Published Law 14,043/2020 providing the Emergency Employment Support Program (“Program”) which sets forth credit grant to fund wages and severance payments

Arising from Executive Order no. 944/2020,  the Law no. 14,043/2020 was approved with amendments by National Congress and sanctioned with vetoes by the President of the Republic. Among the changes to the Program, we highlight:

Expansion of scope by increasing the maximum limit of annual gross revenue of companies in 2019 to up to R$ 50 million, maintaining the minimum of R$ 360 thousand.

Extension of the contracting period to 4 months and possibility of partially financing the payroll. Although maintained the prohibition to terminations without cause, the restriction is now proportional to the contracted credit line, e.g:

• If the contracted credit covers 100% of payroll, no terminations are allowed.
• If the contracted credit covers 75% of payroll, only 1/4 of employees can be terminated, and so on.

Restrictions to termination without cause are in force from Program adhesion up to 60 days after receiving last loan installment. We emphasize that companies should cautiously conduct resignations during this period.

Another innovation was the possibility to use this credit to finance severance payments, paid or pending, resulting from terminations without cause occurred from February 7, 2020 to August 20, 2020, provided the dismissed employee is rehired for at least 60 days.

For companies willing to enter the Program, it is important to pay attention to details of the new law, such as the characterization of debt confession when funding severance payments, obligation to provide updated information and risk of early expiration of installments in case of non-compliance.