Grounds
As a rule, termination does not require a cause, but severance payments for terminations without cause are higher than those owed in cases of termination for cause. Certain circumstances protect employees against unmotivated dismissal. Termination by mutual agreement is allowed in certain circumstances when it is convenient for the company as well as for the employee.
Employees subject to termination laws
All employees are subject to termination laws.
Restricted or prohibited terminations
Certain circumstances prevent the termination of the employment relationship without cause or cause an increase in the severance payments, such as:
- Pregnancy
- Application by the employee for, or election of the employee to, a position at the Internal Commission for Accident Prevention (Comissão Interna de Prevenção de Acidentes or CIPA)
- Application by the employee or election of the employee for a management position at the employees' union
- Work accident (an employee who suffers a work-related accident cannot be dismissed until 1 year after the illness allowance has ceased) and
- Acceptance by the employee of a position in the conciliation commission in charge of settling labor disputes.
Other events provided under collective conventions or collective agreements may lead to temporary job tenure protection.
Third-party approval for termination
The union may be required to participate in the termination process of employees in circumstances preventing termination per collective bargaining rules.
Since November 13, 2017, the union – or the labor authority – is no longer required to ratify terminations of employees; however, collective bargaining agreements may provide that ratification is mandatory for certain sectors.
Mass layoff rules
Mass layoffs do not require prior negotiation with the union, however under Supreme Court case law, unions must be involved in the termination process. However, union authorization is not required in order to move forward with the terminations.
Notice
Termination without cause by employer's initiative: 30 days during the 1st year plus 3 days per additional year of service for the same company, limited to 90 days. Additional collective bargaining agreement provisions may apply.
Termination for cause: Not applicable, effective immediately.
Statutory right to pay in lieu of notice or garden leave
The company has the statutory right to pay in lieu of notice. Garden leave is not allowed.
Severance
In case of termination without cause, the employee is entitled to severance, amounting to the equivalent of 40 percent of the balance in the employee's Unemployment Guarantee Fund (Fundo de Garantia por Tempo de Serviço or FGTS), accrued during the employment relationship. Additional payments will be due, such as 1 month's salary if the termination takes place in the 30 days before the expected date of the collective bargaining agreement for the following period; payout of accrued vacation plus 1/3 vacation bonus; pro-rated 13 months' pay; and other payments required by the applicable collective bargaining agreement or contract.
In case of termination with cause, accrued unused vacation plus vacation bonus and other payments required by the applicable collective bargaining agreement or contract are still required, but there will be no FGTS payout or additional 1 month's salary.
In case of termination by mutual agreement, the company must pay half of the notice and 20 percent of the FGTS balance, as opposed to 40 percent when the termination is on the company's initiative. The employee will be allowed to withdraw 80 percent of the balance of the FGTS fund, as opposed to 100 percent when the termination is on the company's initiative, but they are not entitled to unemployment benefits in this type of termination.
