Brazil Updates: Expiration of Emergency COVID-19 Employment Measures, Increase in Minimum Salary for “Hyper-Sufficient” Employees
January 20, 2021
Multiple COVID-19 emergency employment law programs, including the hour reduction program, expired at the close of 2020 in Brazil, potentially impacting employment practices. Additionally, the Brazilian government issued an increase to the “hyper-sufficient” employee minimum salary.
The Employment Contract Suspension and Hour Reduction Program Expired
On December 31st, 2020, the Emergency Employment and Income Maintenance Program, which had remained effective for the last nine months, expired
. The program allowed employers to reduce employee working hours and suspend contracts to allow employees to remain employed during the pandemic.
With the expiration of the program, employees will no longer receive supplemental income from the government upon job suspended or hours reduced. Therefore, employers will resume the responsibility of paying 100% of the employee's salary unless the suspension or hour reduction complies with the traditional mechanisms of the Brazilian labor code: (i) suspension is only allowed through an agreement with the union to undergo training sessions and (ii) the transitional reduction of work hours is only allowed under extraordinary circumstances of force majeure.
The Use of an Emergency Telework Regime Expired
In March 2020, the Brazilian government issued a provisional measure for emergency and transitional rules to cope with the need to quarantine the workforce. It included the use of a telework regime where companies can unilaterally ask their employees to work from home.
After December 31, 2020, the use of the telework regime expired and employers must work on a telework agreement with their employees who are asked to remain teleworking. Global employers operating in Brazil are advised to review HR Policy Global’s analysis on teleworking in Brazil - Working Hours and Telework Expense: Remote Work Challenges For Brazilian Employers
to understand the complexity and implication of such an agreement.
Government Increases “Hyper-Sufficient” Employees’ Minimum Salary
Brazil’s labor law reform in 2017 introduced a new employee category - “hyper-sufficient” employee, which refers to a worker with a higher education level and receives a salary that is equivalent to or higher than twice the Social Security’s benefit cap.
Employees who fall into this category can also negotiate an independent employment contract directly with the employer. This agreement is effectively equivalent to a collective bargaining agreement. The purpose of creating this novel category is to give employers more flexibility to attract the nation’s top talents, which constitute a small fraction
of Brazil’s population.
On January 13, 2021, the Brazilian Government raised the social security benefit cap from BRL 6,101.06 ($1,159.53) to BRL 6,433.57 ($1,222.72) per month. With the adjustment, the minimum monthly salary of “hyper-sufficient employees” rose from BRL 12,202.12 ($2,319.05) to BRL 12,867.14 ($2,445.44).
Global companies with operations in Brazil that hire this distinct category of employees will need to verify whether the current salaries of these workers are above the new minimum threshold. For those who are below the new standard, employers can either reconsider the employee’s category and update their employment contract or raise their compensation before the last payroll of the month. To avoid any equal pay and discrimination claims, employers who contemplate raising salary for “hyper-sufficient employees” also need to review the income of the employees who are doing the same jobs without a college degree.