Through a Provisional Measure and a Presidential Decree, both published on July 07, 2015, the Brazilian Government created the Employment Protection Program – EPP as an alternative to preserve jobs and prevent the dismissal of workers.
Companies facing economic difficulty can join the EPP and, upon negotiation with the employees' union, cut up to 30% of the work hours and pay, for a maximum of 12 months. The reduction must apply to all of the company's employees or at least one specific sector or branch. It is possible to sign-in until December 31, 2015.
Workers whose pay are cut will be entitled to financial compensation, to be paid by the Federal Government, in the amount equivalent to half the amount cut, limited to R$ 900.84, which corresponds to 65% of the largest unemployment insurance amount.
Companies must pay the social security and severance pay fund (FGTS) contributions relative to the financial compensation paid by the Federal Government.
During the EPP's period, and for an additional period equivalent to 1/3 of the EPP, companies may not dismiss workers included in the program.
The collective bargaining agreement to be negotiated with the employees' union must, among other requisites: (i) be preceded by the delivery, to the union, of economic-financial information about the company, (ii) provide for a joint committee composed of representatives of the company and of employees covered by the EPP for inspection and monitoring, and (iii) demonstrate that any outstanding vacation time and hours of offsetting systems were exhausted.
The rules and procedures to join the EPP will be issued within the next 15 days by the Employment Protection Program Committee, formed by various ministries. It will include, among others, the conditions to evidence the company's economic-financial difficulty.
The Brazilian National Congress has 60 days, extendable for another 60 days, to approve, amend or reject the Provisional Measure that created the EPP.
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.
