Labor Termination Guide: Calculate Your Rights in Brazil

Labor termination is a crucial moment in any Brazilian worker’s life. Whether due to dismissal, resignation, or mutual agreement, knowing your rights and how to correctly calculate severance pay is essential to ensure you receive everything you’re entitled to. With recent changes in labor legislation, especially after Law 13,467/2017 (Labor Reform), it’s even more important to be well-informed about the different types of termination and their financial implications.

In this complete guide, you’ll learn everything about labor termination, from types of termination to detailed calculation of each severance component. We’ll also show practical examples and how to use our labor termination calculator to verify if your calculations are correct.

Labor Termination

Labor termination is the ending of an employment contract between employer and employee. In Brazil, this process is regulated by the Consolidação das Leis do Trabalho (CLT - Consolidated Labor Laws) and must follow specific procedures to guarantee the rights of both parties.

Types of Termination

There are four main types of labor termination in Brazil:

1. Dismissal without just cause: When the employer decides to end the contract without the employee having committed a serious fault. This is the most favorable type for the worker.

2. Resignation: When the employee requests to leave the company voluntarily.

3. Dismissal with just cause: Occurs when the employee commits a serious fault as provided in article 482 of CLT, such as job abandonment, indiscipline, or dishonesty.

4. Mutual agreement termination: A type created by the Labor Reform, where employer and employee agree to end the contract.

Rights by Type

Each type of termination generates different rights for the worker:

• Dismissal without just cause: Right to all severance pay, including 40% FGTS (severance fund) penalty and unemployment insurance
• Resignation: Right to basic pay, but without FGTS penalty or unemployment insurance
• Dismissal with just cause: Only salary balance and accrued vacation (if any)
• Mutual agreement: Right to 50% of benefits related to dismissal without just cause

Severance Pay Components

Severance pay components are the amounts the employer must pay the worker at termination. The composition varies according to the type of dismissal.

Salary Balance

Salary balance corresponds to days worked in the termination month that haven’t been paid yet. The calculation is done by dividing the monthly salary by 30 and multiplying by days worked.

Formula: (Salary ÷ 30) × days worked

Example: For a salary of R$ 3,000.00 and 15 days worked in the month: (R$ 3,000.00 ÷ 30) × 15 = R$ 1,500.00

Notice Period

Notice period can be worked or paid as compensation. Since 2011, Law 12,506 established that notice period has a minimum duration of 30 days, plus 3 days for each complete year of service at the company, limited to 90 days.

Days calculation: 30 + (3 × complete years of service), maximum 90 days

For a worker with 5 years at the company: 30 + (3 × 5) = 45 days of notice period

Proportional 13th Salary

Proportional 13th salary is due when the worker didn’t receive the complete Christmas bonus in the termination year.

Formula: (Salary ÷ 12) × months worked

For a salary of R$ 2,500.00 and 8 months worked: (R$ 2,500.00 ÷ 12) × 8 = R$ 1,666.67

Vacation + 1/3

Vacation can be accrued (complete acquisition period) or proportional (incomplete period). The constitutional 1/3 bonus applies to vacation pay.

Accrued vacation: Full salary + 1/3 Proportional vacation: (Salary ÷ 12) × months of acquisition period × 4/3

FGTS and Penalty

FGTS corresponds to 8% of gross salary deposited monthly. In dismissal without just cause, there’s a right to 40% penalty on the FGTS balance. In mutual agreement, the penalty is 20%.

Calculation by Type of Termination

Dismissal Without Just Cause

In dismissal without just cause, the worker is entitled to:

• Salary balance
• Notice period (worked or compensated)
• Proportional 13th salary
• Accrued vacation + 1/3 (if any)
• Proportional vacation + 1/3
• FGTS + 40% penalty
• Unemployment insurance (if requirements are met)

Resignation

In resignation, the worker receives:

• Salary balance
• Proportional 13th salary
• Accrued vacation + 1/3 (if any)
• Proportional vacation + 1/3

Important: There’s no right to compensated notice period, FGTS penalty, or unemployment insurance.

