Amendments in deduction limits for payroll loans

On August 04, 2022, Law No. 14,431 of August 03, 2022, was published, amending the limits for deduction from payrolls or from employees’ available wages, including severance payments, of amounts referring to the payment of loans, financing, and leasing operations granted by financial institutions and leasing companies.

The deduction limit is now forty percent (40%), of which up to thirty-five percent (35%) can be destined exclusively for loans, financing, and leasing, and five percent (5%) can be allocated exclusively to the amortization of expenses acquired by means of a payroll-deductible credit card, or for the purpose of withdrawal by means of a payroll-deductible credit card.

A noteworthy inclusion is that the legislative amendment at issue does not have the authority to amend contracts and respective discount authorizations made by employees who have already taken on such debts through payroll loans. The new discount limit will only apply to new contracts and new debts contracted by employees under this system, granting new discount authorizations.

Demarest’s Labor and Employment team is available to provide any further clarifications that may be necessary.