By Rafael Mello and Israel Cruz

On 03/22/2020, the Brazilian government issued Provisional Measure 927 (MP 927/2020), which “provides for labor measures to address 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), and provides other measures”.

This informative article already includes the statement given by the President of the Republic, Mr. Jair Bolsonaro, at around 2:00 pm on 03/23/2020, in which he announced the revocation of article 18 of MP 927/2020 and, therefore, excluded the possibility of layoff for 4 months of the labor measures package to combat Covid-19.

The measure seeks to establish exceptional and temporary parameters on the following topics: (i) teleworking, home office and similar, (ii) anticipation of individual holidays, (iii) granting of collective vacations, (iv) use and anticipation of holidays, (v) time bank in favor of the employee and the company, (vi) suspension of administrative requirements in occupational health and safety, (vii) 12×36 working day in health establishments by individual agreement, (viii) definition of covid-19 is not an occupational disease, (ix) extension of collective agreements and conventions, (x) validation of measures already taken by employers, (xi) deferral of FGTS collection by the employer.

It is important to highlight that the measures discussed below apply exceptionally during the period of public calamity recognized by Legislative Decree No. 6 of 2020, with this fact having been declared by MP 927/2020 as “force majeure” for labor purposes.

Another important and controversial aspect is that employers and employees will be able to enter into individual agreements, which will take precedence over other rules (collective, legal and regulatory instruments) with the express objective of “guaranteeing the permanence of employment”.

Let's look at the topics expressly covered in MP 927/2020.

• Telework

The possibility was stipulated for the employer to determine work under a teleworking, remote work or any type of remote work regime at its sole discretion and without the need for an individual or collective agreement, nor prior registration of such change in the employment contract.

It was also expressly provided that work under such regime constitutes external work, according to the exception in article 62 of the CLT, eliminating control of working hours and, consequently, calculation of overtime.

• Individual and collective holidays

Permission to grant vacations with a 48-hour notice period, as well as the possibility of bringing vacations forward, even if the period of vacation has not elapsed. In other words, even future vacation periods may be brought forward in full.

It was also established, when granting individual vacations during the period of public calamity, that the employer would be allowed to pay an additional one third of the vacation up to the legal deadline for payment of the 13th salary.

The deadline for holiday pay has also been changed to allow payment up to the fifth working day after the start of the holiday.

Regarding collective vacations, employees must be notified at least 48 hours in advance, with no need to notify unions or the Ministry of Economy and the respective Labor Secretariat.

• Anticipation of holidays

The anticipation of non-religious federal, state and municipal holidays for immediate enjoyment is permitted, which must be communicated to the employee at least 48 hours in advance, expressly indicating the holidays to be enjoyed.

Any use of religious holidays will depend on an individual written agreement between the company and the employee for validity. Once accepted, it follows the same parameters as the other holidays indicated above.

• Time Bank and “Negative” Time Bank

MP 927/2020 also authorized the establishment of a special time bank regime, regardless of individual or collective agreement.

The aforementioned time bank under a special regime will be valid during the period of public calamity and compensation must occur within 18 months after the end of the state of public calamity.

It is important to note that the rule, in addition to the traditional time bank that calculates additional hours to the workday for later compensation in future days off, mainly aims to regulate the interruption by the employer of its activities and, thus, count the hours not worked to compensate in the future – after this crisis has passed – for overtime worked. It would be, in an informal term, a kind of “negative time bank”.

• Suspension of administrative requirements in occupational health and safety;

During the period of the calamity, medical examinations (admission, dismissal and periodic) and training were no longer required. CIPAs may be maintained until the end of the calamity and ongoing electoral processes may be suspended.

• 12×36 working hours in healthcare facilities by individual agreement

The possibility of adjusting the 12×36 working day in medical establishments through an individual written agreement was established, even in cases of unhealthy activities.

• COVID-19 will not be characterized as an occupational disease or accident

MP 927/2020 also established that cases of COVID-19 contamination will not be considered occupational, except upon proof of a causal link.

• Extension of collective agreements and conventions

At the employer's discretion, collective agreements or conventions that have expired or are due to expire may be extended within a period of one hundred and eighty days, counting from the date of entry into force of this Provisional Measure, and may be extended, at the employer's discretion, for a period of ninety days, after the end of this period.

• Validation of measures already taken by employers

All measures aimed at tackling the COVID-19 crisis implemented by employers in the last 30 days were validated, as long as they do not contradict the provisions set out in MP 927/2020.

• FGTS deferral

MP 927/2020 established the suspension of the requirement for employers to collect FGTS for the periods of March, April and May 2020, due in April, May and June 2020, respectively. In other words, in the next 3 months, employers may stop collecting FGTS.

This rule applies to employers regardless of the number of employees, tax regime, legal nature, field of activity or prior membership.

Some additional obligations are relevant to enjoy this benefit. For example, companies must declare and recognize such amounts as due, assuming that MP 927/2020 brings here an obligation to declare information in e-Social.

For duly declared amounts, companies will be able to pay the deferred FGTS from July 2020 in 6 monthly installments, without adding interest, correction, charges or fines.

In the event of the employee's dismissal before the end of the installment plan, the deferred amounts will be due on the date of termination, but without the addition of interest or fines.

IMPORTANT: Companies that do not pay the FGTS and fail to correctly declare these amounts will be considered in default, will not benefit from the installment plan mentioned above and will be subject to fines, interest, correction and charges.

Provisional Measure 927/2020 will still be the subject of many political and legal debates. Even just a few hours after its publication, some people are already questioning the constitutionality of Provisional Measure 927/2020, especially because it excludes collective bargaining for the adoption of restrictive measures on rights.

We understand that MP 927/2020 brings exceptional measures that should always be implemented with the aim of preserving jobs. The use of these measures in a context other than this, even during a period of calamity, will certainly generate future legal developments with consequences that are still uncertain.

Therefore, the recommendation is that the implementation of any of the measures provided for in MP 927/2020 be legally assessed before their adoption. Mazzucco & Mello Advogados is attentive to the developments on the subject, including statements and adjustments made after the publication of MP 927/2020, and is ready to support its clients in adopting measures in a balanced manner and mitigating risks arising from the current scenario, which is still one of uncertainty and legal insecurity.