Dismissal With Just Cause

Dismissal with just cause is the most restrictive, guaranteeing only:

• Salary balance
• Accrued vacation + 1/3 (if there’s a complete period)

Mutual Agreement

In mutual agreement (created by the Labor Reform), the worker receives:

• Salary balance
• 50% of notice period
• Proportional 13th salary
• Accrued vacation + 1/3
• Proportional vacation + 1/3
• FGTS + 20% penalty
• 50% of unemployment insurance (limited to 2 installments)

Payment Deadlines

Legislation establishes specific deadlines for severance pay:

• Worked notice period: Until the first business day after contract termination
• Compensated notice period: Until the 10th calendar day of dismissal
• Late payment: Generates penalty equivalent to employee’s salary

Failure to meet these deadlines can result in penalties for the employer and right to late payment penalty for the worker.

Required Documents

For labor termination, the following documents are required:

• Employment Contract Termination Term (TRCT)
• Updated work card
• Unemployment insurance guides (if applicable)
• Dismissal Communication (CD)
• Occupational Health Certificate for Dismissal (ASOD)
• FGTS statement
• FGTS keys (for account withdrawal)

How to Calculate Each Component

Practical Examples

Let’s calculate the termination of João, who earns R$ 4,000.00 monthly, worked 3 years at the company, and was dismissed without just cause on March 20th:

1. Salary balance: (R$ 4,000.00 ÷ 30) × 20 days = R$ 2,666.67

2. Notice period: 30 + (3 × 3 years) = 39 days R$ 4,000.00 ÷ 30 × 39 = R$ 5,200.00

3. Proportional 13th salary: (R$ 4,000.00 ÷ 12) × 3 months = R$ 1,000.00

4. Proportional vacation + 1/3: (R$ 4,000.00 ÷ 12) × 3 months × 4/3 = R$ 1,333.33

5. FGTS (estimated 3 years): R$ 4,000.00 × 8% × 36 months = R$ 11,520.00 40% penalty = R$ 4,608.00

Approximate total: R$ 14,800.00 + FGTS penalty of R$ 4,608.00

Termination Calculator

To make your calculations easier and avoid errors, use our labor termination calculator. The tool considers all variables of current legislation and provides accurate calculation of your severance pay.

The calculator allows you to simulate different termination scenarios, compare values between types, and generate detailed reports for verification with the company’s settlement.

What to Do in Case of Error

If you identify an error in severance pay calculation, you can:

1. Talk to HR: Present your calculations and request review
2. Contact the union: The category can mediate negotiation
3. Seek Labor Court: For cases not resolved amicably
4. Access Labor Superintendency: For reporting irregularities

It’s important to keep all receipts and termination documents, as they’ll be needed in case of legal questioning.

Frequently Asked Questions

How long do I have to question termination values?

The statute of limitations for questioning labor benefits is 5 years from the date of injury, limited to 2 years after the end of the employment contract. That is, you have up to 2 years after termination to file a labor lawsuit.

Can I withdraw FGTS in any type of termination?

No. FGTS withdrawal is only allowed in dismissal without just cause and mutual agreement. In resignation and dismissal with just cause, the balance remains in the worker’s account until other situations that allow withdrawal.

What happens if the company doesn’t pay on time?

The company must pay a penalty equivalent to the employee’s salary when it doesn’t meet legal deadlines. This penalty is additional to severance pay and has compensatory nature.

How to calculate proportional vacation when working less than 12 months?

For periods under 12 months, count how many complete months you worked. Fractions of 15 days or more count as a full month, smaller fractions are disregarded. The formula is: (salary ÷ 12) × months worked × 4/3.

Is it possible to negotiate values in termination?

In some situations yes, especially in mutual agreement. However, the company cannot pay less than minimum values established by law. Any agreement must respect the worker’s basic rights.

When am I entitled to unemployment insurance?

The right to unemployment insurance exists in dismissal without just cause and partially in mutual agreement. It’s necessary to have worked at least 12 months in the last 18 months (first application) and not have sufficient own income for family maintenance.

Does termination need to be validated by the union?

Since the 2017 Labor Reform, union validation of termination is no longer mandatory, regardless of length of service. Validation became optional and can be requested by the worker if desired.