Version S-1.1 of the layout introduces labour claims into eSocial and requires new routines from companies.
Labour claims in eSocial (the Brazilian government’s digital bookkeeping system for tax, social security and labour obligations) have been given their own treatment under version S-1.1 of the layout. Joint Ordinance MTP/RFB/ME No. 33, of 6 October 2022, approved this version and the new eSocial Guidance Manual. In practice, companies must now report settlements and decisions of the Labour Courts within the system. This note summarises the content of the official publication on the subject.
What has changed with labour claims in eSocial
The layouts of version S-1.1 fully incorporate the developments provided for in Evolving Documentation Note (Nota de Documentação Evolutiva) 02/2021, dedicated to labour claims. In other words, the system now accommodates information on settlements and on awards made by the Labour Courts. As a result, that note ceased to be valid, since version S-1.1 BETA, of 28 July 2022, already contained these developments.
In addition, the same version brought partial adjustments arising from Evolving Documentation Note 01/2021, which deals with income tax on employment income. On this point, the change is limited to what is necessary in order to include IRRF (withholding income tax) in the DCTFWeb (web-based declaration of federal tax credits and debits). The replacement of the Dirf (annual withholding income tax return), however, has been left to a future version.
Who is affected by the reporting of labour settlements in eSocial
The new requirement applies to companies that enter into settlements or are subject to awards in the Labour Courts. It is of particular interest to those required to acknowledge liability for social security contributions and third-party contributions arising from such decisions. For this reason, the legal, human resources and payroll departments need to work together.
The official publication refers to RFB (Brazilian Federal Revenue Service) Normative Instruction No. 2,094 of 2022. Under that instruction, this information must be included in the DCTFWeb as from assessment period 01/2023. Accordingly, eSocial is no longer merely a channel for payroll data. It now also feeds the assessment of taxes arising from labour claims.
Deadlines and exceptions under version S-1.1
The implementation timetable was amended at the request of companies. According to the published schedule:
- Implementation of version S-1.1 in the production environment: 16 January 2023.
- Coexistence of versions S-1.0 and S-1.1: until 19 March 2023, that is, two months.
- Coexistence version S-1.0 (Technical Note 06): 16 January 2023.
There is one relevant exception. The changes to remuneration events aimed at the assessment of income tax for the DCTFWeb only go into production as from assessment period 03/2023. Likewise, information on IRRF withholding need only be included in the DCTFWeb as from assessment period 05/2023. The same normative instruction sets this deadline.
One observation is warranted. Reference has circulated to 1 January 2023 as the starting point of the obligation. The official publication, however, refers to assessment period 01/2023 in the DCTFWeb and to implementation in production on 16 January 2023. These two milestones should therefore be read together.
What to do now
First, map the ongoing labour claims and the approved settlements that give rise to contributions payable. Next, check whether the payroll system or the service provider is already adapted to the S-1.1 layout. Then, align the workflow between the lawyer conducting the case and the team responsible for filing with eSocial.
It is also advisable to review the terms of the settlements. The itemisation of the amounts, for example, affects the calculation basis of the contributions to be reported. Finally, make use of the coexistence period to test filings and correct inconsistencies before the deadline expires.
What still depends on regulation
The official publication makes it clear that version S-1.1 does not contain all the adjustments required to replace the Dirf. Those adjustments will come in a new version, for which no date has yet been set. In the meantime, companies remain subject to the current income tax obligations.
Furthermore, the eSocial Guidance Manual, approved by the same ordinance, sets out the operational details for completion. Consulting the manual is therefore essential in order to determine which events to use and how to report each item.
In short, labour claims in eSocial require integration between litigation and payroll routines. The firm follows this subject closely and brings together other legal news commented on by the firm.