The current economic scenario has led many companies to look for alternatives to face this moment of retraction.

The legally possible alternatives include granting of vacation shutdown to the workforce of one sector or a whole company, suspension of employment contracts so employees may take courses, execution of Collective Bargaining Agreements with the union representing the relevant professional category for a reduction in working hours and wages, implementation of Voluntary Separation Programs, among others.

The most recent alternative created by the Federal Government is the companies' possibility of reducing working hours and wages by their joining the Employment Protection Program, "PPE", in the Portuguese acronym.

The PPE was established by Provisional Presidential Decree no. 680 of July 6 2015, recently converted into Law no. 13189, on November 19, 2015.

According to such law, companies facing economic and financial difficulties will be able to join the PPE provided that they meet certain legal requirements; one of these requirements is to execute a Specific Collective Bargaining Agreement with the union representing the employees. The reduction in working hours and wages should comprise the total workforce of a company or all the employees of a company's department.

Interested companies may join the PPE by December 31, 2016 and they may remain in the program for not more than 24 months.

By joining it, companies will be allowed to reduce working hours and wages by 30% for a period of up to 6 months, extendable for further 6 months, limited to 24 months.

Where the working hours are reduced under the PPE, the Worker's Support Fund ("FAT") will fund, during the period of wage decrease, 50% of the wage reduction, capped at 65% of the maximum unemployment insurance payment.

It is important to bear in mind that companies that have joined the PPE program are not allowed to terminate, while they are under the program, employees whose working hours were reduced. After the end of the PPE term, terminations will be barred for 1/3 of the term companies were under the program.

In addition, while companies are under the program, overtime work and new hirings will not be allowed, except in cases of workforce replacement or offering of regular jobs to persons that completed apprenticeship courses and, provided, however, that the newly hired are also covered by the Specific Collective-Bargaining Agreement.

It is worth stressing that companies defaulting on a Specific Collective-Bargaining Agreement or on any other provision of the program will be excluded from the PPE and prevented from joining it again. Furthermore, the defaulting companies will be forced to refund the FAT, with adjustment for inflation, for the funds they received and to pay an administrative fine corresponding to 100% of such funds.

Therefore, before adopting any alternative to mitigate the impacts of the economic and financial crisis, companies should consider their possibility of fulfilling the legal requirements.

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.