Authors: Jose Wahle, Silvia Figueiredo Araljo (Veirano Advogados)

IMPLEMENTATION OF PSE - EMPLOYMENT INSURANCE PROGRAM

On December 22, 2016, the Brazilian President Michel Temer issued the Provisional Measure n2 761, implementing the Employment Insurance Program ("PSE") for helping workers to keep their job positions.

Companies of all trades may join PSE for up to 24 months, provided they are able to prove economic and financial difficulties. The company applying for the PSE may then negotiate collective bargaining agreement with the relevant union in order to reduce up to 30% of the employees' work shifts and salaries.

The Government will compensate such employees through an allowance equivalent to 50% of the salary cut but up to 65% of the maximum amount of Brazilian unemployment insurance installment.

The company joining PSE cannot terminate without cause the contracts of the employees covered by such collective bargaining agreement, while the agreement is in force and for a period of 1/3 of the joining period when the agreement ends.

The PSE will be in force until December 31, 2018.