Put Rafael Mello and Israel Cruz  – 07/04/2020

As previously reported, on 04/01/2020, the Brazilian government issued Provisional Measure 936 (MP 936/2020), which “establishes the Emergency Program for the Maintenance of Employment and Income and provides for complementary labor measures to deal with the state of public calamity recognized by Legislative Decree No. 6, of March 20, 2020, and the public health emergency of international importance resulting from the coronavirus (covid-19), as referred to in Law No. 13,979, of February 6, 2020, and provides other measures.”.

The measure in question seeks to establish exceptional and temporary parameters, particularly with regard to the following three topics: (i) Reduction of Working Hours with Reduction of Salary (25%, 50% or 70%), (ii) suspension of the employment contract for a maximum period of 60 days (layoff), (iii) benefit to the worker via unemployment insurance when there is a reduction of more than 25% or suspension of the contract.

Reiterating notes already made in our newsletters, MP 936/2020 was, since its inception, the subject of political and legal debates.

The National Association of Labor Court Magistrates (ANAMATRA), the National Association of Labor Prosecutors (ANPT) and professional bodies of the legal profession such as the Brazilian Lawyers Institute (IAB) have publicly positioned themselves pointing out allegedly unconstitutional items of MP 936/2020, in particular the exclusion of union entities in negotiations for the reduction of working hours and wages and for the suspension of employment contracts.

The controversy was predictable and had been announced, but the first concrete result of what we had considered came in a preliminary decision by Minister Ricardo Lewandowski on 04/06/2020 in the Direct Action of Unconstitutionality (ADI No. 6,363) filed by the political party REDE SUSTENTABILIDADE.

Minister Ricardo Lewandowski of the Federal Supreme Court (STF) determined the interpretation of MP 936/2020 in accordance with the Federal Constitution, in the following terms:

However, the mere provision in MP 936/2020 that such agreements “must be communicated by employers to the respective union representing the category, within a period of up to ten calendar days” apparently does not overcome the unconstitutionality pointed out in the initial complaint. This is because the simple communication to the union, devoid of legal consequences, continues to violate the provisions of the Constitution on the matter.

That's why, It is necessary to give a minimum of effectiveness to the communication to be made to the labor union in the negotiation. And the best way to do so, in my opinion, is to interpret the text of the Provisional Measure, contested here, in the sense that “individual agreements” will only be validated, that is, will only have full legal effects, after the expression of the employees’ unions.

In the absence of any manifestation of these, in the form and within the deadlines established in the labor legislation itself for collective bargaining, such as art. 617 of the Consolidation of Labor Laws interested parties may continue directly with the negotiation until its conclusion.

(…)

That said, based on the reasons set out above, I partially grant the precautionary measure, ad referendum of the Plenary of the Supreme Federal Court, to give an interpretation in accordance with the Constitution to § 4 of art. 11 of Provisional Measure 936/2020, in order to establish that “[t]he individual agreements to reduce working hours and wages or temporarily suspend an employment contract […] must be communicated by the employers to the respective labor union, within a period of up to ten calendar days, counted from the date of their execution”, so that the latter, if it wishes, may initiate collective bargaining, its inaction implying consent to what was agreed by the parties.

The curious thing is that the decision mentioned above, according to some reports published in the media, is already the subject of divergence and criticism among other Ministers of the STF, which could lead to a new change in understanding in the virtual plenary session on April 15, 2020.

For now, and in accordance with the guidance we set out in our previous report, it will be up to the company that chooses to suspend the employment contract or reduce working hours through an individual agreement to notify the union representing the employees that individual negotiations have begun.

In practical terms, if the union chooses to initiate collective bargaining, the company must enter into negotiations with the union. If the union remains silent, the individual agreement will prevail.

There is also the possibility that the employees' union may resist negotiations or demand payment of fees to initiate negotiations. In this case, if there is a situation that effectively makes negotiations unfeasible due to the union's fault, and provided there is considerable evidence of this, we understand that the individual negotiation model provided for in MP 936/2020 may be followed without this implying non-compliance with the preliminary decision of ADI No. 6,363.

It is also worth noting that the website was made available https://servicos.mte.gov.br/bem/ for the employer to register the data of employees and contracts in which the suspension of the employment contract or reduction of working hours and wages was applied. The aforementioned website contains information on the need to notify the union, in accordance with the injunction granted.

It is important to emphasize that, from the perspective of the decision, the company will have the burden of proving that it communicated the matter to the union. Therefore, it is important that the communication be made effectively to provide this future evidence in the event of the issue being taken to court.

Considering, therefore, the public statements by professional associations of magistrates, labor prosecutors and lawyers, as well as the preliminary injunction granted in ADI No. 6,363 at the STF, the recommendation is that the implementation of any of the measures provided for in MP 936/2020 and MP 927/2020 be legally evaluated before their adoption.

Mazzucco & Mello Advogados is ready to support its clients in adopting balanced measures and mitigating risks arising from the current scenario, which is still one of uncertainty and legal insecurity.