The rules established for the entry into force and effect of Provisional Measure No. 905/2019 are analyzed below, following the series of articles on the changes implemented by it.

Although the general rule is immediate application of the new provisions, article 53 of Provisional Measure No. 905 separates the rules on the entry into force of the provisions into five major groups:

Date of Entry into Force

Matter

90 days after the publishing of the Provisional Measure

-      New rules for stoppages and shutdowns from the Ministry of Economy (article 161 of Brazilian Labor Law).

-      New rules regarding the inspection activity of the Ministry of Economy, including regarding the new amounts of administrative fines (articles 634 and 634-A of Brazilian Consolidated Labor Laws - CLT).

First day of the fourth month after the publishing of the Provisional Measure

-      Inclusion of the rule implementing the deduction of social security contributions over the amounts of the unemployment compensation and inclusion of this period for the purposes of granting benefits by social security (article 4-B of Federal Law No. 7,998/90).

January 1, 2020

-      Hiring employees using the Green and Yellow Employment Contract (articles 1 to 19 of Provisional Measure No. 905).

-      Extinguishment of social security contributions, in the percentage of 10%, over FGTS deposits made by the employer in the event of termination without cause (article 25 of Provisional Measure No. 905).

When an act of the Minister of Economy certifies fulfillment of the tax results goals set forth by the Budgetary Guidelines Law, the provisions of Supplementary Law No. 101/2000, and the provisions of the Budgetary Guidelines Law related to the matter.

-      Amendment of rules related to the payment of Profit Sharing (article 2 of Federal Law No. 10,101/2000).

-      Exemption from the collection of social security contributions, Education Allowance, and Social Contributions for Green and Yellow Employment Contracts (article 9 of Provisional Measure No. 905).

-      Granting of unemployment compensation for employees hired through Green and Yellow Employment Contracts. (article 12 of Provisional Measure No. 905).

-      Establishing the Professional and Physical Training and Rehabilitation, Prevention and Reduction of Work-Related Accident Program (articles 19 to 21 of Provisional Measure No. 905).

-      Alteration of the rules related to the integration into salary of meals provided by the employer, including for purposes of the income tax calculation basis (article 457, paragraph 5 of the Consolidated Labor Laws - CLT).

-      Amendments to rules relating to the payment of gratuities (article 457-A of the CLT).

Immediate

All other provisions

Regardless of the time frames set out above, it is important to remember that the effectiveness of Provisional Measure No. 905 is, in principle, provisional. Its continued effectiveness is conditioned on its conversion into law by the Legislative Branch, which will have 60 days, extendable only once for the same term, to deliberate on the text presented by the President.

Only after being approved by both houses of the Brazilian Congress, the Provisional Measure will return to the president for signature and will enter into force with the status of a federal law. If it is rejected by the Brazilian Congress, vetoed by the President, or not approved within 120 days, Provisional Measure No. 905 will cease to be effective.

The Brazilian Congress may propose changes and amendments to the original text, which may hinder approval of the Provisional Measure within the maximum time limits established by applicable legislation, especially considering the vast range of issues that are governed by Provisional Measure No. 905.

This was the case with Provisional Measures No. 808/17 and No. 871/19, which were intended to amend relevant points of the original text of the Brazilian Labor and Employment Reform (Federal Law No. 13,467/2017) and regulates Union Dues, respectively. In the first case, there were more than 900 requests for amendments and, in the second case, more than 500 requests. Because of this and the controversy surrounding the issues discussed, approval of both texts by the Brazilian Congress proved to be impracticable, and they ended up losing their effectiveness at the end of the legal term.

It is possible that Provisional Measure No. 905 may follow the same path, which may hinder its approval, creating instability and legal uncertainty in relation to the period of its effectiveness.