The Green and Yellow Employment Agreement applies to new entrants to the labor market who are aged between 18 and 29 years old. It provides for the following terms:
- The Agreement can be implemented from January 2020 and can be applied to new recruits up until December 2022;
- Employees employed under the Agreement are entitled to all constitutional rights (salary, annual vacations and 13th salary); however FGTS (unemployment fund payments) is 2% (instead of the 8% which applies to indefinite term agreements). Further, the FGTS fine in the event of dismissal is 20% of the FGTS balance (instead of the 40% which applies to indefinite term agreements);
- The Agreement is permitted only for lower cost contracts ie employees who are receiving a maximum salary of 1.5 x minimum salary - equivalent to BRL 1,500;
- No more than 20% of workforce can be engaged under the Agreement;
- The Agreement is valid for 24 months. If the employee remains employed at the end of 2 years, the Agreement will be converted into an indefinite term agreement;
- Companies will have payroll reductions – social security contributions will not apply (20% of the employee´s salary)
The Provisional Measure also brings new changes to the Labor Code, changing approximately 60 provisions (ie authorization for work on Sundays; documents may be archived by digital means/media; meal vouchers/allowance will be deemed part of the employee´s salary, among others).