THE PROVISIONAL MEASURE N° 905/2019 AND THE GREEN AND YELLOW EMPLOYMENT AGREEMENT

The Provisional Measure No. 905/2019 ("PM"), published on November 12,2019 implemented various significant changes and innovations in social security, labor, and tax law.

In this context, the PM presents on Chapter I the figure of the Green and Yellow Employment Agreement with significative reductions on payroll, since it will be exempted from social security contributions, education allowance, contribution to other “S System” entities, including the contribution to INCRA. In addition, the FGTS rate is reduced to 2%.

Moreover, the hiring in this new form will be valid only from 01/01/2020 to 12/31/2022, since observed the following requirements:

a) worker between 18 and 29 years;

b) first record of employment for the respective worker (prior employment as an apprentice, probationary employment agreement, intermittent employment agreement, or in one-off jobs is not considered to be a first record of employment);

c) the engagement must be exclusively for new job positions;

d)  the agreement will be made by a determinate term not longer than 24 months;

e) the monthly base salary is limited to 1.5 times the national minimum wage; and

f) the number of workers cannot surpass 20% of the total number of employees of the company.

As for the remuneration, the company must pay the monthly salary and anticipated proportional vacation plus one third, and the Christmas Bonus proportional salary. It is also possible to negotiate the advance payment of half of the compensation for the FGTS fine.

In addition, among other changes on the Labor Law, the PM amends the article 68 of CLT and allows the labor on Holidays and Sundays, observing the local legislation only for the commerce. Although the obligation to provide weekly paid rest is maintained, but there is no requirements to provide it always on Sundays.

In this sense, the PM also insert a paragraph to the article 68 of CLT, providing that the scale of weekly paid rest on Sundays will be (i) one Sunday every four weeks of work for the commerce and services sector and, and (ii) one Sunday every seven work weeks for industry. Also, there is no obligation to the company to negotiate the labor on Sundays and  Holidays with the Union.

Otherwise, the PM revoked the subparagraph “d”, of item IV of article 21 of Law 8.213/1991, which considered as a route accident the accident suffered by the employee even out of the local of work and the working day, in the route from the his residence to the job, or from the job to his residence, by any transportation, including a vehicle of the employee.

In this context, if the employee suffers an accident on his way to the job and he has to be away from work for more than 15 days, the employee will not have a job tenure as granted in case of a labor accident on his return to work.

It is important to note that the effectiveness of the PM is secured for 60 days, extendable only once for the same period. In addition, not all changes introduced by the PM are already in force.

Finally, only after being approved by both houses of the Congress, the PM will return to the president for signature and will enter into force as a Federal Law. If it is rejected, vetoed by the President, or even not approved within 120 days, the PM will cease to be effective.

Should you have any doubts, SAEKI ADVOGADOS remains available to any clarification.