Brazil’s new labor rules for addressing the Covid-19 crisis

Provisional Measures (MP)


1,045 and


1,046 provide for new rules within the scope of labor relations which aim to manage the consequences of the pandemic, such as the Emergency Benefit for Maintaining Employment and Income (BEm). Published on April 28, 2021 in the Official Federal Gazette, the MPs are effective immediately, taking effect on the date of their publication. Overall, the new provisions are very similar to Provisional Measures


936 and


927, issued in 2020.

They should be passed by the National Congress within 60 days, and was later extended to another 60 days, being effective up to August 25, 2021. If the MPs are not passed after this 120-day period, they will no longer be effective, but any act carried out during this period will be considered legal.

The main provisions of the MPs are outlined below:

MP 1045 – Reduction of working hours and salaries

1. New Emergency Employment and Income Maintenance Program

Established for a period of 120 days (counted from the date of publication), MP 1045 provides for the payment of the BEm, the proportional reduction of working hours and wages, and the temporary suspension of employment contracts.

Direct and indirect public administration bodies, public companies and mixed capital companies, including their subsidiaries and international organizations are excluded from this measure.

2. Emergency Employment and Income Maintenance Benefit

This is a federally funded benefit that is paid monthly to workers who experience reduced working hours and salaries or a temporary suspension of their job contract. Employers must inform the Ministry of Economy within 10 days from the date an agreement is signed.

Non-compliance with this deadline will see the employer be responsible for remuneration (and respective social and labor charges) in the amount prior to the reduction or suspension until the information is provided, in addition to other consequences related to the BEm. The benefit will be calculated based on the amount of unemployment insurance the employee would be entitled to, observing the rules and percentages set forth in MP 1045 (including the exclusion of employees hired to work on random periods).

3. Proportional reduction in working hours and wages

During the term of the New Emergency Employment and Income Maintenance Program, employers may agree on a proportional reduction in the working hours and wage/monthly salary of their employees. This can be done for each sector or department, partially or concerning all positions in the company, for up to 120 days, provided that:

• employees’ working hourly rates are maintained; or
• there is a collective bargaining agreement, collective bargaining agreement or individual written agreement between employer and employee – in which case the proposal must be sent to the employee at least two calendar days in advance. The reduction in working hours and wage/monthly salary can only be either 25%, 50% or 70%, observing the other rules set forth in MP 1045 with regard to salary ranges and employees’ levels of education.

The collective bargaining agreement may establish a reduction in working hours and salary in different percentages. During this period, the employer may grant monthly financial assistance to employees, which:

• must have a defined value in the collective bargaining or individual written agreement;
• must be of a compensatory nature, and is thus not considered when calculating income tax, social security contributions, other payroll taxes or severance fund deposits (FGTS);
• may be considered a deductible operating expense when determining the taxable income and the calculation basis of the Social Contribution on Net Income (CSLL) for legal entities.

4. Temporary suspension of the employment contract

During the term of the New Emergency Employment and Income Maintenance Program, employers may temporary suspend their employees’ contracts by sector, department, partially or concerning all positions, for up to 120 days.

The suspension can be confirmed via a collective bargaining agreement or individual written agreement between the employer and employee that observes the other rules set forth in PM 1045, including those relating to salary ranges and the employee’s level of education. In the event of an individual written agreement, the proposal must be sent to the employee at least two calendar days in advance.

During the temporary suspension of the employment contract, the employee will be entitled to all employment benefits and will be able to make social security payments as an optionally insured person (in the regular course of the employment contract, employees participate in the public pension fund through a mandatory monthly contribution). It should be noted that the employee cannot maintain work activities during this period through telework or remote work – even on a partial basis. Otherwise, the temporary suspension of the contract will be considered unlawful and the employer may be subject to:

• the immediate payment of remuneration and social charges for the entire period;
• the penalties provided for in the legislation;
• the sanctions provided for in the individual or collective bargaining agreement.

