• Insights

Employers can extend contract suspensions and working time reductions in Brazil: new rules

Written by
Veirano Advogados, one of the leading and most renowned Brazilian business and employment law firms.
Brazil has extended the possibility for employers to suspend employment agreements and/or reduce working hours and salary, with Decree 10, 470/20.  

On 24 August, the Brazilian Federal Government edited Decree 10,470/20 extending the period during which employment agreement can be suspended and working hours and salaries reduced. This was previously set out in Law 14,020/20, which established a maximum period of 120 days.

In accordance with this Decree, companies are now allowed to extend the suspension of employment agreements and the reduction of working hours and salaries for an additional 60-day period. This means that the maximum period for suspension or reduction has been extended to 180 days during the period of the coronavirus-related ‘State of Calamity’.

In return, the Federal Government grants employees the emergency employment and income preservation benefit (‘BEm’) as compensation for these measures. However, the Decree states that approval and payment of the BEm is subject to budget availability.