With the elimination of time-sensitive authorizations under Provisional Measure 1394, rushing to lay off employees may end up being more costly than waiting for the legal outcome of the measure.
The Supreme Federal Court (STF) requires prior union negotiation to validate collective layoffs – without it, the company risks reinstatement or compensation for the entire workforce; and, since the Provisional Measure has been challenged and is pending conversion into law by Congress, layoffs carried out now may prove unnecessary in a few weeks.
Alternatives before the final layoff:
(i) Suspension of the employment contract (with or without professional qualifications);
(ii) Reduction of working hours and wages;
(iii) Advance vacation leave; e
(iv) Time bank.
These measures preserve the employment relationship and reduce payroll costs without closing the door to reversal, but they function only as protection – and not as a new risk – when properly designed: defined timeframe, provisions in collective bargaining agreements, and compensation for employees.
The current situation calls for caution, not haste. Those who terminate employees without prior negotiation and without evaluating these alternatives face two risks simultaneously – the risk of regulatory noncompliance and the risk of litigation for improper termination – precisely when there will be less cash on hand to address it.
Regulations change quickly; the labor response does not need to be improvised. Companies that have already mapped out this roadmap approach the finalization of the Provisional Measure with more options and less exposure.