Companies that earned a gross revenue greater than BRL 4,800,000 in the 2019 calendar year may only suspend an employee’s contracts upon paying a monthly allowance equivalent to 30% of the employee’s salary. This payment is compensatory in nature and is not included when calculating income tax, social security contributions, other payroll taxes levied and severance fund deposits (FGTS). In addition, the allowance may be considered a deductible operating expense when determining the taxable income and the calculation basis of the Social Contribution on Net Income (CSLL) for legal entities

5. Provisional job tenure

Employees who receive the BEm as a result of a reduction in working hours and wage/monthly salary or the temporary suspension of their contract will be entitled to provisional job tenure. The determination is valid:

• during the period of reduction or suspension;
• after the reestablishment of the working hours and wage/monthly salary or the end of the temporary suspension of the contract, for a period equivalent to that agreed upon for the reduction or suspension;
• in the case of a pregnant employee, for a period equivalent to the reduction of working hours and wage/monthly salary or for the temporary suspension of the employment contract. This is counted from the end date of the pregnant woman’s provisional tenure period (a period during which her contract cannot be terminated upon returning to work), as provided for in the legislation.

In the case of a dismissal without cause during the provisional tenure period, the employer must pay the compensation amounts provided for in MP 1045. These vary depending on the percentage reduction of workloads and salaries, as well as the severance instalments provided for in the legislation (in the event that the contract is suspended, compensation equivalent to 100% of the salary the employee would be entitled to during the provisional tenure period is due).

6. Other rules

• MP 1045 is applicable to pregnant employees, including domestic workers.
• When adopted, a proportional reduction of working hours and wage/monthly salary or a temporary suspension of employees’ contracts, must ensure that public services and essential activities referred to in

  Law 7,783/1989 can continue to function.

• Violations are subject to the fine provided for in Article 25 of

  Law 7,998/1990.

• The maximum time for proportional reduction of working hours and wage/monthly salary and for temporary suspension of an employee’s contract cannot exceed 120 days – even if one follows the other – except if extended by the Executive Branch.
• By mutual agreement, an employer and employee may opt to disregard the requirement of prior notice and MP 1045’s measures.

MP 1046 – Labor measures for addressing the public health emergency

1. Term

The measures provided for in MP 1046 was also extended to another 60 days, being effective up to August 25, 2021.

2. Telework

Employers may change from an in-person work model to telework, remote work or another type of distance work at their discretion. They may also determine when the in-person work model recommences regardless of the existence of individual or collective agreements, waiving the need for prior registration of the change in the individual employment contract. Employees must be notified of such change must be notified at least 48 hours in advance, in writing or by electronic means.

Provisions concerning responsibility for acquiring, maintaining or providing necessary technological equipment and infrastructure for teleworking, remote working or distance working must be provided for in a written contract, along with the provisions for reimbursing expenses incurred by the employee. The contract must be signed in advance or within 30 days from the date that the work model changed.

It is worth noting that interns and apprentices are permitted to work under teleworking, remote work or distance work models.

3.
Employee vacation periods

Employers are allowed to bring an employee’s vacations forward, provided they give at least 48 hours’ notice (in writing or electronically) informing the employee of the duration of the vacation period. Workers who belong to the coronavirus risk group should be prioritized for individual or collective vacations.

Vacation periods must not be shorter than five consecutive days and can be granted at the employer’s discretion, even if their corresponding accrued period has not elapsed.

Employers may suspend vacations or unpaid leave for health professionals or those performing essential functions. The employee must be given at least 48 hours’ notice and informed either in writing or – preferably – by electronic means.

In Brazil, employees are normally entitled to an additional one-third bonus on their salary while taking paid vacation leave. However, for vacations granted during the 120-day period the measures are subject to, this bonus may be paid after the vacation period at the employer’s discretion, until the date the employee’s annual 13th salary is due, as provided for in the legislation. The conversion of one third of the vacation period into a financial benefit (permitted under law) will depend on the employer’s consent. Payment can be made until the date the employee’s 13th salary is due. The payment of the paid vacation period, however, can be made up to the fifth business day of the month following the start of the vacation.

4. Collective vacations

Employers may grant collective vacations to all employees or sectors of their companies, and must notify all affected employees at least 48 hours in advance, in writing or electronically.

In this case, the maximum limit of annual periods and the minimum limit of consecutive days provided for by law does not apply, with concessions allowed for a period exceeding thirty days. There is no obligation to give prior notice to the local body of the Ministry of Economy or to the labor unions.

