All questions

Discontinuing employment

i Dismissal

There is no law forbidding termination of employment in Brazil, except in the cases of vested employee rights provided for by law, such as for a pregnant employee, a representative of the workplace's internal committee for the prevention of occupational accidents, an employee who has suffered an occupational accident, a union official or in a case of vested employee rights provided for in a CBA. In the event of termination without cause, the employee must receive an indemnity corresponding to termination and indemnity rights (severance pay) and at least 30 days' prior notice of the termination, with an additional three days for each full year of employment.

There is no formal procedure for termination without cause, in which case it is common practice to deliver a written notice to the employee with information concerning compliance with the notice period or compensation in lieu of notice.

Severance pay must be paid within 10 days from the termination date. The decision as to whether the employee should work through their notice period is made by the employer. In the event of resignation, the employee must inform the employer of whether he or she will work through the notice period and it is common for the employee to request a waiver from the employer in this regard.

If the employment contract has been effective for more than one year, termination must be ratified by the union of the professional category of the employee in question or with the Ministry of Labour and Employment.

ii Redundancies

In Brazil, if the employer needs to terminate employee contracts because of new technology rendering their services unnecessary, the need to cut costs or if the activities of the company are to be terminated or transferred, the employer may simply terminate the employment contract without cause with notice (preferably in writing) and with the payment of severance, which is mandatory in such cases, to the employee.

Where redundancy terminations are necessary, a review should be undertaken to determine whether the company employs any workers possessing vested employment rights, as such employees may not be terminated as a result of redundancy.

Certain CBAs grant benefits or provide for indemnities upon terminations deriving from redundancy, and certain employers offer payments that are higher than those provided for by law when contractual termination occurs as a result of discontinuance of a job or function. In such circumstances, it is also sometimes the case that consultation with the union is required before effecting the terminations.