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Category: Labor and employment

Startups create innovative business models. One example is the shared economy, which emerged from the broadening of the concept of the gig economy^[1] (also known as the "freelancer economy"). In it, online platforms serve as a broker between freelancers or service providers and people or companies that need their work and guarantee these professionals autonomy to work when and how they want.

According to a study by McKinsey,^[2] which accompanies the growth trend in this segment, 27% of the economically active population in the United States and Europe has developed some kind of self-employment, and 40% of users of these applications are only seeking income that is supplementary to their main source of income.

Another study by EY^[3] reveals that 80% of online platform users appreciate the flexibility provided by this business model. The absolute majority of respondents say they have made a conscious choice to work in this manner, and it is not a choice out of necessity.

In the difficult economic moment that Brazil has experienced for some years, this new business model has gained prominence, offering valid options to guarantee a second source of income or for unemployed workers in search of professional replacement.

However, for this business model to be economically viable and attractive for users, it needs to be structured so as to avoid the risk of recognition of an employment relationship,^[4] which causes for startups and users all duties and taxes applicable to employees, such as control of working hours, overtime, breaks, 13th salary, holidays with an additional 1/3 premium, FGTS payments, and INSS and IRRF taxes, among others.

The key to defining recognition of an employment link is direct subordination. However, it should not confused with business guidelines. While direct subordination entails subjection to the commands and hierarchical domain of direct orders, business guidelines are merely an indication of business rules that may or may not be accepted by users.

Recent decisions by the labor courts^[5] show that startups may:

• Require personal and non-transferable registration;
• Define the price of the service;
• Provide guidance on how to provide the service;
• Stipulate a fixed rate for brokerage fees;
• Receive directly the amount paid for the service and pass on the user's part;
• Carry out incentive campaigns; and
• Disconnect users due to misuse of the platform.

This occurs because online platforms allow users to connect and disconnect whenever they want, thus having autonomy to use it. On the other hand, judicial decisions[6] also show that startups should avoid:

• Providing self-employed users with the means to render the service (e.g., a car for a driver or a motorcycle for a motorcyclist);
• Sending direct orders to users;
• Applying penalties if users do not respond to the command;
• Requiring a minimum frequency to provide services;
• Taking direct control over how services are being provided;
• Excluding drivers/motorcyclists from the platform based solely on assessments by users; and
• Carrying out promotions that end up requiring self-employed users to continue using the platform for certain periods (e.g., a promotion based on the number of minimum trips or travel time for deliveries).

In these cases, the Courts have found that these are requirements that create an employment relationship, especially direct subordination and/or structural subordination (when the worker is inserted into the business dynamics), and there is a risk of recognition of an employment link.

Therefore, it is crucial to analyze your business model in order to determine how best to structure it to eliminate the risk of direct or structural subordination, thereby avoiding unwanted risks that could hinder the development of your startup.

Next Wednesday, we will speak about the possibility of balancing informality in the workplace with certainty in hiring workers.

Click here to see the other articles in this series

[1] "Gig" is an English slang word similar to the slang “bico" in Portuguese and refers to temporary jobs.

[2] McKinsey & Co. “Independent work: Choice, necessity, and the gig economy”, 2016. https://www.mckinsey.com/featured-insights/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy

[3] EY. “Is the gig economy a fleeting fad, or an enduring legacy?”, 2016. https://gigeconomy.ey.com/Documents/Gig%20Economy%20Report.pdf

[4] There is a risk of an employment relationship whenever the requirements of subordination, onerousness, habituality, and personality are present in the relationship between the parties.

[5] 0000155-67.2015.5.17.0005; 0011258-69.2017.5.03.0012; 0010795-02.2017.5.03.0183; 0011359-34.2016.5.03.0112; 1001574-25.2016.5.02.0026; 1000026-79.2018.5.02.0321; 1002392-25.2017.5.02.0613

[6] 1000123-89.2017.5.02.0038; 0001161-69.2018.5.11.0006; 0100294-09.2017.5.01.0003

Category: Social security

At the end of January, the Federal Revenue Service of Brazil (RFB) modified its understanding regarding the collection of social security contributions on employer food assistance. Communication of the change was done on the 25th through the publication of Cosit Consultation Resolution 35/19, which is applicable to all companies, whether or not they are enrolled in the Workers' Food Program (PAT)

According to the RFB, with the enactment of the Labor Reform (Law No. 13,467/17) as of November 11, 2017, companies that provide food assistance to their employees by means of a voucher or card are not obliged to include this amount in the calculation basis for social security contributions. Previously, the tax authorities argued that only food assistance provided in natura would be excluded from the calculation basis.

