period thereafter. Termination without cause during the job stability period will result in the payment, by the employer, of an additional indemnification to the employee, along with the payment of the mandatory severance.

Secondly, MP No. 1046/2021 reestablishes several measures that were in force last year and linked to MP No. 927/2020, including the following:

  • deferred payment of FGTS deposits related to April to July 2021;
  • flexibility in the adoption of telework system and granting of vacation;
  • payment of vacation bonus up to December 2021;
  • possibility to anticipate vacation periods and holidays;
  • possibility to adopt of a system to offset working hours (bank of hours) in a period of up to 18 months counted after a period of 120 days; and
  • possibility to delay some administrative health and safety procedures, among others.

The measures established in the new MPs may be adopted for up to 120 days, as from 28 April 2021.