Aiming to regulate the granting of loans to employers in order to enable the payment of the payroll for their employees, on April 3, the federal government published Executive Order No. 944/20 ("MP 944"), which launches the Emergency Job Support Program.
Considered to be another way to tackle the state of public calamity caused by the covid-19 pandemic, the program encompasses business companies and cooperatives, with the exception of credit companies with annual gross revenues exceeding R$ 360 thousand and equal to or less than R$ 10 million in 2019.
For two months, employers will be granted credit to cover the entirety of their payroll, limited to an amount equivalent to up to twice the minimum wage per employee.
With low interest rate (3.75% per year), 36 months for payment, and an initial grace period of six months, the measure aims to relieve employers of part of the costs with payroll. MP 944 requires employers to provide truthful information and not to use the funds granted for purposes other than the payment of their employees.
In addition to economic and financial consequences, the measure has important labor impacts. In order to preserve employment relationships, it guarantees stability to the employees by linking the granting of the loan to the company's obligation not to terminate, without cause, the employment agreements of all employees during the period between the date the line of credit is taken out and 60 days after receiving the last installment.
Failure by employers to meet any of the obligations will cause the debt to mature immediately.
MP 944 does not provide for the possibility of indemnities for the period of stability. This leads to the conclusion that any termination before the end of the period may give rise, in addition to early maturity of the obligation, to a claim for reinstatement of employment by employees who have been terminated.
