Managing an increasingly aging workforce is one of the key socioeconomic trends of our times and a crucial issue for many of the world's enterprises. Private practice lawyers across Latin America outline the laws in their respective countries concerning an older demographic in the workplace as well as a number of recent updates across the region.
According to a study by the Brazilian Institute of Geography and Statistics (IBGE), the life expectancy of the Brazilian population increased 30.3 years between 1940 and 2016 while the birth rate declined 31% between 2000 and 2015. It is no wonder that the increase in the number of elderly people in Brazil has drawn the attention and efforts of the government to resume the debate and proposition to reform the country’s social security programme. There is now a legislative bill pending approval by Congress, providing for, among other initiatives, an increase in the minimum age for retirement and the standardisation of rights and benefits including special pension rules for public servants.
The fact is that the public pension scheme scarcely provides enough to support the cost of living in big cities. Consequently, Brazilian workers often postpone their retirement. In Brazil, retirement, which is understood as the granting of the pension scheme, does not lead to the automatic termination of the employment agreement in effect and few employees apply for a termination of the contract (severance pay is also a disincentive). The attempt to extend the employment contract length in such cases is also because it is very difficult for senior workers to find new jobs and to re-enter the labour market as employees or self-employed. The Brazilian Federal Constitution and the law n. 10,741 provides for general protection and equal rights for the elderly, including protection against discrimination, however, there is no specific regulation or official guidelines on what this constitutes and it is up to the companies to have their own policies.
While there certainly is a need for more guidance on the topic, there are several bills currently being debated in Congress that aim to address some of the gaps. Bill n. 142/2017 provides for the possibility of executing a special employment agreement with individuals over 60 with a limit of 4 hours of work per day and the payment of a reduced Length-of-Service Guarantee Fund (FGTS) rate of 2% (the FGTS provides account-based cash benefits to employees on termination of employment for any reason, including retirement). Another bill (n. 688/1999) would grant a tax incentive for employers who hire elderly employees. The government is also looking at the possibility of implementing the so called RETA Regime (Special Retirement Work Regime) in which retirees may work as independent contractors without receiving certain labour benefits such as holiday and sick pay, and whereby companies are not required to contribute to social security. It is unpredictable, however, when and if Congress will make a decision on these bills anytime soon.
For the time being, due to the lack of effective statutory protection, many collective bargaining agreements provide for the next best thing: protection against involuntary dismissal (without cause) of individuals who are close to the statutory retirement age (usually 24 months) and who have worked with the company for a certain time period (usually 5 years).
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