The deliberations and voting on the report of Executive Order (MP) No. 905/2019, scheduled for Tuesday, March 3, have motivated various discussions on the subject, especially in public hearings scheduled for this purpose.

MP 905/2019 instituted the Green and Yellow Employment Contract with the main objective of relieving the payroll charges of workers aged 18 to 29 seeking their first job with a CTPS registration.

The Brazilian Congress has already set up a joint committee to consider MP 905/2019, composed of deputies and senators, under the chairmanship of Senator Sérgio Petecão (Social Democratic Party), vice-chairman Lucas Vergilio (Liberal Party), and rapporteur Christino Aureo (Progressive Party).

The opinion of deputy Christino Aureo was already discussed at the deliberative meeting held on February 19, but the vote was postponed after a group request from the joint committee to evaluate the terms of the text.

After the report is approved by the joint committee, the bill for conversion into law will be sent to the Chamber of Deputies, and, once approved, will proceed to the Federal Senate. If approved with modifications, the text will be returned to the Chamber of Deputies for consideration, where the amendments promoted by the Federal Senate will be accepted or rejected. The matter will then be referred for sanctioning (if the conversion bill is approved) or promulgation (if the original text of the MP is approved) by the Brazilian President’s Office.

The report suggests changing hiring by the Green and Yellow Employment Contract system, including in the list of beneficiary workers aged 55 and over who have not had a formal employment contract for more than 12 months, under the same conditions thought up for the hiring of younger workers, that is, with exemption from payroll charges and the possibility of hiring for a fixed term.

It was also suggested that the applicable rate for calculating the number of contracts authorized by the Green and Yellow Employment Contract modality be increased, from 20% to 25%, precisely in order to increase the number of potential beneficiaries.

Christino Aureo's proposal as rapporteur aims to allow work on Sundays under the justification that, for various sectors of the economy, Sunday is the day with the highest turnover and, therefore, represents the best earning opportunity for employees. The situation is different as regards the possibility of opening bank branches on Saturdays, limited to places and services which do not pose a risk to public safety, in accordance with the terms of the proposal.

In labor matters, the report submitted to the Brazilian Congress for a vote also intends to support the indexation of interest to the savings account rate and adjustment for inflation to the IPCA-E rate, when calculating the updated labor debt.

In relation to profit sharing and results, the proposal does not accept the intention of MP 905/19 to remove union representative from the joint bargaining committee, on the argument that this measure would devalue labor unions and the role of collective autonomy of wills in labor law. However, the report proposed a deadline for the labor union to take up its negotiating position through its representative.

The report also proposes some amendments to the original text of MP 905/19 in relation to bank employees' working hours, although it maintained the possibility of offsetting between the bonus for function and overtime for the 7th and 8th hours worked, in the event of a judicial decision that rules that the bank employees’ position is not a position of trust.

The new labor oversight mechanisms were maintained by the report, including the equivalence of consent orders signed by labor inspectors, under the Executive Branch, to consent decrees (TAC) negotiated by federal prosecutors.

The conversion bill is expected to be voted on by the Joint Committee and forwarded for approval by the Brazilian Congress. The text must necessarily be approved by April 20, 2020; otherwise, it will lose its effectiveness.

The prospect of converting MP 905/2019 into ordinary law, albeit with several proposals for amendment, will have a significant impact on labor law, which is why it will once again require companies to adapt to the new guidelines, including in relation to procedures, contracts, and internal policies.