What is the Green and Yellow Employment Contract and how does it apply?

In this article, we will discuss what the Green and Yellow Employment Contract is and how it proposes to generate new jobs in our country.

As published last year, the Green and Yellow Employment Contract provides through provisional measure 905/2019 for   the hiring of young people aged between 18 and 29 years, through the employment register CTPS (Employment and Social Security Card).

Follow our text and understand a little more about this new model of work. Come on?

What is the Green and Yellow Employment Contract and how does it apply?

The Green and Yellow Employment Contract has as its main objective to encourage companies to hire young Brazilians who do not yet have any type of signed experience in their portfolio.

In this way, characterizing it as a first job, however, this model cannot consider bonds such as experience contracts, intermittent work, minor apprentices or individual work.

Therefore, for this type of hiring, the young person hired may receive up to 1.5 minimum wages, and may undergo adjustments after 12 months of contract fulfillment.

However, the Green and Yellow Employment Contract can only be used in new jobs, in addition to considering the total calculation of employees registered on a company’s payroll, being subject to the limit of 20% of the total employees employed by a company. company.

What are the labor rights of the Green and Yellow Employment Contract?

The young person hired by this new model of contract will have all their rights preserved, as provided for by the Collective Convention category .

In this way, the worker will also be entitled to receive his monthly salary, 13th salary, proportional vacation. And, in the case of termination of the contract, the worker will also be entitled to receive unemployment insurance in accordance with all legal requirements of the category.

In addition, regarding the workday, the young person may not exceed two extra hours worked, as long as they are in agreement with the conversion. Therefore, the payment for overtime worked must be at least 50% of the amount paid for normal hours.

In this model, it will also be allowed to create a bank of hours that registers in order to compensate the overtime performed in the company.

What are the advantages for the employer?

By adopting the Green and Yellow Employment Contract model , the entrepreneur will be able to obtain some advantages, such as, for example, the payroll tax exemption, becoming exempt from the INSS employer’s payment.

In this sense, hiring a worker through the Green and Yellow Employment Contract will be cheaper for the employer.

In addition, your contribution to FGTS will be 2%, taking into account that the percentage is currently 8% for other forms of contracting. Still referring to the FGTS declaration, there may be a reduction in the indemnity on the balance from 40% to 20%, which can be paid monthly and together with other amounts and amounts paid by the company.

However, be careful, as a penalty may be charged in the Green and Yellow Employment Contract, if the employer violates the legislation, and may be subject to the payment of fines, which may be:

  • Light – R $ 1,000.00 to 2,000.00
  • Average – R $ 2,000.01 to 4,000.00
  • Serious – R $ 3,000.01 to 8,000.00
  • Gravissimo – R $ 4,000.01 to 10,000.00

What are the limitations of the Green and Yellow Employment Contract?

The application of this hiring model is limited to 20% of the average number of employees registered by an entrepreneur.

In this way, companies that have up to 10 employees, even for those created as of January 1, 2020, can hire up to two employees under the Green and Yellow Employment Contract model .

However, enough attention: during the 180-day period, counting from the termination date, the employer will not be able to make a new contract under this same modality.

Green and Yellow Employment Contract Term

The Green and Yellow Employment Contract is effective for up to 24 months and may be extended. It can be converted automatically if the term of the contract ends.

In addition, for contractual cases of up to 24 months to be fulfilled after the end of the modality on December 31, 2022, the employee is assured of his rights.

What are the next steps?

Thus, like any provisional measure, it is also immediately valid. However, this measure has not yet become a law. For a provisional measure to become law, it will need to be voted on, within 180 days of its publication date.

In this way, it is up to the human resources sector to continue monitoring all other changes in the legislation, paying attention to all its specificities, before starting to hire new employees.


by Abdullah Sam
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