Special Information Report – Labor Law Alert – Provisional Measure No. 936/2020

As a complement to the terms set forth by Provisional Measure No. 927/2020, the federal government published Provisional Measure No. 936/2020, on Wednesday, 04/01/2020, which instituted the "Emergency Program to Maintain Employment and Income" and established new labor measures to address the state of public calamity and public-health emergency resulting from the pandemic caused by the novel coronavirus (COVID-19).

Again, such measures seek to prevent a substantial increase in the number of layoffs and to reduce the negative impact on employers' cash flow, by authorizing:

1. Payment of the recently created "Emergency Benefit to Protect Employment and Income";

2. Proportional reduction to working hours and monthly wages; and

3. Temporary suspension of employment contracts.

In short, the "Emergency Benefit to Protect Employment and Income" will be paid by the federal government to employees during the period in which their working hours and wages are reduced, or during the period in which employment contracts are temporarily suspended. Said benefit will be calculated based on the monthly amount of unemployment insurance to which the employee would be entitled in case of dismissal, and it will not alter the amount of money or prevent insurance from being granted in the event of the employee's dismissal, as long the normally required legal requirements have been met.

A proportional reduction in working hours and wages has been authorized for a maximum of ninety (90) days, up to the fixed reduction limits of 25%, 50%, or 70%, provided that the employee's hourly wage is protected, which may be negotiated in a collective bargaining agreement, or even through an individual contract (depending on the employee's classification).

However, the temporary suspension of employment contracts has only been authorized for a maximum of sixty (60) days, which may be split up into two 30 (thirty) day periods. The suspension shall also be negotiated through a collective bargaining agreement or a written individual contract...