Labor and social security review: companies in compliance and prepared for merger and acquisition processes

Survey evaluates compliance with routine obligations and verifies the existence of labor liabilities when studying the viability of buying and selling companies

Luciana Lupinucci

Keeping up with labor and social security obligations is the best way to avoid penalties for non-compliance with the relevant legislation.

However, in practice, the volume of duties that fall on companies, in addition to the details of the requirements, makes it difficult to fully comply with Brazilian standards.

In this context, the labor and social security review appears as an option for the prevention of liabilities that originate in erroneous routines, whether in the registration, maintenance or dismissal of employees, or in payments and statements.

Why is labor and social security review important?

In 2019, the Ministry of Economy promoted 221.94 thousand operations in companies in the country to verify regularity in hiring, health and safety, insertion of people with disabilities (PCDs) and apprentices, FGTS collection, among other items.

Inspections, as well as other ways of identifying inconsistencies in accountability, show the importance of investing in integrity check of information relating to workers.

That is why it is valid to periodically promote labor and social security reviews covering employment contracts, the correct application of remuneration and indemnity funds, among other points.

The benefits of labor and social security review are:

The pointing out of wrong processes and weak points harmful to the company;

The identification of any irregularities in the routine, allowing the company to anticipate itself to correct flaws that could lead to fines and penalties;

Cost reduction for regularization of records;

The identification of possibilities for recovering social security credits;

Identifying the need for training of internal staff for the maintenance of good practice;

The company's alignment with the requirements of the Federal Revenue Service and labor legislation, with the consequent elimination of risks of assessments.

Diagnostic purposes

Labor and social security review, among other purposes, can be carried out to:

1. Check if the routine of obligations has been properly fulfilled.

It can be adopted in a timely or periodic manner for the survey of labor contingencies, the review of accessory obligations, the analysis of forms of contracting and the possible risks associated with current practices.

2. Measure the existence of labor liabilities when studying the viability of commercial expansion processes.

Operations such as mergers or acquisitions of companies must be preceded by a thorough survey of labor and social security aspects (which can also be part of a due diligence process). Knowing the company's real situation in this area is essential to mitigate risks and make assertive decisions.

The identification of labor liabilities, for example, can exert great interference on the values of a negotiation or even affect its implementation.

It is worth noting that this type of verification must be lead with the guarantee of confidentiality, as required by operations planning for mergers or acquisitions.

How is this review performed?

The assessment is essentially documentary, but checks can also be planned at the company's facilities and interviews with employees, depending on the purpose of the review and its confidentiality. Depending on the size of the company, the survey is carried out by sampling.

Items and processes will be analyzed, such as: Electronic Registration Point, overtime, vacations, license, mandatory breaks, payroll, equal pay, contractual changes, transfers, mandatory formalizations, work safety issues (such as SESMT), outsourcing, compliance quotas (apprentices and people with disabilities - PCD), collective agreements, among others.

Points of attention

It is not uncommon to identify typing errors in payment slips, collection documents or document numbering. Although apparently trivial, problems can arise, both for the employer, who may be forced to pay a supplementary amount, and for the employee who had, for example, the PIS number entered incorrectly.

Conceptual errors are also detrimental. The understanding between what is considered remuneration funds and what is compensation money has been another factor that compromises the regularity of companies.

Divergences between GFIP and information provided to eSocial with payroll, characterization of items with undue taxation and distortions between stated values and the amounts actually paid by employers are often identified in reviews.

Issues related to collective agreements generate doubts in the day-to-day life of companies and from there arises a series of failures, such as incorrect calculations of payment to employees.

Read more here:Payroll review: strategy for risk prevention and cost reduction

Results

In addition to the benefits already mentioned, the result of the work is a report with preventive and corrective recommendations, pointing out the weaknesses and risks encountered.

Based on this survey, the company will be able to minimize or eliminate situations that do not comply with current regulations.

Complete Diagnosis

The labor and social security review service requires not only extensive knowledge of the applicable legislation, but also familiarity with the operational procedures, both items in the domain of the Domingues e Pinho Contadores team.

DPC has specialists trained to thoroughly assess issues of this nature, helping the company to remain in compliance with the rules in force.

This work is planned in a personalized way to meet the varied profiles of companies and the different objectives and strategies pointed out, adding to this survey, when necessary, complementary diagnoses of fiscal and accounting order.

In addition, DPC promotes specific training in company, in order to guide companies on maintaining practices in line with legal requirements.