Brazil: Green and Yellow Employment Agreement in force from January 2020

Regions & Countries Brazil
Areas of Law Employment
Content Types Latest
Languages English
Employment Areas of Law Labor reforms, Employee status options

Overview

On 11 November 2019, Provisional Measure n. 62 was published which relates to the Green and Yellow Employment Agreement.


Contents

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).

Contact Information
Tim Marshall
Global Co-Chair - EMEA and Asia Pacific at DLA Piper
London
+44 207 796 6617
tim.marshall@dlapiper.com

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