Brazilian government response to COVID-19 and supportive measures for business

31 March 2020

As a result of the impact caused by the coronavirus pandemic, measures are being taken by the Brazilian federal, state and municipal governments to support the economy and society at large. A variety of non-tax measures have been issued or announced in response to COVID-19, including a provisional measure (PM No. 927/2020) which details requirements relating to employment and public health. It also introduces measures relating to tax measures such as suspending certain activities and deadlines for filings.

 

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Economic measures

The main points of PM 927 aim to reduce the economic effects in the face of a global pandemic and maintain employment as much as possible. The provisions are as follows:

  • Suspension of FGTS payments: the demand for payment by employers of the Guarantee Fund is suspended for three months. FGTS is a fund created with the aim of protecting workers who are dismissed without just cause
  • A total of BRL $5 billion from the Workers’ Assistance Fund in the form of credit for micro and small companies
  • For three months, companies will have a 50% reduction in contributions from Sistema S – a set of institutions of interest in professional categories of industry and commercial
  • Simplified requirements to obtain credit and elimination of the requirement to have a debt and federal tax clearance certificate to renegotiate the terms of credit.

Provisional Measure No. 927

In the face of the coronavirus pandemic, the government has released a package of measures designed to make relations between employers and employees more flexible. While PM 927 has immediate effect, Congressional approvement must be received within 120 days for these to be converted into law.

The primary provision is as follows:

  • The employee and the employer may enter into an individual written agreement, in order to guarantee the permanence of the employment relationship, which will prevail over the other normative, legal and business instruments, respecting the limits established in the Constitution

The following measures may be adopted by employers, among others, including provisions relating to teleworking; the anticipation of individual vacations; the concession of collective vacations; the use and anticipation of holidays; the bank hour; the suspension of administrative requirements for safety and health at work; the deferral of payment of the Severance Pay Fund – FGT. Further details as follows:

  • Employers can change the face to face work regime and require employees to work from a home or remote office
  • Vacations may be taken by the employee even before the acquisition period is complete, granted by the employers. Vacation may be suspended for healthcare employees and those providing essential services
  • A special regime is available for compensating overtime in the case of interruptions of the standard working hours during the state of emergency period
  • Other individuals may be required to use vacation time, provided 48 hours’ notice is communicated to the employee
  • Payment is required for mandatory vacations and employees may be required to take holidays
  • Employers are required to provide employees assistance in maintaining their qualifications (e.g., through online courses); and
  • Employees’ rights to receive distributions of FGTS payments previously made by the employer to the individual employee’s FGTS account are suspended
  • The obligation to carry out occupational, clinical and complementary medical examinations is suspended, except for dismissal examinations.

The COVID-19 pandemic continues to evolve in Brazil and new measures are being announced by the government on a regular basis. To discuss any of the topics raised in this article or to find out more about doing business in Brazil in light of coronavirus, please get in touch.

By Cleber Alvarenga, HLB Brazil

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