The Covid-19 pandemic, as well as the measures determined by the public institutions in order to restrain the virus, has been affecting the country´s economy in a significant way, given that all non-essential activities, whether commercial, industrial, religious or service providers,  are forbidden to work. It has transferred an excessive onus to the commercial sector as it doesn´t have a compatible revenue when it comes to the current expenses related to employees and social security issues attached to it.

In the face of this scenario of public calamity recognized by Legislative Decree N. 6, of March 20th, 2020, the Republic Presidency presented the Provisional Measure N. 927, of April 1st, 2020, as a way to guarantee jobs before the difficulties that emerged from the pandemic. It also aimed to financially safeguard the companies extending the deadlines for taxing collection, avoiding mass dismissal and the increasing of unemployment rates in Brazil.

Regarding the existing possibilities of anticipated vacation and bank of hours utilization, article 19 of the Provisional Measure N. 927, of March 22nd, 2020, determines the cessation of the severance indemnity fund collection with due dates in April, May and June. Consequently, such payments shall be made in up to six installments as of July 2020, with no incidence of fines or  charges, as long as all employees´s rights anticipated by the Consolidation of Labor Laws and collective labor agreements are kept.

The biggest challenge for the legislators in the labor field consists of conciliating the concerns about adjusting the regulation of labor contracts to this drastic scenario with the basic principles of the Labor Law which are, in general, established in the Constitutional Text. Particularly, there is a concern regarding protecting the workers, keeping their rights and postponing the collection of funds, given that it is an essential workers´s right.

It´s also worth to ponder that employers will be able to use this legal provision regardless the number of employees, the tax regime, the juridical nature, the economic field of activity and the previous accession, which means a facilitating benefit for the natural person and the employer legal person.

In a recession scenario, specially for companies with a large number of employees, the possibility of postponing the collection deadline of the severance indemnity fund and paying it in installments means a significant economy. Such measures assure that those companies will not have to shut down in this chaotic environment caused by the pandemic.

This way, we notice that such measure was adopted in order to help the employers keeping their employees in a moment of crisis, given that the payment in installments will help the companies and their cash flows, which have already been jeopardized in a significant way.

 

Sérgio Pelcerman – lawyer, expert in labor law at Almeida Prado & Hoffmann office.