Guaranteed right

Paulo Vasconcellos | For Valor, Rio | Jornal Valor Econômico

Seventy one years after Consolidation of Labor Laws (CLT) established the foundations of labor laws in the country, relations between employers and employees are being prepared for a new era. Only the formality of signatures on an Interministerial Ordinance for the entry of eSocial into operation is missing. It is a digital system that unifies the delivery of all information of workers for federal agencies - from hiring to firing, through promotions, transfers, and off sick, in addition to contributions to the Guarantee Fund for Length of Service (FGTS) and evidence of payments to Social Security, essentials for retirement.

The transmission is electronically, avoiding paperwork. The eSocial eliminates the multiplicity of information sent to the INSS, the Ministries of Labour and Social Security and the IRS.

The new platform consolidates the tripod of Public Digital Bookkeeping System (SPED), formed on the accounting sideby Electronic Tax Receipt and, on the tax side, by the Digital Tax Assessment (EFD-contributions) to the Social Integration Program (PIS) Public Service Employee Savings Program (Pasep), the Tax on Social Security Financing (COFINS) and the Social Security Contribution on Revenues.

Like the other two innovations that are already in operation, it is considered strategic and possibly will be implemented between April and January next year, as required by schedule.

"The main objective of eSocial is to ensure workers' rights. The system will also facilitate communication between government and companies, with the standardization and simplification of forms, and to improve the quality of information, essential to the planning of the public administration" says Daniel Belmiro, coordinator of the Surveillance of the Internal Revenue system, who joined the Steering Committee of eSocial with the Ministries of Labour and Social Security the bank Caixa Econômica Federal.

"The eSocial will not change systems, but the culture within companies," says Luciana Ferrante, responsible for the labor area of Mazars, auditing and consultancy with operations in 71 countries. "The eSocial breaks the Brazilian way in labor relations, but it is also a big challenge especially for the 8 million of micro and small enterprises, which deliver HR management to accounting offices," says Gilberto Luiz do Amaral, President of the Superior Council of the Brazilian Institute of Tax Planning (BIPT).

"Ideally, the companies had a longer period for implementation. The ESocial will have a cultural impact on business and will require the review of governance processes (compliance)," says Stephen Oziel, associate director of the legal department of the Federation of Industries of the State of São Paulo (Fiesp), which represents the country's largest industrial park.

"It will be hard work for companies, but it will represent a great labor victory because it will allow a more systematic monitoring of employers and even a statistical monitoring of working life of employees," says Quintino Severo, Secretary of Administration and Finance of the Central Workers Union (CUT) , which represents R$ 24 million workers.

They will be the biggest beneficiaries of the new platform. About R$ 2.5 million employees cannot get pension benefits due to lack of information from employers. The perversity is greater when one discovers that after 35 years of working with signed Labour's Card cannot retire because one of the companies did not collect the contribution to Social Security.

There is also the expectation of benefit to the public coffers. Though not resulting in tax increase, the eSocial should cause an increase in revenues. The initial expectation is at least another R$ 20 billion in the first year with a decrease of errors in payrolls.

An inspection of the IRS at 1% of Brazilian companies found that they failed to collect R$ 4 billion in 2012 for differences in data.

The reduction of the informal labor market, one of the platform’s expected consequences , should cause positive impact also in the collection of the Guarantee Fund of Length of Service (FGTS), the second largest private equity fund in the world with assets of R$ 350 billion. "There isthe difficulty for companies to pass on information to the government because nowadays the data need to be forwarded in different processes for the various ministries and government agencies, difficulting even the investments made by FGTS" says José Henrique Santana, national manager of FGTS Savings Federal.

There is also the expectation of the dropping of frauds in the Welfare System. Only with foiled operations in 2012, they reached R$ 85 billion. "The system closes the door to fraud," says José Alberto Maia, tax auditor and coordinator of the Working Group eSocial in the Ministry of Labour and Employment.

It is expected that the program generates a hundred million events per month – R$ 70 million paychecks and R$ 30 million non-periodic information, such as layoffs and sick leave. The processing will be done by Serpro. The local authority, which now operates ten million electronic invoices daily, will have a daily increase of almost R$ 3.5 million data of eSocial, but it seems prepared for the mission.

There will be reinforcement of the structure to support the demand for service, with the allocation of virtual servers and more investment in technology and resources in the production area, but no one talks about a new tender for hiring staff, or the amount of resources needed to work. "We already have the structure that makes the IRS and processes electronic invoices. ESocial is another challenge for our process, which is already quite complex," says Roberto Plá, manager of unified credit program Serpro.

The platform has so far been tested on 48 companies participating in the pilot project. The selection includes metallurgical Gerdau and Votorantim Group. One study found that the BIPT eSocial will raise by 10% the cost of expert advice on the legal and accounting areas and result in additional impact of a 7% more in spending on information systems, parameterization and monitoring, in addition to employee training.

Ten documents sent monthly or annually by companies such as Caged, Rais, Dirf and GFIP will be replaced by a single sending directly to eSocial. But the bureaucracy, which is now done after hiring the employee, with the new platform will have to be done before. Companies must have a plan to which they are unaccustomed. "What we did was split to facilitate the sending each time the event occurs. A company does not have to gather to send a single file," says Daniel Belmiro, of the Internal Revenue Service. "The record of the worker goes to eSocial and not to the employer's record book. Communicating accident at work will be done electronically rather than in paper. What you are creating is a new model of communication between the State and the employer, "says José Alberto Maia, of the Ministry of Labour and Employment.