On July 6, Federal Law No. 14,020/20 was signed. The law institutes the Emergency Program for Maintenance of Employment and Income and provides for complementary measures to deal with the public health emergency of international importance resulting from the coronavirus.
Among the main regulations brought by the new law, the following stand out:
1. Proportional reduction of working hours and wages:
- The law consolidates the temporary suspension of the employment contract, in individual agreement or collective bargaining with the union representing the professioanl category.
- Salary reduction by 25%, 50% or 70%. The reduction can be established in other percentages as long as there is negotiation with the union.
- It is the employer’s responsibility to guarantee the employee’s employment for a period equal to the reduced working hours or suspension of the contract.
2. Individual or collective agreement:
- The law reaffirms the validity of the individual agreement and establishes that the employer must negotiate directly with the employee and communicate to the union within 10 days. It will be up to the union to decide whether or not to start the collective negotiation.
- In case of conflict, the collective agreement will prevail as of its validity. However, if the individual agreement is more favorable to the worker, it will prevail.
3. Possible responsibility of the public authorities due to the termination of contracts:
No measure by a municipal, state or federal authority will be a justification for the government to be liable for the payment of severance payments or labor indemnities. The law consolidates the employer’s exclusive liability.
Initially, the law allowed only 60 days for contract suspension and 90 days for workday reduction. On July 14, through Decree No. 10.422/20, the deadline for working hours and wages reduction and suspension of the employment contract was extended to up to 120 days — thus giving the employer more flexibility.
The company has up to 10 days, from the date of the agreement, to inform the Ministry of Economy of its joining of the program.
