Provisional Measure (Medida Provisória - MP) 927/2020 and COVID-19

With the aim to secure jobs and income through the COVID-19 pandemic, MP 927/2020 of March 22nd provides for a series of important and extraordinary measures that will be in effect for the period of the state of emergency.

During this period, employers and employees will be allowed to sign agreements that will prevail over other regulatory, legal, and commercial instruments - provided that within the limits defined by the Federal Constitution.

To implement the measures, the Company will only need to observe some specific requirements and notify the employee in writing (emails also valid) with a minimum 48hs advance period.

It is important to note that the MP will have to go through the legislative process to be converted into Law and may be changed along the process (as it happened with the new Lay Off provisions referenced hereunder).


The employer will be allowed to change presential work for telecommuting or any other form of remote work, and will also be entitled to determine when the scheme will revert back to presential work. These changes can be made unilaterally, i.e. regardless of the existence of bilateral or multilateral labor agreements.

Items such as the responsibility to acquire, provide and maintain technical equipment and appropriate infrastructure for the workers performing their activities remotely, as well as the reimbursement of costs incurred by such workers in the course of their activities, will be defined in written agreements signed by the parties prior to the change, or within a 30 days period as from the change.


The employer will inform the employee of any anticipation of unused vacation periods, provided such periods are of at least five days. This procedure is allowed regardless of whether the employee has reached the vesting period for such vacations. Through bilateral written agreements, employees and employers will also be able to negotiate anticipations of future vacation periods.

Under those specific vacation concessions, the employer will be allowed to defer payment of the additional vacation pay of 1/3 of employee remuneration up to the date when the 13th wage (Christmas Bonus) is due (December 20).

At its own discretion, the employer is entitled to grant collective vacations just by notifying employees, will not be required to apply the limits of “maximum annual period” and “minimum of continuous calendar days”, and will not be required to notify the local agency of the ministry of economy and union.

Holidays and “bank of hours”

Companies will be able to anticipate holidays (except for religious), recognized as such byfederal, state or municipal governments. Such holidays may also be used to offset balances owed to employees from “bank of hours” (e.g. unpaid overtime, undiscounted leaves of absence, etc.). Religious holidays may also be anticipated, but only with the written consent of the employee.

Employers can form a special regime for the later offset of hours not worked (i.e. through “bank of hours”) when activities are interrupted because of the crisis. Under such regime employees will have to make up for the hours not work within a maximum period of 18 months as from the termination of the state of emergency.

Further terms concerning the bank of hours may be negotiated with each employee for other topics, or with the unions (collective negotiations).

Nevertheless, at the discretion of the employer, and regardless of bilateral or multilateral agreements or union negotiations, the utilization of previously unworked hours may be done through overtime, by extending future working hours up to 2hs, not exceeding a maximum of 10hs of work per day.

New Lay Off Provisions

In the original version of the MP, the labor contract could be suspended (without pay) for up to 4 months, provided the employee would be placed in remote education courses or professional training programs offered by the employer, or by entities responsible for the professional qualification.

This very significant suspension could be agreed with each employee or group of employees, and would be registered in the Work Permit (paper or electronic).

This possibility, however, was revoked by the Executive Branch (information provided by the specialized media along the day). It is expected that another format of suspension will be enacted whereby workers would receive some compensation, possibly funded in full or in part by the government.

Severance Indemnity Fund (FGTS)

FGTS contributions due by the employer are suspended for the period of March to May 2020. Future payment of such amounts can be made in up to 6 months, in installments and without interest, penalties or the charges defined by Law 8.036/1990.

Future payments of the suspended FGTS contributions would start in July 2020. In order to do adopt such installment payment program, the employer is required to file, up to June 20, 2020, the information regarding the triggering events, calculation basis and amounts due of Social Security Contribution and other information relevant for the INSS or the Board of Curators of the FGTS. The data provided will be consider as a self-assessment of the unpaid FGTS, and enough for reinstating FGTS compliance.

If the employment contract is terminated, the employer would still be required to pay FGTS amounts previously suspended, and may still benefit from the exemption of interest, penalties and charges, provided that the amounts are paid when due.

General rules

The MP recognizes the existence of “force majeure” during a state of emergency. This allows for other measures, in addition to the ones discussed above. Accordingly, the MP enacted further measures and includes other specific topics, related to healthcare facilities, to Social Welfare benefits, and concerning the extended validity of certificates related to federal taxes and Federal Tax Clearance Certificates.

Apart from this, and most important, the MP validates labor actions adopted by employers that are not contrary to the provisions of the MP in the 30 days prior the MP coming into force.

Durval Portela

Sócio e líder de Consultoria Tributária, PwC Brasil, PwC Brasil

+55 (11) 3674 2000


Flávia Fernandes

Sócia, São Paulo, PwC Brasil

+55 (19) 3794 5400