Executive Order No. 927 ("MP 927"), published on March 22, amended the laws and regulations governing the labor measures that may be adopted by employers to preserve employment and income and to confront the coronavirus (covid-19) while the state of public emergency remains in effect.

 

Labor measures may be entered into between employees and employers by written individual agreement, which shall control over other regulatory, legal, and business instruments, within the limits of the Federal Constitution (the "FC").

 

The main measures addressed by MP 927 are the following:

  • teleworking or remote work
  • acceleration of individual vacations
  • granting of collective vacation
  • enjoyment and acceleration of holidays
  • hours bank
  • suspension of employment contracts for employee training (President Jair Bolsonaro announced on his social networks that he revoked this measure, but the official revocation has not been published yet.)
  • suspension of administrative requirements in occupational safety and health
  • deferment of collection of the Guarantee Fund for Length of Service (FGTS)

 

The table below summarizes the main issues related to each of them.

In addition, MP 927 established that labor measures adopted by employers that do not contradict the provisions of MP 927, taken during the 30-day period prior to March 22, 2020, are considered valid.

 

Finally, MP 927 determined that the state of public emergency constitutes, for labor purposes, a case of force majeure according to article 501 of the Consolidated Labor Laws (the "CLT"), which, according to article 503 of the CLT, implies the possibility of a general reduction in salaries of employees, in proportion to the salaries of each one, but not exceeding 25%, subject, in any case, to the minimum wage of the region.

 

However, article 2 of MP 927 itself refers to the limits of the FC. In this context, we understand that the salary reduction (i) should be implemented through collective bargaining, since, according to article 7, VI, of the FC, a salary reduction will only be considered valid if negotiated with the professional union; and (ii) may exceed the limit of 25% established by article 503 of the CLT, due to the prevalence of what is negotiated over what is legislated, as established by the Labor Reform.

 

MP 927: LABOR MEASURES TO CONFRONT COVID-19

ALTERNATIVE

COMMENTS

Teleworking or Remote Work

It may be adopted by the employer, at its discretion, regardless of individual or collective bargaining agreement.

It requires written or electronic notice at least 48 hours in advance.

The rules on liability for the purchase and maintenance and for the supply of the equipment and infrastructure necessary and suitable and reimbursement of expenses must be provided for in a written contract signed in advance or within 30 days of the date of the change in work arrangement.

If the employee does not have the equipment and infrastructure necessary to telework or work remotely: (i) the employer may provide the equipment on a free lease basis and pay for infrastructure services (which shall not be considered a salary payment); or (ii) if it is impossible to provide for a free lease arrangement, the period of normal work hours shall be computed as working time.

The time of use of applications and communication programs outside the normal work hours of the employee does not constitute time on call, readiness, or notice arrangement, unless there is a provision in an individual or collective bargaining agreement.

Regulations on telemarketing do not apply to workers on a teleworking or remote work arrangement.

The employer may also adopt a teleworking or remote work arrangement for interns and apprentices.

The employer may also mandate, at its discretion, return to the face-to-face working arrangement, upon 48 hours notice.

Acceleration of individual vacations

An employer may accelerate individual vacations upon giving at least 48 hours' written or electronic notice.

Workers who belong to the coronavirus risk group should be prioritized for vacation.

Holidays: (i) may not be taken for less than 5 consecutive days; and (ii) may be granted even if their accrual period has not elapsed (acceleration).

The vacation pay may be paid by the 5th business day of the month following the start of the vacation. The employer may also choose to pay one third of the vacation after it is granted, by the date on which the 13th salary is due.

The conversion of one third of vacation into bonuses will be subject to the agreement of the employer.

In the event of dismissal of an employee, the employer shall pay, with the other severance payments, the vacation not yet paid.

The employer may also negotiate with employees regarding acceleration of future vacation periods, per a written individual agreement.

The employer may suspend unpaid vacation or leave for health care professionals or those performing essential functions, upon notifying the employee in writing or electronically, preferably 48 hours in advance.

Granting of collective vacation

The employer may, at its discretion, grant collective vacation upon notice to the affected employees at least 48 hours in advance.

