Senate approves Provisional Measure (“MP”) 936/2020, which allows the reduction of work hours and suspension of labor contract, and made changes to PLR law

The Senate unanimously approved on this last Tuesday (06/16/20) the Provisional Measure 936/2020, which allows the suspension of the employment contract and the proportional reduction of hours and wages, as well as bring some relevant changes to the Profit Sharing (PLR) legislation. The measure affects workers in the private sector.

In the report in favor of the governmental order, the reporting senator called the attention to the fact that the program prevented the termination of around 12 million employees.

The main change brought by the new language approved by the Senate was the inclusion of an article that allows the government to extend the terms of the MP. The current text allows the suspension of the contract for up to 60 days and the reduction for up to 90 days. As per the new article approved by the parliamentarians, the government will be able to extend the maximum deadlines while the state of public calamity lasts.

Another change relates to the union’s monitoring of the negotiations. According to the original text of the MP, workers who received a salary equal to or less than R$ 3,135 or who had a salary equal to or greater than R $ 12,202.12 are allowed to execute individual agreements.

According to the text approved, this possibility is restricted to hyper sufficient employees and workers who receive a salary equal to or less than R$ 2,090.00, when the gross revenue of the employer in 2019 was greater than R$ 4.8 million; or that receive R$ 3,145.00, when the employer’s gross revenue in 2019 was equal to or less than R $ 4.8 million.

Another important change was the prohibition of companies requesting states, municipalities and the Federal Government to bear the costs of labor terminations. Currently the Labor Code (CLT), in its article 486, provides that the public authority responsible for paralyzing an economic activity shall pay the mandatory indemnities (hypothesis called “Prince’s Fact”) and many companies filed lawsuits in this regard due to the social isolation measures taken by mayors and governors.

In addition, the approved text excluded the changes in the CLT suggested by the Chamber of Deputies related to measures that were contained in the MP 905/2019 – the so called “MP of the Green and Yellow Contract”, which lost its validity this year due to lack of agreement.

As a consequence, the senators kept some relevant issues, which were already addressed on MP 905/2019 and were also included in this new MP, such as:

Profit Sharing Plan – PLR (Law no. 10.101/2000):

(i) if the labor union does not appoint a representative within 10 days, the Committee may continue its discussion;
(ii) the company may have several PLR Plans, provided it follows the frequency requirement;
(iii) reiterates the prevalence of the parties’ autonomy of will;
(iv) the PLR signing must precede any payment and must occur at least 90 days before the final installment;
(v) any periodic error only invalids the payments made in disagreement and not the whole plan;
(vi) these relevant changes have an interpretative nature; and

Food Voucher (Meal Program): Clarify that the exemption from the social security taxation encompasses not only the food/meal provided by the employer (in natura) but also tickets and vouchers.

The expectation is that the government will immediately sign the new MP text and then the president to sign the decree extending the effects of the measure. The extension should be for 30 or 60 days.

Employers willing to extend the effects of the suspension must execute new agreements with their employees and union entities.
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