This interpretation favorable to taxpayers innovates in relation to the previous understanding because it considers the prohibition imposed in the wording of article 457, paragraph 2, of the Consolidated Labor Laws (after the reform) refers only to cash payments of the food assistance, such that other forms of payment are not subject to the levying of social security contributions and labor charges.

The issue also generated the Cosit Opinion Letter 04/19, published on January 29, 2019, whereby the RFB clarified that, when the food assistance is paid by both the company and the employee, the treatment of these amount for the purposes of levying social security contributions may be different.

The portion of the food assistance deductible from the employees in a co-participation system will be included in the calculation basis of the social security contributions as part of their remuneration, since the amount discounted constitutes salary of the employees. This interpretation is independent of the treatment given to the portion of the food assistance paid by the company, which may or may not be included in the calculation basis for social security contributions, depending on its remunerative nature defined in accordance with applicable legislation.

Although they were directed to specific taxpayers, the two opinion letters indicated are binding on the RFB and support the actions of other taxpayers, as per article 9 of Normative Instruction No. 1,396/13.[1] Failure to comply with these guidelines may result in assessments of taxpayers and rejection of any offsets.

There are sound legal bases for it to also be recognized that, in the period before the Labor Reform, the benefit of food assistance provided through vouchers or card in the context of the PAT is not subject to taxation through social security contributions, in accordance with applicable regulations. The legal basis would be different from that found in Cosit Opinion Letter 35/19, supported on the social security legislation itself and the regulations of the PAT.

With regard to employee co-participation, although the debate is still incipient and controversial, there are already judicial decisions favoring exclusion of these amounts from the calculation basis of social security contributions, which has legal support in an interpretation of the text of the law and the  compensatory and assistance nature of the benefit.

In view of this scenario, it is advisable for the companies to evaluate the treatment given to the payments in question and to check on the existence of excess collection or even exposure, which requires adjustment of procedures or the use of preventive measures.

Category: Labor and employment

Presidential Decree (MP) No. 873/2019, published on March 1, 2019, amended the CLT to prohibit the collection of union dues from any employees who have not given express authorization, individually and in writing to their union, following the case law of the Federal Supreme Court (STF), which had already ruled the collection of trade union dues to be optional.

The promulgation of the MP produced among trade unions a feeling of hunting for new models for paying for the system, besides removing from these entities privileges guaranteeing the receipt of payments due as union contributions and making them bear the cost of collection and the risk of default.

The publication of Law No. 13,467/17 (Labor Reform) evinced the legislature’s intent to extinguish compulsory union dues, which is stated in the following passage: "Employers are obliged to deduct from the payroll of their employees, provided that it is duly authorized by them, the contributions owed to the trade union...” (article 545 of the CLT). However, this provision did not bring in the proviso set forth in Decree-Law No. 925/1969, and employers were obliged to make efforts to procure transfers to trade unions with the prior authorization of their employees, regardless of the title or nomenclature of the collection.

To support and measure this provision, the subject of the optional nature of the dues was addressed by the STF in the Direct Action of Unconstitutionality (ADI) No. 5794 and in Declaratory Action of Constitutionality (ADC) No. 55, which sought recognition of the validity of the change. Ruling on them together, the STF decided not to allow union dues to be imposed on workers and employers when the Federal Constitution states that "no one is obliged to join or remain affiliated with a union entity," thus validating the end of the compulsory nature of union dues.

With the promulgation of MP 873/2019, there is no longer any pretext to support the absolute certainty of trade union entities as to the receipt of the contributions due, including monthly dues, whose burden of collection, as a general rule, falls on the creditor party. This is because article 545 of the CLT, after promulgation of the MP, addressed "voluntary contributions and monthly payments due to trade unions," which will now be collected independently of their designation, according to articles 578 and 579 of the CLT:

Article 578 of the CLT: "Contributions due to trade unions by participants in the economic or professional categories or professions represented by these entities shall be collected, paid, and applied in the manner established in this Chapter, under the name of union contribution, provided that it is upon the prior, voluntary, individual, and express authorization of the employee.”

The presidential decree also expressly vetoes rules or provisions regulating trade union categories that establish compulsoriness of or obligations for collection for employees or employers without observing what is set forth in the legal provision.

