Chamber approves special credit line for companies to cover payroll during pandemic.

The plenary session of the Chamber of Deputies approved Provisional Measure 944/20, which grants special credit to small and medium-sized enterprises to cover employee payroll during the coronavirus pandemic. The text awaits a vote in the Senate.

The measure opens up credit of up to R$ 40 billion so that small and medium-sized companies can honor salaries or labor debts with employees, through the Emergency Employment Support Program.

According to the approved text, the loan can finance salaries and labor costs for four months. The types of legal entities eligible for the loan have also been expanded. Business owners, business corporations, and cooperative societies (except credit cooperatives), simple partnerships, civil society organizations, and rural employers (individuals or legal entities) will be able to apply for credit.

Companies that join the program will not be able to lay off employees in proportion to their participation in the program: if the line of credit accessed covers 100% of the payroll, then no employee can be dismissed without just cause for 60 days after receiving the last installment of the loan. If the line of credit covers 75% of the payroll, then a quarter of the workers can be laid off, and so on.

Under no circumstances may the contractor use the funds for any purpose other than the payment of salaries or labor-related expenses. If any other type of expenditure is detected, the debt will become due immediately.

To apply for the loan, the interested company must have obtained, in 2019, gross annual revenue greater than R$ 360,000 and equal to or less than R$ 50 million. Loan operations may occur until October 31 of this year.

Opinion

According to lawyer Willer Tomaz, partner at the law firm Willer Tomaz Advogados Associados, it would be preferable if MP 944/20 were not necessary, but government assistance is no longer just a political issue, but one of survival and human dignity.

“Following democratic dialogue in Congress, the proposal is now ready to ultimately support workers and their families, as the line of credit is earmarked for the payment of labor-related expenses during the COVID-19 pandemic, which brought significant challenges and sacrificed productive activity, leading to business closures and mass layoffs.”

Source: Migalhas