2. State Aid
Government subsidies and special relief resources allocated to support employers, and workers, in their efforts to maintain employment and pull through the crisis.
On 1 April 2020, the Brazilian Federal Government issued Provisional Measure (MP) No. 936/2020, which established an emergency employment and employees’ income maintenance program (Program) and determined additional measures that could be adopted by companies during the COVID-19 pandemic. On 7 July 2020, the MP was converted into Law No. 14,020/2020.
The Program first established by the MP and now part of the Law No. 14,020/2020 has three defined goals:
- preserve employment and employees’ income during the state of public calamity;
- ensure continuity of work and business activities;
- reduce social impact caused by the coronavirus pandemic.
To achieve the goals of the Program, Law No. 14,020/2020 establishes the possibility to (i) reduce salary and working hours and (ii) to suspend employment agreements. Law No. 14,020/2020 also establishes an Emergency Benefit to be paid by the Federal Government to the employees, when the reduction of working hours/salary or suspension is implemented (see section VI. Cost-Reduction Strategies, part a. Furloughs and salary reductions for more information).