Article 579 of the CLT: “Requests for payment of union contributions are subject to the prior and voluntary authorization of employees participating in a particular economic or professional category or of a self-employed profession in favor of the representative trade union of the same category or profession or, in the absence of trade union, in accordance with the provisions of article 591.”

The peremptory amendment done by MP 873/2019 is provided for in article 58 of the CLT, which states: "The contribution of employees that expressly authorize in advance the payment of union dues shall be done exclusively by means of a bank slip or electronic equivalent, which shall be compulsorily sent to the employee's residence or, in the event of impossibility of receipt, to the headquarters of the company."

It has been seen that the immediate implication of the rule is to innovate regarding the competence to collect union due through specific means. Thus, employers shall not have the obligation to collect and pass on the main source of funding for trade union entities.

With this, members who voluntarily associate with some trade union organization will do so when they feel properly represented by the category. This forces the trade union organization to reinvent itself in order to attract members and keep them actively paying dues.

Following the STF’s case law, MP 873/2019 removed from trade unions the privilege of guaranteeing receipt of union dues, which were previously passed on by companies. Trade unions therefore have to bear the cost of collection and the risk of default by their members. The change also gives employers the relief that they are no longer required to collect union dues and encourages a greater relationship of representation between trade union organizations and their members.

Category: Labor and employment

Before the Labor Reform (Law No. 13,467/17), in force as of November 11, 2017, if companies did not grant a full one-hour break for meals and rest, the so-called intra-workday break, they had to pay an entire hour of overtime, even if employees had enjoyed most of this time. That is, employers who granted only 15 minutes were treated in the same manner as employers who granted 45 minutes of meal break.

Furthermore, in addition to having to make full payment, the amount of the break also hadsalary nature , thus affecting all other payments to employees.

With the Labor Reform, it was expressly established in the Consolidated Labor Laws (CLT) that only the period of the break not granted should be paid by the employer, as an indemnity, with an increase of 50% over the amount paid as compensation for normal working hours (article 71, paragraph 4).^[1]

Thus, as of November 11, 2017, for situations in which a break for rest is not granted in full, employers must pay only the remaining period.

Aside from this discussion regarding the disproportionate treatment of partial breaks, resolved by the new wording of paragraph 4 of article 71 of the Labor Code, there are other questions about the intra-workday break that deserve attention. For example, are oscillations in the recording of departure and return times for breaks permissible? If so, what is the tolerance limit?

It is inevitable that there will be oscillations both in the start and end times of breaks and in the departure and return times for breaks. Regardless of the organization or size of the company, variations will occur because the records result from a human act.

Regarding fluctuations related to the beginning and end of the workday, the CLT expressly provides that variations of up to five minutes will not be considered for the purpose of working hours, subject to the limit of ten minutes per day (article 58, paragraph 2, of the CLT).^[2] However, for variations in relation to meal breaks, the law is silent and there is no settled understanding in judicial decisions.

The understanding is that variation of up to ten minutes in breaks is tolerable, due to analogical application of article 58, paragraph 2, of the CLT. That is, variation of up to five minutes in departures for lunch breaks and up to five minutes for returns should not have an effect for the purposes of computing the one hour break.

On the other hand, there is also the understanding that it is not possible to apply said article by analogy to cases of meal breaks, since a variation of ten minutes in a break of one hour is not proportional to a variation of ten minutes in a workday of eight hours.

To try to resolve this debate, on March 25, 2019, the Superior Labor Court (TST) decided to establish the following legal theory:

"The occasional and minimal reduction of the intra-workday break, thus considered to be that of up to five (5) minutes in total, added to the beginning and end of the break, due to small variations time card controls, does not call for the application of article 71, paragraph 4, of the CLT. The overstepping of this limit entails the legal consequences provided for by law and case law ".

Thus, according to the TST, companies may be ordered to pay in full the time from the intra-workday break not granted if they do not observe the tolerance limit of up to five minutes at the beginning and end of the break.

By fixing this theory, some questions arise.

• Can the start and end tolerances of the workday be offset against intra-workday break tolerances? For example: will the five minutes less that the employee has not enjoyed as a break be understood by the time card registration system as five minutes worked? And if on that day an employee had five minutes less as break time, what if he/she had come in five minutes early? Could he/she then leave ten minutes before his/her regularly scheduled time?
• The Labor Reform allowed the 30 minute break to be negotiated. Is it possible to negotiate this tolerance as well? By making a rule of three and starting from the same reasoning applied by the TST when considering the five-minute tolerance for a one-hour break, would then a 2.5-minute tolerance for 30-minute breaks apply?

