Put Rafael Mello – 03/04/2020

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 seeks to establish exceptional and temporary parameters, especially in relation to the following 3 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.

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, having been declared by MP 936/2020.

MP 936/2020 will still be the subject of many political and legal debates.

The National Association of Labor Court Judges (ANAMATRA) published a public note on 04/02/2020 in which it highlights its understanding of unconstitutional items of MP 936/2020, namely:

1. The insistence on the provision of individual agreements to deal with the crisis and the exclusion of union negotiations (art. 7, XXVI, of the CF/88)
2. Distinction between underprivileged and “hyper-sufficient” workers in violation of the principle of equality (art. 3, IV, of the CF/88);
3. Removal of the remunerative nature of amounts paid and salary reduction.

Along the same lines, the National Association of Labor Prosecutors (ANPT) also released a public statement on April 2, 2020, in which it points out that, under the pretext of facing the crisis resulting from COVID-19, the Federal Government “subjected Brazilian workers to a situation of profound social abandonment, drastically reducing their labor guarantees during the period, without any compensation from employers or the state”.

ANPT also highlights its concern about the exclusion of collective bargaining and the provisions of MP 936 in its “arts. 2, 7, II, 8, § 1, 9, § 1, I, and 12, which authorize the flexibilization of extremely sensitive labor rights during the period of public calamity, through a simple individual agreement between employee and employer, moving in a diametrically opposite direction to the civilizing level projected by the 1988 Constitution.”.

Lawyers' associations also expressed a similar opinion, as was the case of the Brazilian Lawyers' Institute (IAB), and it is also true that the Brazilian Bar Association (OAB) also tends to express a cautious position regarding the aforementioned MP 936/2020.

The political party REDE SUSTENTABILIDADE filed Direct Action of Unconstitutionality No. 6,363 (ADI No. 6,363) before the Supreme Federal Court also on April 2, 2020, with grounds and arguments similar to those raised by ANAMATRA and ANPT. The case has been pending a preliminary decision since its distribution to the office of Minister Ricardo Lewandowski, with no decision yet.[1].

It is therefore noted that the application of MP 936/2020, as well as its predecessor and complementary MP 927/2020, it is far from providing companies with any legal security, adding to this the legislative process to which provisional measures are subject and the environment of political instability installed in the country, as is well known.

Despite the differences of opinion on the subject and the challenges arising from the crisis the country is going through and the application of the instruments provided for in MP 936/2020, it remains to list the main measures, for information purposes.

Below we highlight 2 essential premises of MP 936/2020:

• MP 936/2020 exempts the company from negotiating with the union to implement its measures layoff and reduction of working hours and wages, with exception negotiations with employees who receive between R$$ 3,135.01 and R$12,202.11 in salary, which must be carried out through the union.
• The application of the crisis containment measures provided for in MP 936/2020 entails, as a counterpart to the employee and which is independent of negotiation, the provisional guarantee of his/her job after the end of the suspension of the employment contract or the reduction of working hours and salary for the same period that the restrictive measure lasted.

With these premises in mind, let's look at the 2 main topics covered in MP 936/2020.

• Proportional reduction of working hours and salary – Through an individual or collective agreement (with a union), the reduction of working hours can be adjusted to 25%, 50% or 70% with a corresponding and proportional reduction in salary. The Government will grant employees 25%, 50% or 70% of the unemployment insurance amount respectively to the percentage of reduction in working hours/salary.
• Temporary suspension of the employment contract – layoff – As explained above, MP 936/2020 allows the suspension of the employment contract for a maximum period of 60 days (layoff) which can be divided into up to two periods of 30 days. During the layoff (i) a company with gross revenue of up to R$4.8 million may choose to pay an allowance to the employee in the form of compensation (it is not a salary, and (ii) A company with gross revenue exceeding R$4.8 million is required to pay an allowance to its employee equivalent to R$301,300 of their salary, and this amount will be compensatory in nature (it is not salary in nature).

We understand that MP 936/2020 brings exceptional measures and that they must always be practiced with the objective of maintaining jobs.

The use of 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.

Considering, further, the public statements by professional associations of judges, labor prosecutors and lawyers, the recommendation is that the implementation of any of the measures provided for in MP 936/2020, as we recommend in relation to 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.

[1] last updated on 04/03/2020 at 1:06 pm