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Brazil: Federal Supreme Court Confirms Validity of Provisional Measures That Reduce Salaries for 90 Days

(Apr. 29, 2020) On April 17, 2020, the plenary of Brazil’s Federal Supreme Court (Supremo Tribunal Federal, STF) held valid Provisional Measure 936/2020 (Medida Provisória No. 936, de 1 de Abril de 2020), which authorizes a reduction of working hours and wages, or the temporary suspension of employment contracts, through individual agreements due to the COVID-19 pandemic, regardless of applicable union contracts. In a trial held by videoconference, the plenary rejected by majority vote an injunction (medida cautelar) granted by Justice (Ministro) Ricardo Lewandowski in Direct Unconstitutionality Action (ADI) 6363, which was filed by the Rede Sustentabilidade party.

Writing for the plenary, Justice Alexandre de Moraes explained that, “due to the exceptional moment, the possibility of an individual agreement is reasonable, since it guarantees a minimum income to the worker and preserves the employment at the end of the crisis,” an STF press release said. According to Justice Moraes, “the demand for action by the union, opening collective bargaining or not concluding within the legal deadline, would generate legal uncertainty and increase the risk of unemployment.” He added that “the rule does not violate constitutional principles, as there is no conflict between employees and employers, but a convergence on the need to maintain business activity and employment.” Justice Moraes concluded that, “in face of exceptionality and time limitations,” the provisional measure “is in line with the constitutional protection of dignity of work and the maintenance of employment.”

Minister Moraes also highlighted the fact that the provisional measure protects workers who sign an agreement. In addition to ensuring their return to normal wages after 90 days, workers may not be fired for an additional 90 days.