With regard to the first question, we consider it defensible that working hours and breaks for rest deserve two separate lines of analysis. Although tolerance is allowed in both cases because of the human impossibility of registering exactly the same hours on all working days, one tolerance cannot be offset with another, as otherwise it will denature its purpose.

In this context, in the example mentioned in the first question, employees would not be entitled to receive any amount for the intra-workday break and could leave (a) at the regular time for departure; (b) five minutes earlier (since they had started the workday five minutes earlier); or (c) up to five minutes later (subject to the limit of ten minutes per day, as permitted by law). If one were allowed to offset the intra-workday break, employees could purposely enjoy five minutes less of break time each day, in order to leave five minutes earlier, which does not correspond to the purpose of the legal theory set by the TST.

Concerning the second question, considering that there is no legal provision for tolerance limits with intra-workday breaks, our understanding is that, in collective bargaining agreements, companies and trade unions should negotiate a provision stipulating the limit for oscillation registration of breaks on time cards, with the purpose of minimizing the risks related to the topic.

However, considering that the minimum threshold of the intra-workday break allowed by law is 30 minutes, applicable for employees submitted to a workday exceeding six hours, our understanding is that employees should in effect receive 30 minutes. That is, any five-minute variation would be detrimental to employees. This is because, following the line of reasoning of the TST, a variation of less than five minutes in a 30-minute break is disproportionate.

Thus, it is up to companies to evaluate their specificities and decide on viable limits, based on the theory already established by the TST, in order to ensure that their employees enjoy the minimum 30 minutes. We also recommend that companies monitor variations in employees' time cards, under penalty of payment of more than five minutes in the form of an indemnity.

Finally, in view of the theory set by the TST, in the case of companies that use bank of hours or flexible hours, it is important to check whether these limits are also being observed by the time card system, that is to say, to check whether the system is adapted to calculate the hours to be offset, considering the limit of up to ten minutes daily per workday and five minutes for intra-workday breaks.

^[1] Article 71 - In any continuous work, the duration of which exceeds six (6) hours, it is mandatory to grant an interval for rest or meals, which shall be at least one (1) hour and, unless otherwise agreed upon in writing or in a collective bargaining agreement, it may not exceed two (2) hours.

Paragraph 4. Failure to grant or partial granting of the minimum intra-workday break for rest and meals, to urban and rural employees, results in a payment of the nature of an indemnity, only for the period not granted, with an addition of fifty percent (50%) over the amount of the remuneration for normal working hours. (As amended by Law No. 13,467, of 2017) (In Effect)

^[2] Article 58. The normal working hours for employees in any private activity shall not exceed eight (8) hours per day, provided that no other limit is expressly set. Paragraph 1. Time variations in records on time cards not exceeding five minutes, subject to the maximum limit of ten minutes per day, shall not be discounted or computed as overtime.

Category: Compliance, investigations and corporate governance

The professionals who work in the area of corporate integrity have raised great expectations regarding the beginning of the new federal government this year, especially regarding the performance of the new justice minister, former magistrate Sergio Moro, who became known for the judgments in the largest corporate corruption case in Brazil, Operation Carwash.

On the fourth day of the new government, Minister Moro presented to the public a bill to amend 14 laws, known as the "Anticrime Package," with the principal objective of strengthening the fight against organized crime and corruption, among other crimes.

One of the 19 changes originally proposed and already submitted for intense public debate has attracted special attention from compliance professionals: the amendment to Law No. 13,608/18 (dealing with hotlines for reports in police investigations) in order to include a legal provision for “well-intentioned complainants” or whistleblowers to receive a cash reward for their reports.

The term whistleblower, already widely used within the integrity programs of various companies, derives literally from “blowing the whistle," in the sense of drawing attention to something irregular that an individual has witnessed or learned of, even if without his direct participation.

Moro's proposal addresses the issue of the whistleblower in three different areas:

1. In the perspective of the organization of the state apparatus, the proposal provides that the Federal Government, states, and municipalities install an ombudsman to receive reports from informants;
2. Regarding the protection of whistleblowers, the proposal indicates the right to maintain their identity anonymous, and it will only be revealed with their consent and in the case of relevant public interest or concrete interest for an investigation of the facts. In the same sense, the proposal gives whistleblowers who are public agents various non-retaliation guarantees; and
3. From the point of view of encouraging reporting, the proposal provides that, when the information available results in recovery of proceeds from a crime against the Public Administration, a reward of up to 5% of the amount recovered may be granted to the informant.

