On the same date, the legal regime of the FLC and GFLC has came into force, approved by Law no. 70/2013, of August 30th , and applicable to employment contracts entered after October 1st , 2013, except very short-term contracts.
The FLC is an individual capitalization fund, financed by employers through mandatory contributions in the amount of 0,925% of the base salary and seniority payments due to each employee covered by this legislation.
Said contributions seek the payment of up until 50% of the compensation value to which the employees covered by the new regime are entitled following the employment contract termination, through the refund of the account balance amount of the employee whose contract will terminate to the employer .
The enrolment into the FLC by the employer – mandatory, unless choice to join an Equivalent Mechanism –, through communication at the time of admission of the first employee covered, determines the creation, by the fund manager entity, of a global account, on behalf of the employer, which comprises compulsorily individual registration accounts, for each of its employees.
By joining the FLC, a contribution to the GFLC, in the amount of 0,075% of the base salary and seniority payments of each employee, is also required.
The GFLC is a mutual fund, activated upon the employee’s request, which aims to cover half of the amount of the compensation due for employment contract termination, deducted from the amount already paid by the employer, unless it has paid an amount equal or greater than reported.
The aforementioned contributions by the employer take place 12 times a year, monthly, within the prescribed period for the payment of contributions to the social security, which is performed by ATM or homebanking.