---
title: "Brazil Termination & Severance 2026 | FGTS, Notice, Procedure"
description: "Brazil termination 2026: FGTS penalty of 40% on the full accumulated balance applies from day one. Notice scales from 30 days to a 90 days cap."
canonical: https://www.teamed.global/country-hiring-guides/brazil/termination-and-severance
---

Brazil · Termination child

Served by Teamed vetted partner-entity network in Brazil

# How do you *terminate an employee in Brazil* in 2026?

Brazil's FGTS severance fund makes every termination without just cause immediately costly. The 40% penalty on the employee's full accumulated FGTS balance falls due from day one of employment, with no qualifying service threshold, and final pay clears in 10 days or you face a one-month salary fine.

Last reviewed 12 June 2026 · Brazil guide

![A warm aerial view of a Brazilian city with green hills, colonial buildings and a bright blue sky.](/images/country-guides/brazil-termination-severance.webp)

Illustration · Sao Paulo, Brazil

Answer.cite this

Brazil employment law runs on the [Consolidacao das Leis do Trabalho (CLT)](https://www.normaslegais.com.br/legislacao/lei-12506-2011.htm) and the FGTS (Fundo de Garantia do Tempo de Servico) system. Every employer deposits 8% of gross monthly salary into a government-held account for the employee. When you dismiss without just cause, you pay a penalty of 40% of the full accumulated FGTS balance. There is no minimum service period before this applies.

Notice starts at 30 days for the first year of service. It grows by 3 days for each full year after that. It is capped at 90 days total. Most employers pay it out rather than require the employee to work the period ([Lei 12.506/2011](https://www.normaslegais.com.br/legislacao/lei-12506-2011.htm)).

Mutual agreement (distrato) cuts the FGTS penalty to 20% and halves the notice period. The employee can only withdraw 80% of the FGTS balance. All termination payments must be settled within 10 days of the termination date.

![A person signing a document at a sunlit desk, a cup of coffee to one side.](/images/country-guides/brazil-termination-polaroid-1.webp)

Verbas rescisorias

## What are valid grounds for termination in Brazil?

Every dismissal in Brazil falls into one of three types. Without just cause is the most common and the most costly. Just cause (justa causa) is rare in practice. Mutual agreement (distrato) is the negotiated exit route. The type you use determines the FGTS penalty, the notice you owe, and what final payments the employee receives.

There is no minimum service period before wrongful dismissal protection applies. Both the FGTS penalty and the notice obligation attach from day one of employment.

The CLT lists the grounds for *justa causa* (termination for cause) exhaustively. Commonly applied grounds include gross misconduct, repeated absence, dishonesty, insubordination, abandonment of post, and criminal conviction affecting job performance. Just cause must be proven and documented. Getting it wrong, meaning the Labour Tribunal (Tribunal do Trabalho) finds the cause insufficient, converts the termination into a dismissal without cause and the employer owes the full FGTS penalty, outstanding notice, and any other verbas rescisorias the employee was denied.

### Protected categories (estabilidade provisoria)

Certain employees hold provisional employment stability and cannot be dismissed without cause during defined periods. Dismissing a protected employee is null and void, and courts order reinstatement or equivalent compensation. Protected groups under the CLT and related statutes include:

- **Pregnant employees**, from confirmation of pregnancy through five months after birth (Constituicao Federal Art. 10 II b; ADCT)
- **Union representatives and CIPA members**, during tenure and for one year after
- **Employees who have suffered a work-related accident or disease**, for twelve months after the INSS sickness benefit ends
- **Members of the internal accident prevention committee (CIPA)**, during and for one year after their term
- **Apprentices**, during the apprenticeship contract

Before initiating any dismissal, check the employee's status against all active stability categories. An overlooked stability makes the entire termination void.

## How much notice must you give a Brazilian employee?

Employer notice starts at 30 days for up to one year of service. It adds 3 days for each full year beyond the first. The total is capped at 90 days ([Lei 12.506/2011](https://www.normaslegais.com.br/legislacao/lei-12506-2011.htm)).

