End of 6×1 worries market with rising costs, says professor

The PEC (proposed amendment to the Constitution) which foresees the end of the 6×1 scale and the reduction of working hours continues to generate a strong reaction from the Brazilian productive sector.

To understand the legal and economic impacts of the measure, Pedro Benatto, professor of Labor Law at Escola Paulista de Direito, analyzed the main points of the debate.

According to Benatto, the business sector is very concerned about the financial effects of the change.

"The National Confederation of Commerce itself has already estimated that a reduction in working hours without a reduction in salary will increase the cost by more or less 21% of the salary bill", he stated. This increase would be necessary to cover hours not worked.

The project provides a period of 60 days for companies to reduce working hours from 44 to 42 hours per week, with a further reduction to 40 hours in the following 14 months.

In addition, a possible expansion of the workforce would generate additional expenses with transportation, food, health insurance and mandatory labor charges.

"The biggest concern for commerce is how it will cover this spending window, so that small and medium-sized companies account for almost 34% of the workforce", highlighted Benatto.

Sectoral exceptions and collective negotiations
For sectors that operate uninterruptedly, such as hospitals, markets and industries that operate 24 hours a day, the PEC itself provides for the possibility of ordinary laws establishing different regimes.

Benatto explained that employers must negotiate with trade unions to fit into the most appropriate regime for each sector.

"Most likely, the unions will have to be activated together with the companies, so that they can establish a compensation regime, so that the company can respect the scale without taking any sanctions", he said.

The professor highlighted that many companies in the healthcare sector are already migrating to the 12×36 scale, permitted by the CLT upon individual agreement. This transition requires less hiring than would be necessary on a 5x2 scale, making it a more viable alternative for continuously operating sectors.

Productivity and legal limits
Regarding the debate surrounding productivity, Benatto highlighted that the Federal Constitution prohibits salary reductions, which obliges companies to maintain salaries even with reduced working hours.

Proponents of the PEC argue, based on European studies, that more rested workers have greater focus and efficiency per hour worked.

However, if the employee does not achieve the expected productivity, "legally you may have to terminate the employment via CLT and open up new opportunities", he stated. "A priori, there is nothing that can protect the business sector," he added.

Regulatory risk for investors
When asked whether investors should already price the regulatory risk related to the shift transition, Benatto considered it too early for such a measure, given that the Senate intends to make changes to the proposal and the country is going through an election year. Still, he advised caution:

"I understand that it is worth doing due diligence to provision a cost for a future new 40-hour working day.

" For the professor, businesspeople and investors must continue investing, but with due planning to absorb possible legislative changes.

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Source: CNN