Severance Pay in Brazil: What Workers Are Owed When a Job Ends

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

When an employment contract ends, you are entitled to a set of payments that varies with the reason you left. Unpaid salary for days worked, notice pay, vacation pay, the thirteenth salary and the FGTS (Brazil’s Severance Indemnity Fund) penalty make up the calculation your employer must present in the termination statement. Knowing what is owed in each situation, checking the amounts and acting on mistakes are the key steps to making sure you do not give up money that belongs to you.

Why the way the job ends determines what you are paid

Not every termination is the same. The payments you are owed depend directly on how the employment relationship ended: whether you resigned, were dismissed without cause, were dismissed for cause, reached an agreement with your employer, or reached the end of a fixed-term contract. Each of these scenarios triggers a different package of rights.

In a dismissal without cause, initiated by the employer, the worker receives the largest number of payments, because the law seeks to compensate for the involuntary loss of a job. When you resign, by contrast, you give up items such as paid-out notice (aviso prévio indenizado) and the penalty on the FGTS, and you receive only the amounts proportional to the time you worked.

Dismissal for cause is the most restrictive scenario. Once serious misconduct is established, the employee receives only the salary for days already worked and any accrued vacation, if there is any, and loses notice pay, the prorated thirteenth salary and access to the FGTS penalty. For that reason, the first thing to verify in any review of a termination is whether the reason for the departure was classified correctly.

The main severance items and how they are calculated

The salary balance (saldo de salário) covers the days you actually worked in the month you left and have not yet been paid for. It is owed in every type of termination, without exception, because it pays for work already performed. The calculation is simple: divide the monthly salary by the number of days in the month and multiply by the days worked.

Notice (aviso prévio) comes in two forms. It can be worked, when the employee keeps working during the notice period, or paid out, when the employer waives the work requirement and pays the corresponding amount instead. The minimum period is thirty days, plus three days for each full year of service with the same company, up to a maximum of ninety days. This increase often goes unnoticed and deserves attention.

Vacation pay shows up in two ways. Accrued vacation, when you completed the qualifying period and did not take the time off, is paid in full. Prorated vacation corresponds to the months worked in the current qualifying period. In both cases, the constitutional one-third bonus is added, equal to one-third of the vacation pay and provided for in the Constitution.

The prorated thirteenth salary is calculated at one-twelfth for each month worked in the year, with any fraction of fifteen days or more counted as a full month. Someone who worked from January through July, for example, is entitled to seven-twelfths of the year-end bonus, except in situations where the law rules out payment.

The FGTS penalty applies in a dismissal without cause. The employer deposits an additional forty percent on the total accumulated in your FGTS account. In a termination by mutual agreement between employee and employer, that percentage drops to twenty percent, and the worker may withdraw part of the balance, generally limited to eighty percent.

Other amounts may also be part of the termination, depending on the facts of each contract, such as unpaid regular overtime, hazardous-conditions or unhealthy-conditions premiums, pending commissions and the balance in a time bank. These items reflect rights acquired over the course of the employment and must be added to the final calculation when they exist.

Each of these scenarios triggers a different package of rights.

Payment deadline and reviewing the statement

The law sets a single deadline for paying severance: within ten calendar days from the end of the contract. This deadline applies to both paid-out notice and worked notice, eliminating the former distinction between the first and tenth business day. Missing it triggers a penalty in the employee’s favor, equal to one month’s salary, unless the worker himself caused the delay.

The termination statement is the document that brings all the amounts together. It lists the payments made, the deductions applied and the calculation base for each item. Your review should start by confirming that the type of termination is correctly identified, followed by an item-by-item check: salary balance, notice, vacation pay with the one-third bonus, thirteenth salary and, where applicable, the FGTS penalty.

It is worth comparing the amounts in the statement with your recent pay stubs, your work card and your FGTS statements. Differences in base salary, a missing one-third vacation bonus, an overlooked increase in notice for length of service and deductions with no legal basis are among the most common errors. Signing the statement does not prevent you from later disputing differences that were not paid.

Deductions also deserve a careful read. Those provided for by law are allowed, such as the social security contribution and income tax on taxable items, as well as documented advances. Generic deductions with no clear explanation, or deductions that exceed legal limits, should be questioned before you agree to the calculation.

What to do when you find irregularities

When you spot missing amounts, incorrect calculations or late payment, the first step is to gather your documents: the termination statement, pay stubs, work card, FGTS statements and any record of your working hours. Together, these support a comparison between what was paid and what was owed.

Negotiating directly with the employer can resolve cases of obvious error, such as the omission of the one-third vacation bonus or the increase in notice. If that does not work, the next step is a labor claim (reclamação trabalhista), in which you seek the differences, the late-payment penalty and any items left out of the original statement.

The deadline for pursuing these rights in the Labor Courts calls for care. A lawsuit can be filed up to two years after the contract ends, and it reaches amounts owed in the five years before filing. Letting the deadline run without taking action means losing amounts that can no longer be claimed.

Given how complex the calculation is and how each type of termination has its own particularities, professional guidance makes a difference. A detailed review of the statement, together with the history of the contract, makes it possible to pinpoint what is missing and quantify the differences, so that you do not accept an incomplete settlement under the mistaken impression that everything was paid correctly.

Frequently Asked Questions

What am I entitled to if I resign?

When you resign, you receive the salary balance, accrued and prorated vacation pay with the constitutional one-third bonus, and the prorated thirteenth salary. You are not entitled to paid-out notice from the employer or to the forty percent penalty on the FGTS. In addition, you must work out your notice period or have the corresponding amount deducted if you do not.

How long does the company have to pay my severance?

Payment must be made within ten calendar days from the end of the contract, a deadline that applies to every form of notice. A late payment triggers a penalty equal to one month of the employee’s salary, and it does not erase the obligation to pay the underlying amounts. The rule is meant to make sure workers quickly receive the money they need to get back on their feet after leaving a job.

I signed the termination statement. Can I still question the amounts?

Yes. Signing the statement does not mean you waive differences that were not paid. If the calculation left out an amount that was owed, applied an improper deduction or used an incorrect calculation base, you can claim those differences in the Labor Courts, within the two-year deadline after the contract ends. The release noted in the statement covers only the amounts actually itemized and paid in it.

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