As countries worldwide are coping with effects of the coronavirus outbreak, Brazil declared a state of public disaster (Legislative Decree # 88/2020) on March 18, 2020, which will allow the government to spend beyond the annual budget to assist with health needs and to support employment. The day before, Brazil’s Minister of Economy, Paulo Guedes, announced several measures to mitigate the economic impacts of the coronavirus, which is estimated to have reached R$147 billion. Meanwhile, some large cities in Brazil have implemented their own restrictions to help limit the virus’ spread.

Employment Measures

In an effort to reduce employment terminations, Brazil’s government announced that it is considering a temporary suspension of employment agreements (a type of furlough) in business sectors most affected by the coronavirus. The Economy Minister is analyzing the costs associated with such a move.

The government also announced that it is planning to authorize companies to reduce employee’s work hours and salaries by 50%. In addition, various vacation and leave time modifications are under consideration, such as allowing employees to take collective vacation with 48 hours’ advanced notice; permitting telework arrangements; allowing individuals to use up to 15 days of vacation time even for those who do not have accrued vacation; and offering employees the flexibility in using their banked hours.

On March 17, Brazil’s Minister of Economy outlined several other actions to ease the economic impact of the outbreak, including postponing the deadline for employers to pay into the FGTS (Federal Severance Pay Fund), providing a credit of R$5 billion to micro and small businesses, and reducing contributions to the S System, one of the payroll taxes, for three months.

Closures and Local Measures

Several senior governmental officials in Brazil have already tested positive for the coronavirus, including the Senate President, the Mining and Energy Minister, and the National Security Advisor. There was also an impeachment request presented to the Chamber of Deputies after President Jair Bolsonaro ignored medical recommendations to stay isolated when he attended a demonstration in Brasilia to greet supporters.

Brazil has therefore begun taking steps to help contain the outbreak, including suspending in-person meetings to limit community transmission. For example, the Superior Labor Court has suspended judgment hearings and deadlines until March 31, 2020. Earlier in March, larger employees in Brazil began encouraging employees to attend meetings remotely, and were encouraged to make preparations to comply with the Brazilian Labor Code to allow working from home to help curb the spread of the coronavirus.

Sao Paulo has been hit hard by coronavirus cases, and has responded with several local measures aimed at reducing the virus’s impact. Sao Paulo’s government has declared a state of emergency in Sao Paulo City, and has proposed preventive measures, including the possibility of remote work for public servants who can work from home; suspending vacations for public servants for 60 days for those working in healthcare, urban safety, social assistance, and funeral services; and prohibiting public servants to travel abroad.

In an interview, Sao Paulo’s governor emphasized that employers should grant collective vacations to employees and allow them to work from home to avoid layoffs. Sao Paulo has also begun suspending public and private school classes, with municipal schools closing indefinitely as of March 23. The mayor of Sao Paulo has also closed stores and retail establishments from March 20 through April 5, with the exception of bakeries, drugstores, restaurants, cafeterias, supermarkets, gas stations, and street markets.

Rio de Janeiro’s state government has also declared a state of emergency for 15 days and has recommended that bars and restaurants limit their occupancy to 30% of capacity; gyms and malls be shuttered, and flights restricted from areas where coronavirus is circulating. Rio de Janeiro also suspended for 15 days interstate buses from states where the virus has been confirmed or a state of emergency declared, and has banned gatherings in theaters, and public events such as sporting events, concerts, and marches. The city is also limiting hospital visits to patients diagnosed with COVID-19 for 15 days at both public and private hospitals.

Because the situation is fluid and government responses to the outbreak evolving, employers are encouraged to keep apprised of new developments and to consult with counsel as the situation warrants.

* Marilia Minicucci is a Partner, and Pamela Gordo an Associate, with Chiode Minicucci Advogados in São Paulo, Brazil