On March 12, 2025, the Federal Government published Provisional Measure No. 1,292 ("MP No. 1,292"), which amends Law No. 10,820, of December 17, 2003 ("Law No. 10,820"), to establish new rules applicable to payroll-deductible credit transactions (credito consignado) extended to private-sector employees ("Private-Sector Payroll Credit").
MP No. 1,292 expands the pool of eligible beneficiaries of Private-Sector Payroll Credit to include, in addition to employees governed by the Consolidated Labor Laws (Consolidacao das Leis do Trabalho – CLT, Decree-Law No. 5,452/43), rural workers, domestic workers, and non-employee directors entitled to the Severance Indemnity Fund (Fundo de Garantia por Tempo de Servico – "FGTS").
The operationalization of Private-Sector Payroll Credit will be conducted through digital systems or platforms maintained by public operating agents ("Private-Sector Payroll Credit System").
According to the Presidential Office (Planalto), the Private-Sector Payroll Credit System was developed by Dataprev and is integrated with the Digital Employment Record (Carteira de Trabalho Digital – "CTPS Digital"), the Digital FGTS (FGTS Digital), and the eSocial platform — through which the collection documents for the payroll deduction amounts must be generated. Also according to information released by the Federal Government, employees will have the option of contracting Private-Sector Payroll Credit transactions through the CTPS Digital, without prejudice to contracting through the consignatory financial institutions' own channels. To do so, the borrower must authorize access to data such as their name, individual taxpayer registration number (CPF), the available payroll margin for deduction purposes, and length of service.
MP No. 1,292 establishes the Managing Committee for Payroll-Deductible Credit Transactions (Comite Gestor das Operacoes de Credito Consignado) which, among other powers to be conferred by the Executive Branch through its own regulation, may set parameters for the elements, terms, and conditions of agreements, as well as for the operationalization and execution of transactions.
Among the main developments, we highlight the following:
(i) discount authorizations for Private-Sector Payroll Credit transactions processed outside the Private-Sector Payroll Credit System (e.g., transactions contracted directly between borrowers and financial institutions) must be registered (averbadas) in that system under penalty of nullity, pursuant to regulations to be established by an act of the Ministry of Labor and Employment (Ministerio do Trabalho e Emprego);
(ii) discount authorizations relating to transactions already contracted as of March 12, 2025 must be registered in the Private-Sector Payroll Credit System within 120 (one hundred and twenty) days, and such registration is conditional upon the adaptation of the agreements to the provisions to be set forth by the Managing Committee;
(iii) during the 120 (one hundred and twenty) days following the entry into operation of the Private-Sector Payroll Credit System, the proceeds of Private-Sector Payroll Credit transactions must be applied exclusively to the repayment of (a) unsecured, non-payroll-deductible loans with outstanding installments; or (b) payroll-deductible loans with outstanding installments, provided that the new credit transaction bears a rate lower than that of the original transaction;
(iv) employees may authorize eligible financial institutions to access the necessary data, subject to the provisions of the General Data Protection Law (Lei Geral de Protecao de Dados – LGPD);
(v) the use of the Private-Sector Payroll Credit System entails for employers, among other obligations, the obligation to carry out all operational procedures necessary for the effectiveness of the credit transaction agreement with the consignatory institution chosen by the employee, regardless of whether a prior agreement or arrangement exists between the employer and the consignatory institution;
(vi) the employer will be responsible for the information provided, for making the deductions, and for remitting the amounts due through the Private-Sector Payroll Credit System, pursuant to the terms to be established by regulation; and
(vii) the employer, by express statutory provision, will be liable for losses and damages caused to the consignatory institution and to the employee in the event of non-compliance with the obligations imposed by Law No. 10,820, including the obligation to make the deductions authorized by the employee, and will further be subject to applicable administrative, civil, and criminal penalties in the event of misappropriation of funds;
Employees continue to be permitted to offer as collateral for Private-Sector Payroll Credit transactions up to 10% (ten percent) of their FGTS balance and up to 100% (one hundred percent) of the termination penalty payable upon dismissal without just cause or dismissal due to reciprocal fault or force majeure, pursuant to applicable law.
In addition, deductions from termination payments owed by the employer remain authorized, if so provided in the relevant agreement, up to a limit of 40% (forty percent), of which 35% (thirty-five percent) is earmarked exclusively for loans, financing, and financial leases, and 5% (five percent) is earmarked exclusively for the amortization of expenses incurred through a payroll-deductible credit card (cartao de credito consignado) or for cash withdrawals through a payroll-deductible credit card.
Likewise, the new rules do not alter the operation of FGTS Anniversary Withdrawal advance transactions (antecipacao de Saque-Aniversario do FGTS), as MP No. 1,292 does not amend the specific rules applicable to that type of credit transaction.
The new Private-Sector Payroll Credit rules have received prominent coverage in the leading financial media, which anticipate a reduction in prevailing interest rates due to greater transparency and competition among financial institutions. The centralization of the system is also expected to facilitate workers' access to more favorable terms by enabling them to compare offers and conduct portability of transactions in a simplified manner.
Financial sector experts have noted that the MP may boost the volume of payroll-deductible credit transactions in the private sector, traditionally less developed than public-sector payroll credit (extended to civil servants and INSS retirees and pension recipients), owing to the greater legal certainty afforded by the centralized nature of the new Private-Sector Payroll Credit System.
The Private-Sector Payroll Credit System is expected to become operational as of March 21, 2025, according to information released by the Presidential Office.
MP No. 1,292 entered into force on March 12, 2025 and must be approved by the National Congress within 120 (one hundred and twenty) days to remain in effect. During its legislative passage, it is possible that amendments may be proposed that alter specific provisions of the text.
We note, finally, that the contracting of new Private-Sector Payroll Credit transactions as of the effective date of MP No. 1,292 must comply with the new rules, which will require particular attention from employers and financial institutions in view of the operational challenges arising from the innovations introduced.
MP No. 1,292 may be accessed here.
FreitasLeite Advogados will continue to monitor developments relating to MP No. 1,292, particularly its legislative passage through the National Congress and the regulations to be established by the Managing Committee and the Ministry of Labor and Employment.
For further information, please contact the Financial and Capital Markets team at FreitasLeite Advogados.
