Severance Pay in Brazil: What Workers Should Check When They Are Dismissed

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

What you receive when you leave a job depends directly on the reason the employment ended. Dismissal without cause, resignation, dismissal for just cause, and termination by mutual agreement each carry a different set of payments, and each has its own payment deadline. Going through the termination statement line by line is the safest way to spot amounts that were left out.

The type of termination determines what you receive

Not every departure from a job carries the same rights. Brazil’s Consolidation of Labor Laws sorts severance payments according to who ended the contract and why. That is why the first step in any review is to identify clearly how the termination was recorded in your documents.

In a dismissal without cause, the employer takes the initiative, and you are entitled to the fullest set of payments. In a resignation, the initiative is yours, and you give up certain indemnity payments. In a dismissal for just cause, the law limits your rights to what you have already earned. Termination by mutual agreement, created by the labor reform, falls in between, with some payments made only in part.

What is owed under each type of termination

The set of payments varies depending on how the termination is classified. In general terms, the breakdown usually follows the list below, always subject to the particulars of your contract and your industry’s collective bargaining agreement.

• Dismissal without cause: the balance of salary owed, notice period (worked or paid in lieu), proportional 13th-month salary, accrued and proportional vacation pay plus one-third, release of your FGTS (Brazil’s Severance Indemnity Fund) balance, a 40% penalty on the fund balance, and eligibility for unemployment insurance.
• Resignation: the balance of salary owed, proportional 13th-month salary, and accrued and proportional vacation pay with the one-third addition. There is no FGTS penalty, no withdrawal of the fund on this basis, and no unemployment insurance.
• Dismissal for just cause: as a rule, only the balance of salary owed and accrued vacation pay with the constitutional one-third. The other proportional and indemnity payments are excluded.
• Termination by mutual agreement: the same payments as a dismissal without cause, except that the paid notice is cut in half and the FGTS penalty is reduced to 20%. Withdrawal of the fund is limited to 80% of the balance, and there is no right to unemployment insurance.

The notice period deserves special attention. When it is paid in lieu, it pushes your end date forward and affects the calculation of the other proportional payments. In addition, each full year of service with the same company adds three days to the notice, up to the legal limit, which can raise the final amount significantly.

Vacation pay is another sensitive point. Accrued vacation, meaning periods for which the acquisition cycle has been completed but no time off was taken, must be paid double once the legal deadline for granting it has passed. Regular salary-type payments, such as commissions, hazardous-conditions and unhealthy-conditions premiums, and frequently worked overtime, also feed into the calculation base for several severance payments.

In a dismissal without cause, the employer takes the initiative, and you are entitled to the fullest set of payments.

How much each payment weighs in the final settlement

Knowing how much each item represents helps you judge whether the total you received makes sense. The balance of salary corresponds to the days actually worked in your final month and is usually easy to check: divide your monthly salary by the number of days in the month and multiply by the days you worked. The proportional 13th-month salary is calculated at one-twelfth for each month worked, with any fraction of fifteen days or more counted as a full month.

Proportional vacation pay follows the same one-twelfth logic, always with the one-third addition provided for in the Constitution. When you have accrued vacation you never took, the effect on the settlement can be substantial, especially if it must be paid double. The 40% FGTS penalty, for its part, applies to the entire balance deposited over the life of the contract, not just the last period, which often makes it the largest part of the final amount in a dismissal without cause.

Payment deadlines and what to do if payment is late

Labor law sets a single deadline for paying severance: ten calendar days from the end of the contract, whether the notice period was worked or paid in lieu. If the deadline passes without payment, a penalty equal to one salary is owed to you, in addition to adjustment of the amounts due for inflation.

The delivery of the forms needed to withdraw your FGTS and to apply for unemployment insurance, when applicable, follows the same timing rule. An employer who fails to provide the paperwork on time makes it harder for you to access your rights and may be held liable for the resulting losses.

If payment is late or incomplete, you can seek guidance on how to notify the company and, if necessary, file a labor claim. The deadline to claim unpaid amounts is five years while the contract is in force, but no more than two years after it ends, which makes keeping track of time a decisive factor in not losing your rights.

How to review the termination statement and find missing amounts

The termination statement itemizes each payment made and each deduction applied. Reading it carefully is the most direct way to find omissions. It is worth comparing the figures listed against your pay stubs from the past several months, the entries in your work card, and your industry’s collective bargaining agreement.

A few points tend to concentrate disagreements. Check whether the base salary used matches what you actually earned, whether averages for commissions and overtime were included, whether the one-third addition was applied to all of your vacation pay, and whether the proportional 13th-month salary counted the correct number of months worked. Improper deductions, such as unauthorized charges, should also be questioned.

When your review turns up differences, the best course is to gather the documents that support the correct amount before approaching the company or the Labor Courts. Receipts, time records, pay stubs, and the termination statement itself form the body of evidence that gives your request for a recalculation a solid footing.

Frequently Asked Questions

What payments are owed to someone who resigns?

If you resign, you receive the balance of salary for the days worked in the month, the proportional 13th-month salary, and accrued and proportional vacation pay plus the constitutional one-third. There is no 40% FGTS penalty, no withdrawal of the fund on this basis, and no eligibility for unemployment insurance, because those payments apply only when the employer ends the contract.

What is the deadline for the company to pay severance?

Payment is due within ten calendar days from the end of the contract, whether the notice period was worked or paid in lieu. If the company misses this deadline, it must pay you a penalty equal to one salary and also cover the adjustment of the amounts owed for inflation.

What should I do if amounts are missing from the termination statement?

Compare the statement against your pay stubs, work card, and collective bargaining agreement, and gather documents that prove the correct amount. Once you have identified the difference, you can notify the company and, if the impasse continues, file a labor claim within two years after the contract ended, covering claims from the preceding five years.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.