Provisional Measure 927/20: additional measures to ease labor relations due to the coronavirus crisis

Author: Deborah Monte The Provisional Measure 927 (PM 927) was issued last night (22/02/20) setting forth additional measures to flexibilize the relations between employers and employees during the coronavirus crisis.

It should be noted that the PM is in force as of its date of publication for a period of 60 days, which can be renewed for an additional period of 60 days until it is converted into law by the Congress. If the PM is not converted into law during that period it will lose its validity.

Author: Deborah Monte

The main measures included in PM 927 can be summarized as follow: 

1. Reduction of Working Hours and Salary by up to 25% 

As the coronavirus crisis has been recognized as a case of force majeure for the purpose of Labor Law, employers are allowed to implement a reduction of 25% of the working hours of its employees with a correspondent salary reduction (yet the minimum wage floors per region must be respected). This measure needs to be implemented observing the applicable jurisprudence on this matter and possible collective labor agreement. 

2. Lay off for a 4 months period (professional courses or qualification program)

The employment contract may be suspended for a period of up to 4 months to allow the employees to participate (remotely) to professional courses offered by the employer or other educational institutions. The suspension of the employment contract does not depend on a collective agreement or convention and allows the employer to suspend the payment of wages during that period. Nevertheless, the employer may still grant to the employees a monthly compensatory financial aid, which will not have the nature of salary. The amount of the financial assistance can be freely negotiated between the employer and its employees (please note that the government is currently discussing the possibility to remove this measure from the PM)

3. Individual agreement will prevail 

The employee and the employer may enter into an individual written agreement, which will prevail over other normative instruments. Yet, the agreement must respect the limits established in the Federal Constitution.

4. Home office 

The employer may implement a home office regime for its employees regardless of the existence of individual or collective agreements.

5. Anticipation of individual vacations 

The employer can anticipate the vacations of its employees, even though the acquisition period for such vacation has not fully elapsed. Future vacation periods may be negotiated, by written agreement between the parties and payments for the additional 1/3 of a monthly salary and 13th month salary may be deferred.

6. Granting of collective vacations 

The employer may grant collective vacations to a group of employees with a prior notice of 48 hours. Some of the normal requirement to grant collective vacations will be waived, including the requirement to communicate the collective vacations to the Ministry of Economy and labor unions.

7. Compensatory Time (Comp Time – Banco de horas)

The Employer is allowed, through collective or individual agreement, to interrupt its activities and put in place a working hours compensation scheme (banco de horas) to its favor or in favor of its employees. The compensation scheme can be valid up to 18 months after the date the state of public calamity is over.

8. Anticipating bank holidays

The employer may allow its employees to anticipate bank holidays, which may be used to offset the balance working hours as part of the compensation scheme.

9. Deferral of contributions to the Severance Indemnity Fund (FGTS) 

The employer contributions to the FGTS for the months of March, April and May 2020, and respectively payable on April, May and June 2020 are suspended. The deferred amounts may be paid in installments as of July of 2020.

FCR Law Labor team has extensive experience to assist companies with the matters included in this alert. 

We are fully available to review, together with you, the possible measures that could immediately be implemented to reduce or mitigate the negative effects caused by the coronavirus.

Please do not hesitate to contact us for any additional information or assistance that your company may require. 


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