Prior reporting to the Ministry of the Economy and the professional unions is dispensed with.

The maximum number of annual periods and the minimum number of days laid down in the CLT (2 annual periods of not less than 10 calendar days) shall not apply.

Workers who belong to the coronavirus risk group should be prioritized for vacation.

Enjoyment and acceleration of holidays

The employer may accelerate the enjoyment of federal, state, district, and municipal non-religious holidays upon giving employees at least 48 hours' notice in writing or electronically, with an express indication of the holidays taken.

Holidays may also be used to clear the balance in the time bank.

The enjoyment of religious holidays will require the agreement of the employee, by written agreement.

Hours bank

The employer may interrupt its activities and set up a special time bank arrangement, by means of a collective or individual agreement, for offsetting within up to 18 months after the date of closure of the state of public emergency.

Recovery time can be offset by extending the work day by up to two hours, not exceeding the daily limit of 10 hours.

Suspension of employment contracts for employee training

(President Jair Bolsonaro announced on his social networks that he revoked this measure, but the official revocation has not been published yet.)

The employment contract may be suspended, for up to 4 months, for employees to participate in a not-in-person course or professional training program offered by the employer, directly or through training entities, with a duration equivalent to the contractual suspension.

Suspension: (i) will not require a collective bargaining agreement; (ii) may be agreed upon individually with the employee or group of employees; and (iii) will be recorded on a physical or electronic work ledger.

The employer may grant the employee monthly compensatory assistance, not of a salary nature, during the suspension period, with the value defined between employee and employer, individually.

During the suspension, the employee will be entitled to the benefits voluntarily granted by the employer, which will not be included in the employment contract.

If, during the suspension of the contract, the professional training course or program is not given or the employee continues working for the employer, the suspension will be undone and will subject the employer: (i) to the immediate payment of wages and social charges for the period; (ii) to the applicable penalties provided for in the laws and regulations in force; and (iii) to the penalties provided for in collective bargaining agreements.

No training scholarship will be granted by the Government during the suspension period.

Suspension of administrative requirements in occupational safety and health

During the state of public emergency, the obligation to perform (i) occupational, clinical, and complementary medical exams is suspended, except for the exams upon discharge; and (ii) periodic and occasional training of current employees, provided for in regulatory rules on safety and health at work.

Exams upon dismissal may also be waived if the most recent occupational medical examination was performed less than 180 days ago.

The examinations suspended must be performed within 60 days after the end of the public disaster and the training must be done within 90 days.

The current CIPA may be maintained until the end of the state of public disaster and ongoing electoral processes may be suspended.

Deferment of collection of the Guarantee Fund for Length of Service (FGTS)

The FGTS is suspended for March, April, and May of 2020, with maturity in April, May, and June of 2020.

The collection of the amounts for March, April, and May of 2020 may be carried out, without the application of adjustment for inflation, penalties, and charges, within up to six monthly installments, due on the seventh day of each month, starting in July of 2020.

In the event of termination of the employment contract, the suspension shall be terminated and the employer shall be obliged: (i) to pay the corresponding amounts, without the application of a penalty and charges, if it is done within the legal period established for performance thereof; and (ii) to deposit the amounts for the month of termination and the immediately preceding month, if they have not yet been paid.

 

MP 927 further established the following points:

  • Health establishments are allowed, per written individual agreement, even for hazardous activities and for twelve-hour work days with thirty-six hours of rest: (i) to extend the work day, in accordance with the provisions of article 61 of the CLT; and (ii) to adopt overtime shifts between the thirteenth and twenty-fourth hour of the break during the work day, without any administrative penalty, guaranteeing paid weekly rest in accordance with the provisions of article 67 of the CLT
  • During the 180-day period from March 22, 2020, the procedural deadlines for filing a defense and an appeal in administrative proceedings arising from labor infraction notices and FGTS debit notices are suspended
  • Cases of contamination with the coronavirus will not be considered occupational, except upon proof of a causal link
  • Collective bargaining agreements due or falling due, within 180 days, as of March 22, 2020, may be extended, at the employer's discretion, for a period of 90 days after the end of this period

 

We will continue to monitor the evolution of these topics and any potential developments.