What are the employer’s obligations in the event of a pandemic?

Employees who get sick in a pandemic outbreak or as a result of any other medical condition that prevents them from working must take medical leave. The first 15 days are paid by the employer. After that, the organisation must notify the Social Security System (the ‘INSS’) for medical pension coverage. The employer must notify the sanitary authorities if there is an outbreak of any pandemic disease among its employees. It is advisable to inform employees about prevention and the risks of contamination.

Is the organisation required to shut down its operations?

In principle, no. But the sanitary authorities may issue a shut-down order to control the spread of the disease. Brazil does not have any such precedent in recent history. In 1918, schools and some retail shops were temporarily closed and gatherings were prohibited as a result of the Spanish flu.

What happens if the sanitary authorities order a shut down? Is the employer obliged to pay for employees’ leave?

Shutting down operations may be a matter of force majeure; to be discussed with the sanitary authorities. There is no provision in the law for this situation, but operational risks are generally considered to fall upon the organisation alone, not on its employees. The law does not contemplate the possibility of collective unpaid leave either, which would therefore depend on a collective agreement with the relevant union. It is unlikely that unions, or the labour authorities responsible for overseeing public policy employment matters would approve any long-term unpaid leave. It would be more realistic to aim to provide paid leave with temporary reduction of salaries by 25%, or perhaps less, depending on the circumstances (duration of leave and the employer’s capacity to fund it).

Is it possible to implement a voluntary shutdown?

A voluntary shutdown would be equivalent to a year-end shutdown for holidays, requiring 15 days’ advanced notice to the union, so it might not be appropriate given the urgency of responding to a pandemic outbreak. The exceptional emergency circumstances could perhaps justify an agreement on a shorter term, to be discussed.

There is an alternative provision in the law, which allows for the termination of an employment agreement by virtue of ‘a governmental act’ that results in the temporary or permanent stoppage of the organisation’s activity. In this event, severance will be paid by the government. However, the application of this provision is unheard of.