BC calls for reform agenda to continue despite crisis

The reform agenda is essential for the Brazilian economy and, even amid the covid-19 pandemic, cannot be completely abandoned, Central Bank President Roberto Campos Neto said. “We obviously understand that the moment is for the anti-crisis package, but as was said before, the difference between making or not the reforms will be how the recovery shapes up,” he said Wednesday during a live stream sponsored by Credit Suisse. According to him, “the attitude towards reforms” will determine the speed of the recovery after the pandemic. Of the measures within the scope of the monetary authority, he cited the Agenda BC#, a set of proposals for the modernization and competitiveness of the financial system. “This plan continues. We will deliver [instant payment system] Pix later this year.”

Source: Valor Econômico


Coffee cooperatives reap good results amid pandemic

Brazilian coffee cooperatives took advantage of good international prices before the novel coronavirus crisis to trade high volumes of coffee in advance. The move will likely ensure good results in a year when the global economy is agonizing. The Brazilian 2020/21 crop, which begins to be harvested this month, is expected to total 59.6 million 60-kilo bags, projections by the National Supply Company (Conab) show. The Council of Coffee Exporters in Brazil (Cecafé) estimated in February that exports would total 32.5 million bags, repeating the 2019 record. “We are advising our members to take advantage of market highs to negotiate future sales,” said José Marcos Magalhães, president of Minas Gerais-based Minasul cooperative. “We are optimistic. It will be a very good year, despite the pandemic.”

Source: Valor Econômico


COVID-19 – Labor Impacts – April 2020

COVID-19  –  Labor Impacts  –  April 2020



Reduction of working hours and wages and suspension of the employment contract (MP 936/20).

The Federal Government, through Provisional Measure MP 936/20, instituted the Emergency

Employment and Income Maintenance Program providing for labor measures aimed at reserving employment and income, guaranteeing the continuity      of work and business activities and reducing social impact , to cope with the state of public calamity determined by law No. 13,979 / 20 resulting from the coronavirus (covid-19).

Among the measures instituted by the government, we highlight the possibility of proportional reduction of working hours and wages   and the temporary suspension employment contract of the Proportional Reduction of Working Hours and Salary.

The proportional reduction of working hours and wages may be agreed for up to 90 days, by written individual agreement between      employer and employee,  in  the  percentages  of  25%,  50% and 70%. In this case, the federal government will pay the  same reduced percentage, not based on salary, but on  the amount of unemployment insurance to which the employee would be entitled.

The employer may agree to the payment of compensatory aid, which shall be compensatory in nature and shall not integrate the employee’s salary for any purpose.

The reduction of the working day and salary may be the object of a collective agreement or convention and, in this case, establish percentages different  from those mentioned above.   However,  the federal government benefit will be paid observing the rounding down, i.e., no benefit will be perceived in the case of a reduction of less than 25%; 25% benefit of the  nemployment insurance  value  for  reduction  between  25% and 49%;  50%  for  reduction  between  50%  and 69%; and 70% for reduction of 70% or more.

The individual agreement formalized must be informed to the Union and to the Ministry of Economy, within 10 days, in order to the federal government to pay the benefit.

The working day and the salary shall be reestablished upon the cessation of the state of public calamity or the end of the agreed period or communication by the employer to the employee informing about his decision to anticipate the end of the agreed period.

Temporary Suspension of Employment Contract:

Employers can temporarily suspend the employment contract with a maximum term of 60 days, with a discount of up to 2 days to 30 days, using individual negotiation with the employee  or collective negotiation with the Union, provided that the employees have perceived the equal salary or less than R$ 3,135.00       (3 minimum discounts) or a higher level and salary equal to or greater    than R$ 12,202.12 (double the Social Security ceiling). In other cases, the suspension  of the  contract depends on collective  bargaining  or indication.

During the period of suspension of the contract, the employer will not pay a salary, will not collect the FGTS, will collect the social security contribution, but will continue to provide all the benefits  granted  to  the  employee  (for  example, health plan, food voucher). MP 936/20 allows the employee to make contributions to Social Security contributions as an optional policyholder, so that the period is counted for retirement purposes and other benefits.

Companies that earned more than R$ 4.8 million in 2019 can  pay a monthly allowance with no value of 30% of the employee’s salary.

The aforementioned allowance, which is optional for other employers, will have na indemnity nature   and will not have an impact on social security contributions and        other taxes on a payroll, nor will it be the basis for calculating the employee’s FGTS, in addition the power to be excluded from net income for IRPJ and CSSL purposes.

The formalized individual agreement will be informed to the Ministry of Economy, with no term of 10 days, for the payment of the benefit to be made possible by the federal government.

The benefit amount will be based on the monthly unemployment insurance amount to which employees are entitled, with a maximum ceiling of R $ 1,813.03.

The employment contract will be reestablished with the cessation of the state of public calamity or the end of the agreed period or the communication     from the employer to the employee informing about his decision to anticipate or end the agreed period.

It is important to note that the main items maintained as work activities, even if limited, means of remote work, etc., will be uncharacterized by temporary suspension of the employment contract, subjecting or employing the payment of remuneration and charges for the entire period, in addition to penalties collective legislation and convention prohibited.

Other provisions:

MP 936/20 establishes the employment guarantee for the employee who receives the benefit from the federal government as a result of the reduction in working hours and wages or the temporary suspension of the employment contract, during the agreed period of reduction or suspension and, after the re-establishment of the contract, for the period equivalent to  the  agreed reduction or suspension period.           Unjustified dismissal during the job guarantee period will subject the   employer to the payment of the respective indemnity.

Unconstitutionality of the MP:

According to MP 936/20 the employer must communicate to the Union about the formalization of the individual agreement, with no provision regarding the need for agreement by the Union.

However, much is discussed about the unconstitutionality of the MP regarding the reduction of working hours and wages and temporary suspension of the employment contract, by individual agreement, without the participation of the Union, as guaranteed by the Federal Constitution.

Minister Ricardo Lewandowski, of the Federal Supreme  Court  (STF),  in  response  to  the  Direct Action of Unconstitutionality – ADI n. 6363, granted a preliminary injunction to establish that “[the]  individual  agreements  to  reduce  working hours and wages or temporarily suspend employment contracts […] must be communicated by employers to the respective labor union,  within up to ten consecutive days, counted from the date of its celebration ”,  so that the latter,  willingly,  sets off collective bargaining, importing its inertia in agreement with what was agreed by the parties.

This is an injunction by the Supreme Court that has a great chance of being confirmed in the sentence.

Therefore, the terms of the individual agreement negotiated between the employer and the employee may be subject to collective bargaining by the Union, it remains  to  be seen  whether the Union will be able to start collective negotiations in  a short  period of time and in all individual agreements.