Andréa Novais

Andréa Novais

The Brazil Business


Dismissing in Brazil

Andréa Novais

Andréa Novais

The Brazil Business


After writing an article on things that must be considered before hiring in Brazil, we've decided to talk about the costs of firing in Brazil.

Brazil is known for its high tax burden over payrolls and for the many benefits it gives its employees. Hiring in Brazil is not cheap. It is common to say that an employee costs twice his salary. What is not mentioned so often is how much it costs to fire your employee.

Before discussing the details regarding costs of firing, it is important to understand the two common circumstances in which employees are fired in Brazil. The first one is demissão por justa causa, which is when the employee commits one of the faults foreseen by CLT (Portuguese for Consolidation of the Labor Laws). The other one is demissão sem justa causa, which corresponds to the employee firing his employer without any legal reason to do so.

Demissão por Justa Causa

According to CLT, there are 12 situations that justify the dismissal of an employee. They are:

Status Reason
Ato de Improbidade It constitutes theft or stealing of corporate material and the falsification of documents.
Incontinência de Conduta ou Mau Procedimento It is a broad category that includes sexual harassment, using equipments without permission (like using the company's car for personal matters and without permission) or leaving the company during working hours without proper authorization.
Negociação Habitual It happens when the employee, without any authorization, performs a business activity that competes directly with the one of the employer or that, even though does not compete, affects directly his workflow or generates a conflict of interests.
Condenação Criminal Once the employee has received a criminal sentencing, the employer has the right to dismiss him.
Desídia It is the repetition of minor faults, such as unjustified absences, low production rate, being frequently late and other faults that bring negative effects to the company's workflow or that make it clear that the employee is no longer committed to his job.
Embriaguez Habitual ou em Serviço Consists of situations in which the employee drinks alcohol at his work place or goes to work under the effects of alcohol. However, as alcoholism has been approached as an illness instead of a mere addiction, employers are encouraged to assist their employees on how to treat the problem before firing them at the first sight of alcoholism.
Violação de Segredo da Empresa It consists of the violation of confidential information. Only confidential information that is given to a third party that has a particular interest on it characterizes violation.
Ato de Indisciplina ou de Insubordinação It happens when the employee disobeys an order that has already been determined by a previous contract or that he was aware of when taking the job.
Abandono de Emprego Absence for more than 30 days with no justification.
Ofensas Físicas Constitutes physical aggression to members of the company and even to third parties, as long as the aggression happens within the facilities of the company.
Lesões à Honra e à Boa Fama Verbal or gestural aggression, discrimination regarding gender, place of birth or educational level.
Jogos de Azar Gambling is prohibited in Brazil and, therefore, constitutes a reason to fire your employee.

Companies try not to fire their employees claiming justa causa so often as it may result on lawsuits. Also, getting fired by justa causa leaves a negative impression on the employee's professional records and it may affect directly the process of getting a new job.

The other alternative is to dismiss your employee without a justa causa. This is the alternative that is going to be discussed on the next topic.

Demissão Sem Justa Causa

Dismissal without justa causa implies that the reason why you are dismissing your employee is not foreseen on CLT. Therefore, as the employee did not do anything to get fired (at least in theory), he is compensated through benefits.

When dismissing an employee without justa causa, the employer has to pay several fees and fines, being them:

FGTS – Fundo de Garantia do Tempo de Serviço

The “Fundo de Garantia por Tempo de Serviço” is a set of resources collected from the private sector (mostly companies) and managed by Caixa Econômica Federal. The purpose of these resources is to support employees when they are dismissed from their jobs. Every month, the employer has to collect an amount correspondent to 8% of the employee’s salary and deposit in the employee’s account at Caixa Econômica Federal (every employee working under the CLT regime has this account).

When you fire your employee claiming justa causa, you won't have to pay for the 50% fee over the FGTS and he will only be able to withdrawal the balance of his account after being unemployed for three years.

Aviso Prévio

When dismissing your employee, you must notify him one month in advance or pay him the amount equivalent to a month salary. Earlier this month a new legislation was implemented and besides the previous 30 days, now there is the addition of three days per year of work, so an employee who has worked for 20 years will receive an aviso prévio of 90 days, which corresponds to three months of salary.

13th Salary

Just like it is observed in countries like Mexico and Argentina, the 13th salary is a gratification that corresponds to a month salary and that is paid in two installments. In Brazil, it is paid in November and December.

If the employee is dismissed before receiving his 13th salary, then the employer will have to pay the amount correspondent to the working months. For example an employee who earned monthly BRL 1100,00 and was dismissed after 8 months of work will receive BRL 733,28 (1100 : 12 x 8).

Paid Vacations

Regardless on why your employee was dismissed (with or without justa causa), he has got the right of a 30-day rest every 12 months of work. If by the time you dismiss your employee he has not gone on vacation, you will have to pay him a month salary plus a 1/3 of this amount. So that same employee who earns monthly BRL 1100,00 will receive BRL 1430,00.

The payment of this amount must be done at least two days before the employee goes on vacation. Otherwise, the employer will have to pay the employee twice the amount.

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