On January 14, 2020, the Brazilian Ministry of Economy issued an ordinance1 fixing the 2020 maximum payout amount of social security retirement benefits at R$6,101.06, representing a 4.48% increase to the maximum payout rate for 2019. Employers in Brazil should take note of this revised amount, as it factors into the test for determining whether an employee qualifies as "hyper-sufficient" under the labor code.
Since 2017, the new labor code includes a category of employees deemed "hyper-sufficient." Hyper-sufficient employees are those presumed capable of negotiating and entering into certain valid employment-related contracts with their employer. This designation gives more flexibility to the employer and employee, because the parties can agree on terms that are different from the applicable collective bargaining agreement on matters related to working hours, schedule, bank of hours, holidays, variable compensation, among others. To be considered "hyper-sufficient," the employee must have a college degree and earn a monthly salary that is at least twice the maximum payout amount of social security retirement, i.e., R$12,202.12 for 2020, which is approximately $2,921.92 per month, or $37,984.96 per year (including 13th salary2).
Employers should verify whether each hyper-sufficient employee's current salary meets the new threshold and consider whether to increase it, if needed. Also, employers hiring new employees should keep these numbers in mind, subject, of course, to pay equity requirements.
Footnotes
1 Ordinance 914 of January 13, 2020 (Portaria N. 914 de 13 de janeiro de 2020).
2 The 13th salary is akin to a year-end bonus.
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