The first confirmed cases of people with COVID 19 started in Brazil in early March and since then the Brazilian government has been taking steps to minimize the impact of the pandemic on the country’s economy. On March 23, 2020, the federal government announced Provisional Measure 927/2020 amending several labor rules-

Among them, allowing work under the “Home Office” regime with a notification period of 48 hours; to anticipate employee vacations with the payment extension until the 5th business day of the following month; anticipate collective vacations in companies without the need for intervention by the union or the labor ministry; make the use of the Bank of Hours more dynamic, favoring the employer; and the possibility of anticipating religious holidays.

In addition, the government suspended the payment of FGTS (Guarantee Fund for Length of Service) on the payroll of March, April and May, allowing the company to pay the amounts up to 6 times from the month of July, interest-free and fine.

The INSS (Social Security) payment also changed. The percentage of other entities was reduced from 5.8% to 4.55% in the months of April and May, and the payment of the company social security (20% on the payroll) and the RAT (Risk of Accident at Work) in March and April may be paid in August and October, facilitating the cash flow control of companies during this period of crisis.

On April 1, the federal government announced Provisional Measure 936/20 which allows the suspension of employment contracts and the reduction of working hours and salaries for a determined period. In this way, the employer will be able to make an agreement with the employee and reduce from 25% to 70% of his workday and, consequently, of his salary for a maximum period of 90 days. All agreements must be formally made and reported to the union, respecting the rules described in the law.

There is also the possibility of suspending employment contracts, by formal agreement with the employee, for a maximum period of 60 days. In this case, the company must maintain the payment of benefits to the employee and, if the company has an annual turnover greater than 4.8 million, it must pay 30% of the salary as an indemnity. In both cases, the government will subsidize the payment of the reduced portion of the employee’s salary, according to the proportionality of each case.

For Micro and small business, freelancers and informal workers who had their income reduced in this period of crisis, the government established social protection measures, through Law 13,982 / 20, including the granting of Emergency Aid in the amount of BRL 600.00 monthly for a period of 3 months, for people who are proven to have a per capita income of up to half the minimum salary.

To date, the government has accounted for 97.7 million applications for Emergency Aid, that is, almost half of the Brazilian population, of which 50.5 million have been approved, and the rest have been considered ineligible or inconclusive and need to supplement the registration.

All efforts are being made to ensure that the pandemic crisis and the impact of social isolation affect the economy and income distribution in the country as little as possible.

The Coronavirus crisis is causing businesses to face huge challenges and, in this context, reliable and up-to-date information is essential. At AUXADI, we are experts in providing accounts, tax compliance and international payroll management to our clients. If you would like us to expand on the above information, please do not hesitate in getting in touch with us.

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Regine Torrezani Rodrigues

Regine Torrezani Rodrigues
Payroll Department Brazil

André Ricardo Dannemann
Country Manager Auxadi Brasil

All information contained in this publication is up to date on 2020. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.