Put Fabiana Aparecida da Silva and Leticia Lamb

After provisional measure 881/2019, which became known as the “labor reform”, now also published by the Government on November 11, 2019, provisional measure 905/2019 “Green and Yellow Employment Contract”, a new contractual modality that not only has some of its own characteristics but also changes some provisions of the labor standard CLT (Consolidation of Labor Laws).

The green and yellow contract was created by the Government in order to generate around 1,800,000 (one million and eight hundred thousand) jobs throughout the country by the year 2022. When hiring under the green and yellow contract, attention must be paid to the legal requirements and limitations.

Article 1 of the provisional measure limits the age for hiring under this modality. The so-called “beneficiaries” under the MP must be between 18 and 29 years old and must not have worked under a formal employment contract. Young people who have worked as apprentices, under intermittent employment contracts, in casual work and/or on a trial basis may be hired under the green and yellow contract.

This type of contract has peculiar contractual characteristics in relation to those provided for in the CLT. One of the peculiarities mentioned in the green and yellow contract is the salary that varies from a minimum wage to a salary and a half.

Under this type of contract, employers will not pay rates for the “S” System, the education salary and the employer contribution of 20% to Social Security. The rate for the Severance Pay Guarantee Fund (“FGTS”) will increase from 8% to 2% on the salary.

And in case of dismissal without just cause, the fine is reduced from 40% to 20% on the FGTS balance.

Employers interested in hiring young workers may hire up to 20% of their total employees under this modality. And for those who have up to 10 (ten) employees, the employer is allowed to hire up to 2 (two) employees under the green and yellow contractual modality, even if this represents a percentage higher than 20%.