Terminating someone is never pleasant, yet the process can be particularly complex in Brazil.
Figuring out how to officially terminate an employment contract in Brazil requires understanding the country’s complex labor laws and regulations – after all, nobody wants to stay on the wrong side of an inconvenient legal battle.
Despite its unusual intricacies, navigating this bureaucratic maze can be more manageable than it initially appears.
This blog post will provide a comprehensive overview of the procedures involved with terminating employees in Brazil so you can ensure your termination is compliant.
1. Reasons For Dismissal
Dismissal of an employee with a cause is when the employer has to provide a valid reason for their termination as specified in labor laws, such as dishonesty, sexual harassment, or inappropriate behavior at work.
On the other hand, dismissal without cause allows employers more discretion and could be due to workforce redundancies or any number of reasons unrelated to what’s outlined by local law.
It should also be noted that depending on whether this action takes place ‘with’ or ‘without because will affect severance payments made upon dismissal – something which must be noticed!
2. Form
Dismissing an employee is a difficult choice for an employer to make, and there is a specific protocol to be followed. The employer must notify the employee of the termination in writing, and both parties should sign off on a term of dismissal.
Additionally, it is vital that the termination is registered in the employee’s employment booklet and informed relevant authorities involved.
Failure to follow this protocol can result in unwanted litigation complications later. To protect themselves from future legal issues, employers should remain diligent and ensure these steps are carried out.
3. Notice Period
To ensure smooth transitions, employers must give employees 30 days’ notice before either termination with a cause or when their employment agreement stipulates a longer period of notice.
If it is a just-cause termination, employees are entitled to salary balance, prior notice period 30-90 days), prorated salary for 13th month, prorated vacations with 1/3 additional payment, and total balance available with Federal Service Indemnity Fund/Guarantee Fund for Severance Pay (FGTS, Fundo de Garantia por Tempo de Serviço).
4. Summary Dismissals
Regarding summary dismissals, employers are limited to dismissals with cause. However, if an employer wants to dismiss without cause, they must give the employee 30 days’ prior notice.
Employees are entitled to a salary balance, prior notice period (30-90 days), prorated vacations with one-third additional payment, prorated 13th month salary, total balance available Federal Service Indemnity Fund and a special fine of 50% of the total amount deposited in the FGTS (40% of this amount is paid to the worker while 10% to the government as special social security contribution) if it is an arbitrary/unfair or no just cause dismissal.
5. Severance Pay
Termination from a job can be a complicated and nerve-wracking process for any employee, but fortunately, those who are released without cause are entitled to severance pay.
This payment comes from the employer’s own Time of Service Guaranteed Fund (FGTS), which they put aside financially each month to enable them to offer this type of compensation.
When contract terminations occur, employers and employees must understand their rights regarding severance returns. For more information regarding labor laws and compliance in Brazil, visit Global People Strategist.
