Senate approves Provisional Measure 936, and the government may extend the period for reduced working hours and suspension of employment contracts.

The Senate plenary unanimously approved, in a remote session this Tuesday, Provisional Measure (MP) 936, which deals with the suspension of employment contracts and the reduction of wages and working hours during the coronavirus pandemic. Senators excluded sections added by the Chamber of Deputies that altered provisions of the Consolidation of Labor Laws (CLT). The text now goes to President Jair Bolsonaro for his signature.

The Executive branch has been working hard in recent days to pressure the Senate to vote on the Provisional Measure. Now, the government can issue a decree that will extend the maximum periods for salary reduction agreements by another 30 days and for contract suspensions by another 60 days. This possibility was included in the original text of the Provisional Measure by the Chamber of Deputies.

The sections excluded by the senators dealt with working hours and overtime for bank employees, changes in the adjustment of labor debts, and the expansion of the margin for payroll loans for public servants and private sector workers to 40%. Issued on April 1st, the Provisional Measure authorizes companies to negotiate directly with workers agreements to suspend contracts for up to 60 days and reduce working hours and wages for up to 90 days. In return, the proposal creates a benefit granted by the Union to help supplement workers' income. With the extension of the deadlines, the aid will be paid for a maximum of four months during the period of public calamity, which ends on December 31st.

The Chamber made other modifications to the text sent by the Executive. Among them, it extended the payroll tax exemption for labor-intensive sectors until December 2021. The benefit was originally set to expire in December of this year.

Changes

Other changes made by the deputies were blocked in the Senate. One of them included measures that reduced costs for employers, such as changes to the adjustment of labor debts in lawsuits and permission to replace appeal deposits with bank guarantees or surety bonds. The government leader in the Senate, Fernando Bezerra Coelho (MDB-PE), even appealed for the section to be maintained:

- I'll mention two important measures from Bill 32. The first is that it reduces labor debt interest from 16 percentage points per year to six. The calculation will be based on the TR (reference rate). We are in the middle of a pandemic, companies are going bankrupt, labor lawsuits are going to explode, and we are going to pave the way for companies to close down. This is not neglecting workers' rights; this is saving Brazilian companies. The other is the allowance for surety. The deposit for labor claims, instead of being in cash, can be made with a bank guarantee.

It was no use.

The section was removed by a vote of 46 to 30. The Senate also excluded a relaxation of the conditions for payroll loans, raising the income commitment margin from 35% to 40% during the period of public calamity. Rules The Provisional Measure provides for reduced working hours and salary cuts of 25%, 50%, or 70% for those earning up to R$ 3,135, without the need for union participation. The text approved by the Chamber requires union mediation for those earning up to R$ 2,090 if the company's annual revenue exceeds R$ 4.8 million. If the cut is 25%, individual agreements remain permitted. For workers who make the agreement, the Union pays a supplement in the same proportion as the salary reduction, calculated based on unemployment insurance installments (between R$ 1,045 and R$ 1,813). In the case of contract suspension, workers receive the unemployment insurance installments they would be entitled to.

Companies that adhere to the proposal must maintain jobs for twice the duration of the agreements. According to the Ministry of Economy, almost 11 million agreements have already been formalized since the issuance of the Provisional Measure. According to initial estimates, the Provisional Measure will have an impact of R$ 51.2 billion.