With regard to the obligation for public agencies to create channels for receiving reports, the project formalizes something that is already recommended for Brazilian private entities and was already mandatory for public companies and for government-controlled companies, since the State Companies Law (Law No. 13,303/2016) also provided for the mandatory adoption of risk management and internal control structures, with mandatory inclusion of a whistleblowing channel for receiving reports on violations of the company's internal policies, as well as protection mechanisms so that whistleblowers are not subject to retaliation.

In the passages dealing with the protection of whistleblowers, the decree seeks to guarantee them the right to confidentiality in a relevant and healthy measure. In addition, for informants holding a public office, the proposal sought to do what many companies that have established internal complaints policies have done: to discipline the protection of whistleblowers in good faith against any kind of retaliation, including by pointing out that agents who perform or fail to perform an act to retaliate against an informant shall have committed abuse of office.

However, the point of the proposal that most attracted attention was the possibility for informants to have a share in the amount recovered by the State by virtue of their collaboration.

The idea of rewarding whistleblowers as a mechanism to encourage reporting is not new and is already included in the current text of Law No. 13,608/18. However, the new proposal innovates by actually linking the reward to a proportion of what is recovered by the public coffers, an idea that originates in the United States of America, where the subject is explored in greater depth and where there is already a provision for a reward if the tip provided by the whistleblower to the United States Securities and Exchange Commission (SEC) in fact gives rise to a sanction imposed on the offending company.

According to US law, tips to the SEC may address various issues pertaining to potential irregularities related to publicly traded companies that trade securities in the US, including possible violations of the Foreign Corrupt Practices Act (FCPA)^[1], an American rule similar to Law No. 12,846/2013, or the Brazilian Clean Company Act.

In the US, the system seems to be generating good results. Between 2011 and 2017, the SEC received more than 22,000 tips on potential irregularities^[2] and by 2017 the program generated more than $1 billion in financial rewards. Whistleblowers have already received more than US$ 300 million as rewards^[3].

However, while the new proposal of the Brazilian government seeks to drawn on the American experience to encourage further investigations and to increase recovery of assets by the Brazilian state, it is also true that it still seems too generic for immediate application if it is to be transformed into law.

While in the US the law provides a series of limitations, conditions, and procedures to be fulfilled in order for whistleblowers to receive a reward^[4], the Brazilian proposal only provides for the possibility of a reward, thus seeming to delegate the necessary regulations for practical application of the institute to a potential presidential decree. This creates a degree of concern for corporate integrity experts by creating a scenario of legal uncertainty in an area that already suffers from a lack of clear legal guidance.

In the same vein, while they view favorably the encouragement of good faith reporting, experts have been concerned that the absence of clear legal outlines and the over-prominence of public reporting channels in the proposal will dehydrate the complaints channels implemented by private companies themselves.

The furnishing of channels by companies to receive information and the provision of mechanisms to protect whistleblowers are provided for in Decree No. 8,420/2015, which provided the regulations for the Brazilian Clean Company Act. Such channels have been widely used by corporations to initiate internal investigations and to respond to or prevent cases of corruption before they even occur.

An example of the market's concern is that the new legislation, if not supported by thorough regulations, ultimately discourages  employees from pursuing such channels, since the materialization of a potentially harmful act preventable internally could take the case to the public administration and generate rewards for the whistleblower.

In this sense, despite presenting an interesting strategy, the proposal demands greater details for it to constitute an effective advance. As it moves forward, it is recommended that the National Congress includes private sector corporate integrity experts in the debate.

^[1] https://www.sec.gov/whistleblower/frequently-asked-questions

^[2] https://www.sec.gov/page/whistleblower-100million

^[3] https://www.sec.gov/page/whistleblower-100million

^[4] https://www.sec.gov/about/offices/owb/reg-21f.pdf

Category: Infrastructure and energy

The enactment of a new version of the Sanitation Executive Order took place in the transition between governments at the federal level later this year. The first version of the Executive Order lost its effectiveness due to the expiration of the time limit without timely approval of its conversion into law. Despite the difficulties in approval by the Legislature, the new Executive Order replicates the previous text with some relevant changes. The news reveals a reinforcement of the private participation in the sector and in the initiative of the Federal Government in providing financial and technical support to states and municipalities for basic sanitation projects.