Employees who resign give a flat 30 days regardless of how long they have worked. The scaling rule only applies when the employer ends the contract.

| Years of service | Statutory employer notice |
| --- | --- |
| Up to 1 year | 30 days |
| 2 years | 33 days |
| 5 years | 42 days |
| 10 years | 57 days |
| 20 years | 87 days |
| 21+ years | 90 days (cap) |

The table shows representative points. The formula adds 3 days per full year of service after year one. An employee with exactly 21 full years reaches the 90 days ceiling; beyond that, the period does not grow.

### Indemnified notice (aviso previo indenizado)

The employer may pay the notice period rather than require the employee to work it. This is called *aviso previo indenizado* and is the standard practice. Payment is at the employee's current salary. During a worked notice period, the employee is entitled to reduce their daily working hours by two hours per day (or take seven continuous days off at the end of the period) to look for new work.

### Notice during probation

Brazilian probation contracts (contrato de experiencia) are fixed-term contracts of up to 3 months, structured in segments of up to 45 days each and renewable once. Early termination mid-segment by either party may trigger a penalty of 50% of wages remaining in that segment. There is no rolling notice during probation in the sense that applies after the probation ends. On natural expiry of the probation contract the relationship simply ends.

## How is Brazilian severance calculated?

Brazil severance centres on the FGTS. Each month, the employer deposits 8% of gross salary into a government-held FGTS account. When you dismiss without just cause, you pay a penalty of 40% of the total accumulated FGTS balance.

This penalty applies from day one. An employee dismissed in month two already triggers a 40% penalty on whatever balance has built up.

L&E Global · Termination of employment contracts in Brazil

On termination without just cause, the employer pays a FGTS penalty of **40%** of the total accumulated FGTS balance, plus all accrued notice, proportional thirteenth salary, proportional vacation entitlement and the vacation bonus (one-third addition). All amounts must be settled within **10 days** of the termination date.

Source: [L&E Global, Termination of employment contracts in Brazil](https://leglobal.law/countries/brazil/employment-law/employment-law-overview-brazil/07-termination-of-employment-contracts/)

### What the termination package includes

A without-cause dismissal triggers the following statutory payments, all of which form the *verbas rescisorias*:

- **FGTS balance**, the full accumulated balance in the employee's account, unlocked and paid directly to the employee by Caixa Economica Federal
- **FGTS penalty (multa)**, 40% of the accumulated balance, paid by the employer separately
- **Indemnified notice**, the notice period calculated under Lei 12.506/2011 if the employer elects not to require the employee to work it
- **Proportional thirteenth salary**, the pro-rata share of the annual thirteenth salary (Decimo Terceiro) for the months worked in the current year
- **Proportional vacation**, accrued but unused annual leave, plus the one-third vacation bonus (Terco Constitucional)

### Just cause termination

Termination for just cause (justa causa) eliminates the FGTS penalty and indemnified notice. The employee retains the right to withdraw their FGTS balance but the 40% penalty is not paid. Proportional thirteenth salary and outstanding accrued vacation are still owed. Just cause is hard to defend: Labour Tribunals require clear documentary evidence and apply the grounds strictly.

## What procedure must you follow to terminate in Brazil?

For a standard without-cause dismissal, you do not need to give a reason or run a warning process first. The steps are mainly administrative. Give the required notice or pay it out. Prepare the *termo de rescisao* (termination document). Settle all payments within 10 days.

For just cause, the documentation bar is high. You need clear evidence of the specific ground the law allows. You must also act promptly after discovering the issue. Delay is treated as acceptance of the behaviour.

Brazil has no general statutory collective redundancy procedure with defined consultation periods or employee count thresholds. The Brazilian Supreme Court (STF) has, however, established through case law that mass terminations must be preceded by a genuine good-faith negotiation attempt with the relevant union. Failure to attempt union negotiation before a mass dismissal can result in the Labour Tribunal declaring all terminations null and ordering reinstatement. No statutory timeframe or headcount trigger is set in statute.

The termination document (*termo de rescisao do contrato de trabalho*) must be signed by both parties. Employees with more than one year of service must sign in the presence of a union representative or before a Ministry of Labour and Employment officer. This formality is often coordinated through an employer's HR or legal team.

