Brazil: Reimbursement Of Education Expenses In Brazil

The reimbursement of education expenses in Brazil was always a controversial issue, from the social security perspective.

Inspections and most part of the case law considered that it would only not comprise remuneration, for the sake of collection of social security and unemployment savings fund (FGTS) contributions, if the company's policy complied with the requirements under article 28, paragraph 9, "t", of Law nº 8.212/1991, i.e., that courses subject to reimbursement/payment were professional qualification courses, that such courses were at all times connected with the activities such employees performed at the company and that all employees and managers had access thereto.

Law N  8.212/91 did not deal with subsidy on education of employees' dependants, on the grounds that such payment had a salary nature. In other words, the law provisions did not stimulate companies to finance the education of children, what would be very important in Brazil, as the public educational structure is not able to reach everybody who needs it.

Nevertheless, on October, 2011 a new legislation was issued (Law nº 12.513 that amended Law nº 8.212/1991) providing that "the amount concerning educational plan or scholarship aiming at the basic education of employees and their dependents" will not be part of the salary if:

"1. is not used in replacement of a salary portion; and

2. the monthly amount of the educational plan or scholarship, considered on an individual basis, does not exceed five percent (5%) of the remuneration of the employee or the amount corresponding to one and a half times the amount of the minimum monthly limit of the salary considered for the purpose of social security contribution, whichever is greater"

As one may see, a positive aspect of the new legislation is that it acknowledged that the amount granted as educational allowance to employees' dependents does not have salary nature.

As a result, payment for the basic education (elementary school and high school, pursuant to Law 9.394/96) for employees and employees' children does not constitute benefit with salary nature for the purpose of collection of social security and FGTS contributions, provided that the requirements set in items 1 and 2 quoted above are complied with, specially the limit of amount to be paid (5% of employee's salary or 1.5 times the minimum monthly limit of the salary considered for the purpose of social security contribution).

Consequently, this would be the negative aspect of the new legislation, because it limits the amount of the benefit with the risk of having such benefit been mischaracterized and make it take on a salary nature.

We believe that this negative aspect (limit of amount), however, is disputable from the Constitution perspective, considering that the education has always been considered by case law as an assisting benefit, regardless of the amount granted (except if there is evidence of fraud or replacement of salary by the benefit).

In fact, the Federal Constitution provides that 'Education' is a right of all and should be incentivized with the cooperation of the society, including in relation to the access to "higher levels of education".

As a result, we believe that if there used to be no limitation set in the law mentioned above for the grant of education (social right), the new law could not, within the social security scope, impose a condition that is detrimental to the interests of society (employees, their dependents and, in this case, the employer), i. e. set a limit on the value of education.

In conclusion, the reimbursement of education expenses in Brazil is still a controversial issue, but at least the employees' dependents rights were included in this discussion.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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