The period for the mechanism to enter into force for competitiveness between private initiative and state companies has passed from three years to one year. Therefore, the period for the state companies to adapt to the reality has been reduced. Further, regulatory agencies must contribute to the submission of projects of delegation of public utilities to the manifestation of interest of the private initiative, which must precede any concession contracts to state companies without a tender offer, according to the new version of the Executive Order.

The Executive Order detailed the conditions for publicity of public calls to solicit interested parties from the private initiative and extended the deadline for submission of proposals. Municipalities of the same region may adhere to the call and act jointly. In this case, the Executive Order  stresses the possibility that these municipalities may benefit from resources from the support fund for the structuring and development of concessions and PPPS (Law No. 13,529/2017).

The possibility of charging a fee or tariff for the divisible services of solid waste management on invoices for water supply and sewage consumption, provided for in the previous MP, was extended to the invoices of other public services in the new version of the text. On the one hand, the extension of this aspect will make legal arrangements that burden less the Public Power more viable and its capacity for indebtedness with PPP projects; on the other hand, it may mitigate the risks of default by users, thus reducing the cost of providing services.

The measurement of rates and tariffs in the urban sanitation and solid waste management sector may adopt as criteria consumption of water and frequency of collection, as well as the requirements already provided for, namely: appropriate disposal of the waste collected, income level of the population served, characteristics of the division and area, and weight and average volume collected per inhabitant or domicile.

In order to improve regulatory provisions, the inclusion in the contractual instrument of progressive and gradual targets for expanding services, reducing losses in the distribution of treated water, quality, efficiency, and rational use of water, energy, and other natural resources became a condition for the validation of contracts for the delegation of sanitation services to state and private companies.

The search for greater centralization of the regulatory function also inspired a new rule in the Executive Order, with the Federal Government being expected to define minimum potable water parameters. In turn, it will remain the responsibility of the regulator established by the authority over the services to define the maximum loss limits in the distribution of treated water.

The authorities over the services will be required to allocate resources deriving from onerous grants to funds that may be set aside to fund expanded access, such that they may only be used for another purpose after the achievement of certain goals. In the previous version, the earmarking of funds arising from onerous grants to such funds was a mere option.

Among the most important changes, there are those that demonstrate that the Federal Government will offer incentives, financial support, and aid in the structuring of projects in the basic sanitation sector, revealed mainly in the changes introduced by the new Executive Order  to Law No. 13,299/17. On the first aspect, the Federal Government may grant budgetary, tax, or credit benefits or incentives as a counterpart for the achievement of previously established operational performance targets.

In addition, the fund provided for in Law No. 13,529/2017, which will have the participation of the Federal Government, previously had legal authorization only to support the structuring and development of concessions and PPPs. Now it will also have as an objective support for the execution of infrastructure works and the planning and management of urban development actions, with priority on basic sanitation actions.

The role played by the basic sanitation sector is evident in the section of the Executive Order  that states that funds allocated to technical assistance related to these services must be segregated from the others and cannot be used for other purposes of the fund. As detailed in the Executive Order , among actions aimed at basic sanitation, the assistance from the aforementioned fund will target the preparation of studies, sector plans and engineering projects, drafting and review of basic sanitation plans, and evaluation, accreditation, and project management and infrastructure works.

In addition, the participation of the Federal Government in the fund, previously restricted to a maximum of R$ 180 million, becomes unlimited. Further, assistance to entities by the fund will no longer have preferences: mandatory allocation of up to 40% of the fund's resources to projects in the North, Northeast, and Midwest regions has been removed.

In addition, the Executive Order  delegated the provision of rules for financial support to the fund’s bylaws and updated the resources that may make up the assets of the fund, therein adding (i) donations of any nature, including other federative entities, other countries, international and multilateral organizations; (ii) reimbursement of amounts spent by the managing agent and subsidies arising from the contracting of the services financed; (iii) funds derived from the sale of assets and rights, or from publications, technical material, data, and information; and (iv) other funds defined by law.

Thus, the new Executive Order improves the regulatory framework of basic sanitation, thus strengthening the search for solutions for the relentless need for technical and financial support to most service authorities, as well as the urgency of private participation in the sector to meet the goals of expanded access to services.