1. Classify the termination type Decide before you act: without cause, just cause, or mutual agreement (distrato). The type determines the FGTS penalty rate, notice entitlement, and what the employee receives. Reclassification by a Labour Tribunal is expensive.
2. Check for stability protection Confirm the employee holds no provisional employment stability, including pregnancy, union roles, CIPA membership, or recent work-accident benefit. A protected dismissal is null and reinstatement is ordered.
3. Calculate and serve notice Issue written notice or elect to pay in lieu. The notice period is calculated from the employee's length of continuous service under Lei 12.506/2011. Document the election in writing.
4. Prepare the termo de rescisao Draft the termination document listing all verbas rescisorias payable. Employees with more than one year of service must sign before a union representative or Ministry of Labour officer.
5. Settle all payments within the deadline All termination payments must reach the employee within 10 days of the termination date. Missing the deadline triggers a one-month salary penalty under CLT Art. 477.

## How does mutual agreement termination (distrato) work?

The distrato is a negotiated exit that cuts costs for both sides. The FGTS penalty drops from 40% to 20% of the accumulated balance. The notice period is halved. (CLT Art. 484-A)

The employee can only withdraw 80% of the FGTS balance, not the full amount. In return, they keep their right to unemployment insurance (seguro desemprego). A voluntary resignation would lose that right.

The distrato is often the right structure where both parties want to end the relationship. The employer saves on the full FGTS penalty and may negotiate a shorter notice period; the employee preserves FGTS access and unemployment benefit eligibility. The key conditions:

- The agreement must be in writing and signed by both parties
- The FGTS penalty is 20% of the accumulated balance, not 40%
- The notice period is halved relative to the applicable statutory period
- The employee may withdraw 80% of their FGTS balance
- Proportional thirteenth salary, vacation pay, and the vacation bonus are still owed in full
- The employee retains eligibility for unemployment insurance

A distrato is not appropriate where the employer is dismissing the employee without genuine mutual agreement. Courts treat coerced distrato agreements as without-cause dismissals and award the full 40% penalty. The HR team or local counsel should document that consent is genuine.

## How Teamed runs Brazil terminations

Teamed acts as your legal [employer of record](/lp/employer-of-record) in Brazil for [**from $599 per employee per month**](/pricing), with **zero FX mark-up**. Our partner-entity network holds the employment relationship. The termination procedure runs through Teamed's local operations.

We handle the termination documents, the FGTS penalty calculation, and the verbas rescisorias reconciliation on **one platform**. The decision to dismiss, on what grounds, and whether to pursue a distrato stays with you.

**Real HR and legal experts** handle your Brazil hires. **An actual person**, not a ticket queue, coordinates the termo de rescisao, the union-presence formality for tenured employees, and the Caixa Economica Federal FGTS release. There is **no setup fee** and **no exit fee**, and every statutory cost **passes through at cost, itemised** on every invoice.

The split of responsibilities under EOR for Brazil terminations:

| What Teamed handles | What the client decides |
| --- | --- |
| Notice period calculation under Lei 12.506/2011 | Whether to dismiss, for what reason, and on what timeline |
| FGTS penalty calculation (40% or 20% distrato) | Whether to pursue distrato or standard without-cause dismissal |
| Verbas rescisorias reconciliation (notice, 13th, vacation, bonus) | Whether to offer enhanced terms above the statutory floor |
| Termo de rescisao preparation and union-presence coordination | Communication with the wider team |
| Final pay settlement within the 10 days deadline | Whether to negotiate a mutual agreement exit |
| FGTS release instructions to Caixa Economica Federal | The commercial terms of any enhanced settlement |

EOR payroll, contractor onboarding, and entity setup all run on **one platform**. A Brazil contractor who converts to a CLT employment relationship keeps their record, and the same employee can **graduate** from EOR to your own Brazilian entity without switching systems. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips. EOR is the right model for a first Brazil hire, **until it isn't**. Start from the Brazil hiring overview; each guide takes one layer of Brazilian employment law.

