26th March 2020
(information and measures available up to 7:00pm of this date, subject to change as new measures are announced by the authorities)

Having regard the pandemic declaration by the World Health Organization (WHO) due to the new coronavirus (Covid-19) and guidelines to restrict mobility in the country, with effective restrictive measures and suspension of activities of several non-essential businesses in certain States, companies have faced difficult decisions on how to cope with the survival of their businesses and maintaining jobs.

Law No. 13,979 was published on 6th February 2020 providing for policies to confront Covid-19, but does not contain specific measures to protect workers and jobs. It limited itself to considering as valid justification an employee´s absence from work to investigate, care and treat the disease.

The Brazilian federal government announced lines of credit for companies and measures aimed at protecting jobs by Provisional Measures (“MP”). In the labour sphere, two MPs have been enacted and published this far (MP No. 927 of 22nd March 2020 and MP No. 928 of 23rd March 2020). However, there are rumours that new MPs will be enacted, especially regarding the possibility of reducing working hours and salaries.

In the light of the above, we set out below the current options provided by Brazilian legislation for business savings and job preservation purposes, contemplating the innovations introduced by MPs No. 927/2020 and No. 928/2020, highlighting that they are clear in determining that their provisions only apply during the state of public calamity recognized by Decree No. 6, of 20th March 2020.

In addition to the options presented below, it is important to note that:

MP No. 927/2020 confirms that the state of public calamity declared by the Brazilian federal government constitutes an Act of God pursuant to the provisions of Article 501 of the Brazilian Consolidation of Labour Laws (“CLT”);
MP No. 927/2020 expressly provides that cases of contamination by Covid-19 will not be considered occupational diseases, except if there is evidence to connect the same with the workplace;
The measures adopted by employers that do not contravene the provisions of MP No. 927/2020, taken in the 30 days prior to its publication, are valid;
There are specific measures for healthcare facilities – we are available to provide further details.

It should be noted, regardless of the measures chosen by the company, as long as employees remain in the workplace, that it is the employers’ responsibility and obligation to adopt the necessary and possible precautions to protect their employees and prevent the spread of the disease, such as informing employees about the topic and adequate hygiene care, provide washbasins with soap and water, provide sanitizers (70% alcohol gel or other suitable products), implement measures to change the work routine to make working hours more flexible and avoid crowds, work station spacing etc.

Current options provided by Brazilian legislation supplemented by MPs No. 927 and No. 928 of 2020, which aim to safekeep jobs:

a) Home office:
• Written notice from the employer to the employee must be provided 48 hours in advance;
• Not applicable to telemarketing/call centre workers;
• Exemption of working hour controls;
• The written agreement is waived but the provisions regarding the responsibility for the acquisition, maintenance or supply of technological equipment and the necessary infrastructure must be the subject of a written agreement signed within 30 days from the date of the change of the work regime;
• Should the employee not have the technological equipment and necessary and adequate infrastructure, the employer may: (i) lend the equipment and pay for infrastructure services; or (ii) consider the employee under on-call conditions;
• Also applicable to apprentices and interns.

b) Anticipation of individual vacation leave:
• Written notice from the employer to the employee must be provided 48 hours in advance or by any electronic means of communication;
• Minimum term of 5 (five) days;
• May be granted unilaterally by the employer, even if the employee has not completed 12 months of service to the company (thus, enabling the anticipation of individual vacation by unilateral decision of the employer);
• Possibility of individual negotiation to anticipate future vacation periods by written agreement;
• Priority in the concession for employees belonging to the Covid-19 risk group;
• Possibility of deferring vacation payment until the 5th business day of the month subsequent to that in which vacation is taken and the additional 1/3 bonus until the date on which the 13th salary is due (20th December);
• The conversion of up to 1/3 of the vacation leave in cash allowance will depend on the employer’s consent;
• Possible suspension of vacation or work leave of employees working in essential activities by prior communication of 48 hours, in writing or by any electronic means of communication
• In the event of termination of the employee, in addition to the severance package, the amounts not yet paid relating to vacation must be paid.

c) Collective vacation leave:
• Written notice from the employer to the employee must be given 48 hours in advance or by any electronic means of communication;
• Mandatory prior communications to the local labour authority (Ministry of Economy) and unions representing employees are waived;
• Although the wording is not clear in this regard, it is possible to argue the possibility of deferring payment of vacation leave up to the 5th business day of the month subsequent to that in which vacation is taken and the additional 1/3 bonus by the date on which the Christmas bonus (13th salary) is due (December 20th) also in the collective vacation.

d) Anticipation and use of public holidays:
• Written notice from the employer to the employee must be provided 48 hours in advance;
• Valid by unilateral decision of the employer, except for religious holidays, which depend on the employee’s written consent;
• Holidays can be used to offset time bank balances.

e) Time Bank:
• Authorizes a special working hour set-off regime, under a time bank, established by collective or individual formal agreement, for set-off within up to 18 months as from the date of the end of the state of public calamity.

f) Suspension of Administrative Requirements for Health and Safety at Work:
• Suspension of the obligation to conduct occupational, clinical and complementary medical exams, except for termination medical exams (this may also be exempt if the most recent occupational medical exam was conducted within the last 180 days) – note that we do not recommend exemption of the admission medical exam, in order to avoid exposure to the risk of onboarding new hires with unidentified pre-existing diseases;
• Exams must be conducted within 60 days from the cessation of the state of public calamity;
• Suspension of periodic training and occasional training for current employees, as provided for in regulatory standards for health and safety at work, which must be conducted within 90 days of the end of the state of public calamity;
• Maintenance of current CIPAs until the end of the state of public calamity and suspension of ongoing electoral processes.

g) Deferral of FGTS payment:
• Suspension of the enforceability of FGTS payments by employers, in respect of March, April and May 2020, falling due in April, May and June 2020, respectively;
• Such payments can be effected in up to six monthly installments, maturing on the seventh day of each month, starting in July 2020, by declaring this information by 20th June 2020;
• Upon termination of employees, payment must be immediate, without interest and fine.

h) Paid leave, which if exceeding 30 days precludes the employee’s right to vacation in that acquisition period.

i) Application of the provisions regarding Acts of God, provided for in Articles 501-504 of the CLT, in particular the possibility of a general reduction in wages by up to 25%, limited to the regional minimum wage and provided the negotiation and execution of a Collective Bargaining Agreement (“CBA”), with a counterpart provision to guarantee job stability.

j) Suspension of employment agreements, for a period of 2 to 5 months, for the participation of the employee in professional qualification programs (necessarily online, in the current scenario) offered by the employer, provided the negotiation and execution of a CBA and the employee’s consent, maintaining the concession of benefits voluntarily conferred by the employer.