Green and yellow employment contract. Shall we understand?

On November 12, 2019, Provisional Measure 905/2019 was published, which, among other topics, creates the Green and Yellow Contract, another type of employment contract available to the market.

The objective seems to be to make it possible to hire young workers, reducing some charges and making some rules more flexible.

Workers aged between eighteen and twenty-nine can be hired in the Green and Yellow modality, provided that this is the first contract to be noted in the employment card. For the purposes of the law and to allow the characterization of the first job, previous contracts in the modalities of minor apprentice, experience contract, intermittent work and temporary work will be disregarded.

For the vacancy to become eligible for the model, the salary must not exceed one and a half times the current national minimum wage, as well as the vacancies occupied must represent the increase in the number of employees of the company (as a rule), and the contracts of work in this modality cannot exceed the percentage of 20% of the total number of workers.

The Green and Yellow Employment Contract is a fixed-term modality, with a limit of two years, and will be available from January 1, 2020, valid until December 31, 2012. These dates are binding for the conclusion of the contract. employment contract and not for its termination, thus, even if the hiring takes place at the end of the period declared by law, its effects will be extended until the end of the agreed term.

The advantages for the employer are the possibility of numerous contract renewals up to a two-year limit, the reduction of the FGTS rate to two percent and the possibility of reducing the FGTS fine by half, provided that payment is agreed in the contract. monthly payment of such charge to the worker. Yes, there is the possibility of paying the FGTS fine in advance and monthly. The 13th salary and proportional vacation plus 1/3 must also be paid periodically, allowing the employer to better financial planning.

The Provisional Measure also provides for an exemption conditional on the payment of social security contributions on the payroll, education salary and contributions destined to the “S system”. Such exemptions, as provided for in item I, paragraph 1 of article 53, are subject to a certificate, by act of the Minister of State for the Economy, compatibility with the expected fiscal results targets, therefore, it is even better not to have such a discount.

The new modality should help in the creation of new job vacancies, but it requires the employer to plan in order not to make a mistake. Consult your lawyer and get to work. May 2020 be a very successful year!

Author: Rafael Ernesto Lima (Lawyer, partner at Lima e Valiatti Advogados. Specialist in Business Law from FDV. Master in Legal-Private Sciences from the University of Porto – Portugal)

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