Key sources: [L&E Global, Brazil termination](https://leglobal.law/countries/brazil/employment-law/employment-law-overview-brazil/07-termination-of-employment-contracts/), [CMS Law, Dismissals in Brazil](https://cms.law/en/int/expert-guides/cms-expert-guide-to-dismissals/brazil), and [Lei 12.506/2011 (aviso previo proporcional)](https://www.normaslegais.com.br/legislacao/lei-12506-2011.htm).

## Frequently asked questions

What is the FGTS penalty on termination without just cause in Brazil?

The employer pays a penalty of 40% of the employee's total accumulated FGTS balance at the point of termination. The employer has been depositing 8% of gross monthly salary into the FGTS account throughout employment; the penalty is calculated on the full accumulated total, from the first deposit. There is no minimum qualifying service period before the penalty applies.

How is the notice period calculated for a Brazilian employee?

Under Lei 12.506/2011, the employer notice period starts at 30 days for up to one year of service and increases by 3 days for each full year of service beyond the first, up to a cap of 90 days. Employees resigning give a flat 30 days regardless of tenure. Employers typically pay in lieu of notice rather than require the employee to work the period.

What is a distrato and how does it affect the FGTS penalty?

A distrato is a mutual agreement termination under CLT Art. 484-A, introduced by the 2017 Labour Reform. Under a distrato, the FGTS penalty is halved to 20% of the accumulated balance, and the notice period is reduced by half. The employee can withdraw 80% of their FGTS balance and retains eligibility for unemployment insurance (seguro desemprego). The agreement must be genuinely mutual, in writing, and signed by both parties.

When must final termination payments be made in Brazil?

All verbas rescisorias, including indemnified notice, the FGTS penalty, proportional thirteenth salary, proportional vacation, and the vacation bonus, must be settled within 10 days of the termination date under CLT Art. 477. If the deadline falls on a weekend or public holiday, payment may move to the next business day. Missing the deadline triggers an additional penalty equal to one month's salary under CLT Art. 477 SS8.

Does Brazil require a consultation process for mass terminations?

Brazil has no statutory collective redundancy procedure with defined headcount thresholds or mandatory consultation periods. However, the Brazilian Supreme Court (STF) has established through case law that mass terminations must be preceded by a genuine good-faith negotiation attempt with the relevant union. Failure to attempt this negotiation may result in a Labour Tribunal declaring the terminations null and ordering reinstatement. No statutory timeframe is prescribed.

Which employees cannot be dismissed without cause in Brazil?

Employees with provisional employment stability (estabilidade provisoria) cannot be dismissed without cause. This protection covers pregnant employees from pregnancy confirmation through five months after birth, union representatives and CIPA members during tenure and for one year after, and employees recovering from a work-related accident or disease for twelve months after the INSS sickness benefit ends, among other categories. A dismissal that ignores stability protection is null, and reinstatement or equivalent compensation is ordered by the Labour Tribunal.

Teamed Legal Operations

The FGTS structure means Brazilian termination cost is proportional to how long the person has been employed, but it starts accruing from day one. Employers who don't model the FGTS balance alongside salary often arrive at the termination conversation with a surprise on the invoice. Run the numbers before you give notice, not after.

A note from Tom Price-Daniel

Brazil's 40% FGTS penalty accrues on the employee's balance from month one. There's no service threshold before it applies.  
Most employers find out what that costs when they're already trying to close the relationship.  
Model the FGTS balance at hire, not at termination.

Tom Price-Daniel · Co-founder, Teamed

## Related Brazil guides

- Hiring in Brazil, overviewparent
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [Germany termination and severance](/country-hiring-guides/germany/termination-and-severance)neighbour
- [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction, so verify current requirements with the relevant authorities, including the Ministerio do Trabalho e Emprego (Ministry of Labour and Employment) and the Ministerio Publico do Trabalho, or speak to a qualified local professional before relying on any specific framework. The Brazilian Labour Tribunal (Tribunal do Trabalho) system means court outcomes on just cause and mass terminations can diverge from statute; employment counsel is advised for any contested dismissal.