What You Need to Know Before Hiring in Brazil: A Guide to Terminations

When hiring employees in Brazil, you probably aren't thinking about terminations. But parting ways with an employee is inevitable, so if you don't understand the basics of how to terminate an employee in Brazil, you could easily run into trouble ahead.

At-will employment exists in Brazil, but employees are still entitled to notice periods, severance pay, accrued benefits, and other entitlements under local labor laws—and the rules are different for different types of employees and reasons for their termination.

Don't risk a potentially costly wrongful dismissal claim—read on to learn everything you need to know about terminating employment in Brazil, plus how hiring through an Employer of Record (EOR) can spare you from having to master all the local termination requirements for your global workforce.

6 essential things to know before hiring in Brazil

• In Brazil, employment can be terminated at any time, with or without cause, provided the employer follows rules for notice periods (or payment in lieu) and severance payments. We'll cover all the details on this further down.
• All employees in Brazil have government mandated severance funds. Employers pay into the severance fund; typical contributions are 8% of an employee's monthly earnings.
• Terminated employees in Brazil are entitled to their accrued benefits. This includes unused vacation pay and vacation bonus, a prorated portion of their 13th month salary, and severance funds.
• When terminating an employee with cause, employers must prove their misconduct. Employees who are terminated with cause are not entitled to the same benefits, but the burden of proof is on the employer.
• Employers must notify the proper authorities when they terminate an employee. This includes the Cadastro Geral de Empregados e Desempregados (CAGED) and the Fundo de Garantia por Tempo de Serviço (FGTS).
• Some categories of employees are protected from termination of employment. This includes pregnant employees, any employee who had a recent work-related injury or illness, union leaders, and employees who are one year away from retiring.

Termination rules in Brazil: What are acceptable grounds for firing an employee?

Employment in Brazil is at will, meaning any employee can be terminated at any time, with or without cause. There are some exceptions to this for certain protected employees:

• Pregnant employees, from when their pregnancy is confirmed until five months after the birth.
• Employees who had a work-related illness or injury that required them to be away from work for 15 days or more and receive social security benefits, for one year from recovery.
• Union leaders leaving their post, for one year.
• Employees elected as In-House Accident Prevention Commission members leaving their post, for one year.
• Employees who are one year or less away from retirement (this should be outlined in a collective bargaining agreement or CBA).

Employees can leave their job voluntarily for any reason. Notice periods for resignation are generally 30 days.

In most cases, employees who are terminated involuntarily are entitled to notice periods, severance pay, and payment for their accrued benefits. Details on those are below.

What are the mandatory notice periods and termination pay for Brazilian employees?

Notice periods and severance pay for Brazilian employees depend on a few factors—most notably, the length of service and the reason for the termination.

Employees who are on their notice period are entitled to a two-hour reduction in their work hours per day (while still receiving full pay) so they can look for their next job.

The easiest way to comply with Brazilian termination requirements

When you employ a global workforce, it's tough to keep track of termination requirements. Just-cause considerations, probationary and notice periods, and severance pay laws can vary not just from country-to-country, but even in different regions of a single country. Hiring global workers means mastering all that information yourself.

An alternative is to hire through an EOR, which can monitor termination requirements for you.

Frequently asked questions about terminating employees in Brazil

Do you need a reason to terminate an employee in Brazil?

Employment in Brazil is at-will, so you can involuntarily terminate an employee without cause, as long as you follow all the rules for notice periods and severance pay.

If you terminate an employee and forgo notice and severance requirements, you'll need to have just cause for the termination.

What is considered just cause for terminating an employee in Brazil?

In Brazil, termination with just cause is when an employee is let go for actions related to serious misconduct. This can include:

• Breach of a trade secret (but the employer must prove that the employee did it knowingly and that the company was financially impacted by it)
• Insubordination, such as breach of a company policy or their employment agreement
• Inappropriate behavior, including harassment, sexual harassment, psychological bullying, racism, or sexism
• Dishonesty, theft, or fraud
• Low productivity or negligence, including failure to show up to work or repeatedly missing deadlines (the employer must show that a disciplinary procedure was followed and the employee had at least three strikes)
• Ongoing drunkenness or drug abuse not because of alcoholism or drug dependency
• Physical violence
• Gambling at work
• Serious conflict of interest, such as working on the side for a competitor
• Criminal conviction
• Gross negligence
• Abandonment of the job
• Acts detrimental to national security

In general, the burden is on the employer to prove they had just cause when terminating an employee. They should be careful to document all misconduct and disciplinary actions in case they need to defend a termination in the future.

What qualifies as wrongful dismissal in Brazil?

In Brazil, wrongful dismissal is when an employee is terminated without meeting the requirements for notice and severance payments. It can happen when an employer:

• Fires an employee without cause but doesn’t pay them their severance.
• Claims they’re firing an employee for cause, but the reason is illegitimate or they don't have proof to back it up.

Employees who think they’ve been wrongfully dismissed can take legal action against their former employer, claiming payment for entitlements including severance and accrued benefits. Employment claims are made before a specialized labour court in Brazil.

What is always required when an employer terminates an employee in Brazil?

Employees who are dismissed (either with or without cause) must receive notice in writing. Employers are not required to inform their employees' union or the Ministry of Labour.

Terminated employees must receive their final salary payment and any other outstanding payments (severance, accrued benefits, etc.) on their last day of employment. Employees who resign must receive their final salary payment within 10 days of their last day of employment.

In addition, employers must fill out and submit a number of documents upon termination of an employment relationship:

• A signed and dated letter of termination
• Aviso prévio, or termination notice letter
• Termo de Rescisao de Contrato de Trabalho (TRCT), or termination of employment contract terms
• Guia de Recolhimento Rescisorio do FGTS (GRRF), a form used to withdraw the employee’s severance funds from the FGTS
• Seguro Desemprego for unemployment benefits
• Relatório de Medias, a salary report

What benefits are terminated employees entitled to?

Terminated employees may be entitled to payment of accrued benefits, depending on the length of their employment and the reason for the termination.

What is the law for dismissing a contractor in Brazil?

In Brazil, independent contractors are governed by the civil code, not employment laws. That means the process for terminating a contractor can vary depending on the terms of their contract.

Typically, either party can terminate a contract agreement if they provide notice as specified in the agreement. If no notice period is specified, standard notice periods for independent contractors in Brazil are:

• 8 days for monthly remuneration
• 4 days for weekly or biweekly remuneration
• No notice for contracts valid less than 7 days

If an employee is found to have been misclassified, their employer may be liable to back payment of severance and accrued benefits.

What are layoffs in Brazil?

In Brazil, there's no legal concept of redundancy, so employees who are made redundant or laid off are considered terminated without cause. They are entitled to the same notice periods, severance pay, and benefits as any other employee terminated without cause.

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Rippling and its affiliates do not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.