In Brazil, employment can be terminated without cause at any time, provided the notice period is respected (or paid in lieu) and severance is paid. In addition, some categories of employees enjoy additional protection against dismissal. Termination must be written, signed, and dated.
Upon termination without cause, employees are entitled to receiving accrued benefits. Those consist of their salary for the unpaid time worked, unused and accrued vacation and vacation bonus, the appropriate portion of the 13th month salary, FGTS, and an additional 40% on the balance of their FGTS fund. (FGTS and the penalty are not applicable if the termination is with cause).
The Brazilian legislation recognizes some reasons that lead to termination with cause. However, employers must have a legitimate and recognized reason and must prove the misconduct. Employees are entitled to neither notice period nor pay in these circumstances:
Termination by mutual agreement signed by both parties reduces the notice period to 15 days and lowers the FGTS penalty by 20%. Employees get access to only 80% of the funds in their FGTS account.
Employees who lost employment with or without cause must receive their salary and any outstanding payments on their last day of employment. If the employee resigns, the deadline for the payment is increased to ten days from the last day of employment. If the employee works through their notice period, the payment must be made on the last day of employment. If the employee doesn’t work through their notice period, payment can be made within ten days of termination.
Employers must fill out and get employees to sign the following documents upon termination:
Employers must notify the authorities mentioned above (FGTS, CAGED) about the termination.
There is no legal disciplinary procedure that companies need to follow in Brazil. However, in some circumstances involving just cause for dismissal, employers should be keeping proof that they have done their part and tried to help the employee before making the decision to terminate the contract. It is very common for companies to be taken to court by current or former employees in Brazil, so the more evidence employers have to back up their actions, the less likely they are to lose the case.
There are no rules on the number of warnings an employee must receive before dismissal in case of insubordination, poor performance, or constant lateness for work and missed deadlines. The company’s actions may depend on its policy and tolerance. However, it’s standard to give employees three warnings — the first verbally, the second in writing, and the third in the form of actual temporary employment suspension.
The first warning is a way of alerting an employee that such behaviour will have consequences to their employment status and should be duly documented. The second warning, which is in writing, requires it to be delivered to the employee in the presence of two witnesses. If the employee works remotely, the warning can be emailed and the two witnesses need to be CCed. The third warning leads to temporary suspension from work. If the employee doesn’t improve or change their behaviour, employers can terminate them with cause.
Employees can resign at any time, without cause, as long as they respect the notice period. In case of resignation, the notice period is 30 days and doesn’t require the additional 3 days per year of service. Employees who resign are entitled to their accrued benefits, except for the FGTS (there is no 40% penalty for the employer to pay either) and unemployment funds. If the employee doesn’t serve their notice, the employer has the right to deduct one month’s wage from the employee’s final pay.
Employees should present their desire to resign in writing to their employer. The letter must be signed and dated. Employees serving their probationary period may request to be released before the 30 days of notice expire.
The concept of redundancy doesn’t exist in Brazil; therefore, such dismissal is treated as termination without cause. There is no legal distinction between being dismissed and made redundant.
The minimum statutory notice period is 30 days, but some agreements may include longer notices, capped at 90 days. For every year of employment, there is an additional 3 days’ notice added to the 30 days. Employers may choose to pay employees in lieu of notice. Termination with cause, such as gross misconduct, don’t require a notice. Termination by mutual agreement allows the notice period to be cut in half if the parties agree to it.
Employees who work through their notice period are entitled to a work schedule shortened by two hours daily or seven days in total while receiving their full remuneration to look for work. The employee must have been employed for at least 12 months to be entitled to this right.
Employees who are terminated without cause are entitled to severance pay, which consists of the funds employers put aside monthly for employees on their Time of Service Guaranteed Fund (FGTS). Additionally, employers must pay 40% of the balance of the employees’ FGTS as compensation.
If the employer and employee agree to the termination, the 40% FGTS penalty is reduced to 20%. Fixed-term employment that gets terminated without cause requires compensation of 50% of the remaining pay.
As mentioned previously, some categories of employees benefit from protection against dismissal for a defined period, as follows:
If any of these employees are dismissed without cause, they can take the company to court and be reinstated.
Employees are entitled to unemployment funds if their employment is terminated without cause. The government allowance varies depending on the employee’s salary in the preceding three months and cannot be lower than the minimum wage. The period an individual is entitled to receive the benefit for depends on their tenure.
To be entitled to the benefit, an employee must meet the following criteria:
Employees who worked from 6 to 11 months are entitled to 3 months of allowance; one year to one year and 11 months, 4 months of allowance; two or more years, 5 months of allowance. If the individual finds a job while they are still receiving the benefit, they must inform the Ministry of Labour so that the benefit can be suspended.