Navigating employment termination in Brazil requires a thorough understanding of the country's complex labor laws, primarily governed by the Consolidated Labor Laws (CLT). Both employers and employees have specific rights and obligations that must be strictly adhered to during the termination process to avoid legal disputes and penalties.
Properly managing the end of an employment relationship is critical for companies operating in Brazil in 2025. Compliance with notice period requirements, accurate calculation and payment of severance entitlements, adherence to procedural steps, and awareness of employee protections are essential for a lawful and smooth termination process.
Notice Period Requirements
In Brazil, the notice period (aviso prévio) is a mandatory requirement for most types of employment termination without cause. It serves to provide the employee or employer with advance notice of the impending end of the contract. The standard notice period is 30 days, but it increases based on the employee's length of service with the company.
The calculation for the extended notice period is 30 days plus an additional 3 days for each full year of service, capped at a maximum of 90 days total.
| Length of Service | Minimum Notice Period |
|---|---|
| Up to 1 year | 30 days |
| 1 year | 33 days |
| 2 years | 36 days |
| ... | ... |
| 20 years | 90 days |
| 21+ years | 90 days |
The notice period can be worked (aviso prévio trabalhado) or paid in lieu (aviso prévio indenizado). If the employee works the notice period, they are entitled to either a reduction of two hours per day or seven consecutive days off at the end of the period. If the employer opts to pay the notice period in lieu, the employee is immediately terminated but receives compensation equivalent to the notice period salary.
Severance Pay Calculations and Entitlements
Severance entitlements in Brazil depend heavily on the grounds for termination. For termination without cause by the employer, the employee is entitled to several payments and benefits.
Key severance components for termination without cause include:
- Balance of Salary: Payment for days worked in the month of termination.
- Proportional 13th Salary: Payment for the months worked in the current year, calculated as 1/12th of the monthly salary for each month or fraction of 15 days worked.
- Proportional Vacation + 1/3 Bonus: Payment for vacation days accrued but not taken, plus the mandatory one-third bonus, calculated proportionally to the months worked since the last vacation period.
- Accrued Vacation + 1/3 Bonus: Payment for any full vacation periods accrued but not taken, plus the one-third bonus.
- Notice Period Pay: If the notice period is paid in lieu.
- FGTS Withdrawal: The employee is entitled to withdraw the full balance of their FGTS (Fundo de Garantia do Tempo de Serviço) account. The FGTS is a mandatory savings fund deposited monthly by the employer (8% of the employee's salary).
- FGTS Fine: The employer must pay a fine equivalent to 40% of the total FGTS deposits made during the employment period. This fine is deposited into the employee's FGTS account.
- Unemployment Insurance: Eligible employees are entitled to apply for unemployment insurance benefits, provided they meet the government's criteria regarding length of employment and previous receipt of benefits.
For termination with cause by the employer or resignation by the employee, severance entitlements are significantly reduced, typically limited to the balance of salary and accrued/proportional vacation + 1/3 bonus. The FGTS withdrawal, FGTS fine, and unemployment insurance are generally not applicable in these cases.
Grounds for Termination
Brazilian law specifies various grounds under which an employment contract can be terminated.
- Termination Without Cause (Sem Justa Causa): This is the most common type, initiated by the employer without specific misconduct by the employee. It requires payment of full severance entitlements, including the 40% FGTS fine and notice period.
- Termination With Cause (Por Justa Causa): Initiated by the employer due to serious misconduct by the employee, as defined by the CLT (e.g., dishonesty, insubordination, abandonment of employment, habitual drunkenness). This type of termination results in minimal severance entitlements for the employee.
- Resignation (Pedido de Demissão): Initiated by the employee. Entitlements are limited to balance of salary and accrued/proportional vacation + 1/3 bonus. The employee may be required to work or pay the notice period.
- Mutual Agreement (Distrato): Introduced by the 2017 labor reform, this allows termination by mutual consent. Entitlements include balance of salary, proportional 13th salary, proportional vacation + 1/3 bonus, 20% FGTS fine (instead of 40%), and withdrawal of 80% of the FGTS balance. Unemployment insurance is not available.
- Termination Due to Force Majeure or Mutual Fault: Less common grounds with specific rules regarding severance.
Procedural Requirements for Lawful Termination
Regardless of the grounds, certain procedural steps must be followed to ensure a lawful termination.
| Step | Description | Required Documentation |
|---|---|---|
| Notification | Provide written notice of termination (aviso prévio), specifying whether it is worked or paid in lieu. | Notice of Termination (Aviso Prévio) document, signed by employer and employee. |
| Calculation of Severance | Calculate all applicable severance payments based on the grounds for termination and employee's tenure. | Detailed calculation sheet. |
| Preparation of Termination Statement | Prepare the Termo de Rescisão do Contrato de Trabalho (TRCT), detailing all payments and deductions. | TRCT form, generated according to government standards. |
| Payment of Severance | Make the severance payments within 10 days of the termination date (or immediately if notice is worked). | Proof of payment (bank transfer receipt, check copy). |
| Delivery of Documents | Provide the employee with the TRCT, proof of payment, FGTS withdrawal key, and unemployment insurance forms. | Signed TRCT, FGTS withdrawal key/code, Seguro Desemprego forms. |
| FGTS Release | The employer must process the necessary documentation to allow the employee to withdraw their FGTS balance. | Connectivity key/code generated via the FGTS system. |
| Social Security Information | Update employee information in government systems (e.g., eSocial). | eSocial submission confirming termination details. |
For terminations without cause involving employees with more than one year of service, the labor reform of 2017 removed the mandatory requirement for homologation (verification and approval) by the employee's union or the Ministry of Labor. However, some collective bargaining agreements may still require it, and it is often recommended as a best practice to ensure correctness and prevent future disputes.
Employee Protections Against Wrongful Dismissal
Brazilian labor law provides significant protections against arbitrary or discriminatory termination, often referred to as wrongful dismissal.
Key protections include:
- Stability Periods (Estabilidade): Certain employees are protected from termination without cause during specific periods:
- Pregnant Employees: From the confirmation of pregnancy until five months after childbirth.
- Employees on Sick Leave/Work Accident Leave: During the leave and for 12 months after returning to work (if receiving social security benefits).
- Union Leaders: During their term and up to one year after its end.
- Employees Elected to Internal Commission for Accident Prevention (CIPA): During their term and up to one year after its end.
- Employees Close to Retirement: Some collective bargaining agreements grant stability for a period (e.g., 12 or 24 months) before the employee becomes eligible for retirement.
- Discriminatory Termination: Termination based on discriminatory grounds (e.g., age, gender, race, religion, medical condition) is prohibited and can lead to reinstatement or significant compensation.
- Retaliatory Termination: Termination in retaliation for an employee exercising their rights (e.g., filing a complaint) is also considered wrongful.
If an employee is terminated during a stability period without just cause, they are typically entitled to reinstatement or compensation equivalent to the salaries and benefits they would have received during the protected period. Wrongful dismissal can result in significant legal costs, fines, and reputational damage for the employer. Therefore, understanding and respecting these protections is paramount.
