Published with the objective of mitigating the economic losses resulting from the covid-19 pandemic, Executive Order No. 927/20, of March 22 (MP 927/20), also sought to ensure compliance with the constitutional principles of a broad defense and adversarial proceeding to companies, established in article 5, subsection LV, of the Federal Constitution of 1988.[1]
In its article 28, MP 927/20 provides for the suspension of procedural deadlines for filing defenses and filing appeals in administrative proceedings arising from labor assessments during the 180-day period. The suspension order covers administrative proceedings arising from labor infraction notices and FGTS (Guarantee Fund for Time of Service) deficiency notices under the purview of the Ministry of Economy.
The measure ensures compliance with the rule set forth in subsection LV of article 5 of the Federal Constitution of 1988, which is fully applicable to administrative proceedings, in which the parties have the right to a broad presentation of evidence, regardless of which type, and may even request the designation of a hearing for oral evidence.
Moreover, according to the changes introduced in the Consolidated Labor Laws (CLT) by Executive Order No. 905/19, which instituted the Green and Yellow Employment Contract, the review of defenses and administrative appeals must be performed by a different federative unit from the one that issued the infraction notice, per the criterion of deterritorialization.
It should also be noted that the Ministry of Economy does not have an electronic filing system for sending defenses and administrative appeals, such that the filing of briefs must be done in person by the company, preferably at the office responsible for the assessment, or by sending correspondence through the Post Office.
For the filing of briefs, it is necessary to travel, either to go to the office of the Ministry of Economy, or to go to a branch of the Post Office. In the latter case, considering the measures adopted to contain the disease, there are post offices that are not even operating.
Faced with the current situation of social distancing and considering the decree of public emergency due to the coronavirus pandemic, it is extremely difficult to guarantee the regular processing of administrative proceedings, such that the applicable procedures and constitutional guarantees assured to the companies assessed are observed.
For this reason, suspension of the procedural deadlines for filing a defense and lodging appeals in administrative proceedings arising from labor assessments and FGTS deficiency notices is of paramount importance.
However, MP 927/2020 does not set forth situations to be observed in the case of ongoing inspections under the purview of the Ministry of Economy. It is necessary for companies to enter directly into contact with the respective labor inspectors to determine what position will be adopted on a case-by-case basis. Despite this circumstance, which has not been adequately addressed by the executive order, assessments arising from the ongoing inspections are suspended.
In addition, MP 927/20 also promotes changes in the conduct of labor inspectors with the Ministry of Economy within 180 days of its publication. In accordance with article 31 of MP 927/20, it shall be incumbent upon these public officials to provide guidance regarding the irregularities found during this period. This means that if any irregularity is found, the tax auditors should advise the companies on how to remedy it before an assessment is issued.
The exceptions to this rule, which allow the issuance of infraction notices within 180 days after the plan, are provided for in subsections I to IV of the same provision: (i) lack of employee registration, based on complaints; (ii) situations of serious and imminent risk, only for the irregularities immediately related to establishing the situation; (iii) occurrence of a fatal work accident as a result of an inspection procedure performing accident analysis, only for the irregularities immediately related to the causes of the accident; and (iv) work in conditions analogous to slavery or child labor.
Such a determination is of extreme importance, considering that, in the current circumstance, companies are facing innumerable difficulties in conducting their activities, focusing, in the first place, on the health of their employees to the detriment of attending to legal formalities that may be considered unnecessary or put in second place at least at this moment.
Thus, given that the current situation may make it impossible for companies to comply with certain rules as a result of force majeure, the provision set forth in article 31 of MP 927/20 is extremely reasonable, especially in view of the fact that serious infringements committed by companies will continue to be monitored by the Ministry of Economy and will lead to the issuance of infraction notices.
[1] “LV - to litigants, in judicial or administrative proceedings, as well as defendants in general, are guaranteed the right to an adversarial proceeding and a broad defense, along with the means and appeal inherent thereto;”