Executive Order No. 927/20 (MP 927/20), published on March 22 with a series of measures to preserve employment and income during the covid-19 pandemic, allows employers to grant early vacation (individual or company-wide) to workers in order to maintain employment during the current scenario of public emergency and reduce the impacts of the crisis on Brazil's economy.
Annual vacation is a fundamental right of the employee, but the choice of the time when it can be enjoyed is up to the employer, according to its needs (articles 2 and 134 of the Consolidated Labor Laws - CLT). The current scenario of social distancing and falling economic activity represents a period in which the granting of vacation meets the interests of the employer, in view of the need, in most cases, to keep all employees working as normal.
In addition, it is possible to predict that, in certain sectors, when activities return, the employer will need, more than ever, its entire workforce in order to try to minimize the negative impacts of the crisis, increasing its production and sales volume, among other actions. By granting vacation to their employees at this time, employers can count on having their entire staff for a long period, even 12 months, to return to work and try to reduce losses.
It is possible, however, that companies have not scheduled the granting of annual vacation at this time, which may have negative implications for cash flow. MP 927/20 then presents two alternatives to reduce the financial impacts of accelerating vacations: (i) extension of the deadline for payment of holidays until the 5th business day of the month following the beginning of the vacation period; and (ii) possibility of payment of the additional 1/3 premium on vacation until 12/20/2020.
Reflection on the advantages of granting vacation in the current period is valid, especially considering that companies may need to keep their workforce fully active when they resume their activities.
It is worth remembering that not granting vacation within 12 months from the date the employee acquired the right entails payment by the employer of double remuneration. Therefore, if it is necessary to keep all employees for a long period of time after resuming their activities, it is recommended that companies identify the accrual periods for vacations and evaluate the advantage of granting them now.
It is also important to keep in mind that employees may need to change their vacation plans, including rescheduling or canceling trips, due to the need for acceleration. When future vacations have already been approved by the employer, it is recommended that one analyze cancellation and acceleration thereof on a case-by-case basis in order to avoid possible material damage to employees.
The precedents of the Labor Courts, especially Normative Precedent No. 116 of the TST, are to the effect that, once an employee is informed of the period of an individual or company-wide vacation, the employer may only cancel or modify the start date reported if there is an overriding need and, even so, upon compensation for the proven financial losses of the employee.
Thus, although employers use force majeure to justify changes in the start dates of vacations already communicated to employees, prior case law points to the duty to reimburse losses incurred by employee as a result of such a decision. In any event, since this is a patent state of public emergency, it is possible that this jurisprudential position will be relaxed, depending on the review of the specific case.
It must also be taken into account that acceleration may lead to consecutive years of work without the employee taking a vacation. In addition to possible risks related to the employee's health, this may generate future debates regarding the validity of acceleration granted by means of an individual agreement, due to possible distortion of the purpose of the provision of "annual vacation", which is guaranteed by the Federal Constitution in its article 7, XVII.
From the legal point of view, when a condition of force majeure is established, there is no loss to the parties, because the fundamental right to annual vacation remains preserved, as does the employer's prerogative in particular, including via a reduction in bureaucratic procedures and an increase in the time frame for payment of remuneration (click here to see an e-book on the subject).