Publicado em 07/07/2020

Conversion of Executive Order 936 to Law 14,020/2020

The Executive Order 936 (MP 936) bill of law, which sets forth the conditions for temporary suspension of employment agreements, reduction of salaries and working hours, and the Emergency Benefit for the Employment and Income Preservation, was enacted through Law No. 14,020/2020, with relevant changes. 

Differently from the original provisions of MP 936, Law 14,020/2020 provides for a reduced maximum salary for individual negotiations on suspension of employment or reduction of salary and work hours for companies with gross revenues higher than BRL 4,800,000,00 in 2019. From now on, such companies may only negotiate temporary salary suspensions or reductions and hours through individual agreements with employees whose monthly salaries are less than BRL 2,090.00 or with employees with salaries above BRL 12,202.12 and a college degree (employees with broad autonomy).

For companies with 2019 revenues lower than BLR 4,800,00, the salary cap for the first group of employees in case of individual negotiation will remain BRL 3,135, without prejudice of the individual negotiation with employees with broad autonomy.

Due to the Presidential vetoes, the enacted law does not include the changes approved by the Brazilian Congress regarding profit sharing plans, monetary correction index applied to labor debts (IPCA-E and savings account interest), automatic extension of collective bargaining agreement provisions during the pandemic, and concerning extension to December 31st 2021 of payroll tax relief (without maintaining the contribution on gross revenues, rather than on payroll) combined with Cofins-Importação increase, as previously determined by the bill of law approved by the Brazilian Congress.

In view of such vetoes, the Brazilian Congress may further review the enacted law, refusing such Presidential vetoes and reinstating – in total or in part – the provisions previously approved.

Finally, Law 14,020/2020 sets forth the Executive branch prerogative to extend through a Decree the maximum terms for the temporary suspensions of employment and reductions of salaries and working hours. In accordance with recent interviews of the Labor Secretariat, in the next days an extension for 60 days for employment suspensions and 30 days for salary reduction, rising the total term of such measures to 120 days, is expected to be enacted by the President.

We will continue to follow up this matter and will provide an update in case of any developments.