Some rules provided for in MP 1046 that regard bringing forward individual vacations also apply to collective vacations, such as the impossibility of granting them for periods of less than five calendar days.

5. Public holidays

Employers can bring forward federal, state, district and municipal holidays (including religious holidays). They must notify all affected employees at least 48 hours in advance, either in writing or electronically. The notification must clearly state which holiday is being brought forward, as employees who work can in these days have these hours included in their bank of hours (compensatory schedule).

6. Suspension of work activities and compensatory time

Employers are authorized to suspend work activities and create a special framework for bank of hours (compensatory schedule), in favor of the employer or employee. This can be established by means of an individual or collective bargaining agreement for compensation within a period of up to 18 months from the end of the 120 day-period that the measures of MP 1046 are in effect.

To compensate for time lost due to suspended activity, workdays can be extended by up to two hours, so long as they do not exceed a total of 10 hours. This may occur on weekends, subject to the prior permission rules of the competent authority in matters of work for work on Sundays, as per Article 68 of the Consolidated Labor Laws (CLT) and applicable regulations.

During the 120-day period the measures of MP 1046 are in effect, companies that perform essential activities may establish a special framework for compensatory time via a bank of hours, regardless of whether activities are suspended.

7. Suspension of administrative requirements in safety and health

The obligation to carry out occupational, clinical and complementary medical examinations of workers who are teleworking, remotely working or working at a distance is suspended during the 120-day period that MP 1046’s measures are in effect. The physical examination of a terminated employee, in turn, may be waived if the most recent occupational medical examination was carried out less than 180 days ago.

The obligation to carry out occupational examinations and periodic training for health workers and and other staff working in hospitals remains. The examinations will be carried out within 120 days of the end of the period in which the measures of MP 1046 are in effect.

The periodic occupational medical examinations of workers in physical activity that are due during the term of the measures in MP 1046 may be carried out within 180 days from the date they are due. The coordinating physician indicated by the company’s medical and occupational health surveillance program can indicate to the employer the need to carry out the exams, if they consider that the extension represents a risk to the employee’s health.

The periodic training of current employees provided for in work safety and health regulatory standards is suspended for a period of 60 days, as of MP 1046’s date of publication. When MP 1046’s measures are no longer in effect, this training must be carried out within 180 days.

Training may also be carried out via distance learning during the period MP 1046 is in effect. It will be up to the employer to ensure that training activities are carried out safely. Internal commissions are authorized to hold meetings on accident prevention remotely via the use of information and communication technology, including those intended for electoral processes.

8. Length of Serverance Fund (FGTS) payment deferral

Employer payments into the FGTS by employers are suspended for the months of April, May, June and July 2021 (with due dates in May, June, July and August 2021, respectively). These FGTS deposits can instead be made in up to four instalments due from September 2021, and are not subject to fees and charges provided for in the legislation.

9. Other measures

During the 120-day period that MP 1046’s measures are in effect, via a written individual agreement, health establishments are allowed to:

• extend the working day beyond the legal or agreed limit (Article 61 of the CLT) including for positions that pose potential health risks, as well as for certain positions which require 36 hours’ rest for each 12-hour shift worked;
• adopt overtime shifts between the 13th and the 24th hour of the 36-hour shift break (essentially working 12 hours on, 12 hours off) without suffering administrative penalties.

The overtime hours may be compensated within 18 months, counting from the end of the 120-day period. This may be done either through the hour bank system or remunerated as overtime pay.

• MP 1046 also applies to temporary workers and third-party service providers (under the terms of

  Law 6.019/1974), rural workers (Law 5.889/1973) and – where applicable – to domestic workers (Complementary Law No. 150/2015).

• Regulations on teleworking and telemarketing provided for in Section II, Chapter I, Title III of the CLT do not apply to teleworkers under the terms of MP 1046.
• A professional qualification course or program that allows for suspending the employment contract (referred to in Article 476-A of the CLT) may be offered by the employer exclusively in a non-presential manner. It must have a minimum duration of one month and a maximum duration of three months.

For more information, please contact Mattos Filho’s

Labor, Employment and Executive Compensation practice area.