Dismissal Without Cause in Brazil: What Companies and Employees Need to Know

Dismissal Without Cause in Brazil: What Companies and Employees Need to Know

Hello! Today’s post will address a very relevant topic in the Brazilian corporate world: the dismissal of employees without cause. We will discuss the concepts, correct procedures, and examples of calculations that companies must follow.

What is Dismissal Without Cause (sem justa causa)?

Dismissal without cause occurs when an employer decides to terminate an employee without a specific reason or inappropriate behavior justifying the dismissal. In Brazil, the Consolidation of Labor Laws (CLT) governs the rules and procedures related to this type of dismissal. It is important for companies to be aware of their legal obligations to avoid potential labor lawsuits.

Common Reasons for Dismissal Without Cause

There are several reasons why a company might choose to dismiss an employee without cause. The most common include:

• Organizational restructuring
• The need to reduce costs
• Changes in the company’s strategy
• The employee’s lack of adaptation to the company’s culture or objectives

Employee Rights Upon Dismissal Without Cause

Employees dismissed without cause are entitled to several legally guaranteed benefits. These include:

• Prior Notice (Aviso Prévio): This can be worked or indemnified.
  • Worked Prior Notice: The employee continues to work during the notice period, which can be 30 days or more, depending on the time worked. The employee is entitled to a reduction of two working hours daily or seven consecutive days at the end of the period.
  • Indemnified Prior Notice: The employer dismisses the employee immediately, paying the corresponding amount for the notice period.
  • Duration of Prior Notice: For employees with up to 1 year of service: 30 days of prior notice. For each additional year of service: an additional 3 days of prior notice, up to a maximum of 60 additional days (totaling 90 days).
    • Calculation Example: An employee with 5 years of service is entitled to 45 days of prior notice (30 days + 15 additional days). An employee with 10 years of service is entitled to 60 days of prior notice (30 days + 30 additional days).
  • The prior notice can only be communicated to the employee when they are in an active work period. Any attempt to deliver the prior notice during vacations, for example, can be legally contested and invalidated.
• Salary Balance (Saldo de Salário): The employee will be paid for the days worked in the month.
  • Calculation Example: An employee with a monthly salary of R$ 3,000 who was dismissed on the 10th of a 30-day month will receive a salary balance of R$1,000 (R$3,000 / 30 * 10).
• Indemnity of 40% on the FGTS (Fundo de Garantia do Tempo de Serviço – Severance Pay Fund): The company must pay an amount corresponding to 40% of the total amount already paid as FGTS to the employee.
  • Example: If the FGTS amount paid to the employee since their hiring was R$5,040, the company must pay an additional 40%, which will be R$2,016.
• Overdue Vacation (Férias Vencidas) plus one-third: If the employee has completed an acquisition period of 12 months and has not yet taken these vacations, they are entitled to receive the corresponding vacation amount plus one-third.
  • Example: If an employee has a monthly salary of R$ 3,000 and has an overdue vacation period, they will receive R$ 3,000 + 1/3 of R$ 3,000 (R$ 1,000), totaling R$ 4,000.
• Proportional Vacation (Férias Proporcionais) plus one-third: The employee is also entitled to proportional vacation for the uncompleted acquisition period. These vacations are calculated proportionally to the months worked from the beginning of the last acquisition period until the dismissal date, plus one-third.
  • Example: If the employee worked 8 months from the beginning of the last acquisition period, they are entitled to 8/12 of the value of a salary, plus one-third. Using the monthly salary of R$3,000 as an example, they will receive R$2,000 + one-third of R$2,000 (R$667), totaling R$2,667.
• Proportional 13th Salary (13º Salário Proporcional): The proportional 13th salary is calculated based on the months worked in the year of dismissal. Each month worked (or fraction equal to or greater than 15 days) corresponds to 1/12 of the salary.
  • Example: If an employee worked 8 months in the year of dismissal, they are entitled to 8/12 of the 13th salary. Taking the monthly salary of R$3,000 as a basis, the amount to be paid would be R$2,000.
• Possibility of FGTS Withdrawal: The employee dismissed without cause has the right to withdraw the total balance of their FGTS account.
• Unemployment Insurance (Seguro-Desemprego): The right is granted according to the rules established by the government.

Procedures for No-Cause Dismissal

To carry out the dismissal correctly, the company must follow some mandatory procedures:

1. Notification of Dismissal: Inform the employee verbally and in writing about the decision to dismiss without cause. Ensure that the notice is clear and documented, with the date of communication.
2. Prior Notice: Comply with the period, whether worked or indemnified, observing the legal deadlines.
3. Necessary Documentation: Prepare the necessary documentation for termination, including the Termination of Employment Contract Term (TRCT), FGTS collection guides and termination penalty, and the Termination Communication (CD) to the Ministry of Economy.
4. Calculation of Termination Payments: Correctly calculate all termination payments, including salary balance, overdue and proportional vacations with an additional one-third, proportional 13th salary, indemnified prior notice if applicable, and a 40% penalty on the FGTS.
5. Payment of Termination: Termination payments must be made within 10 calendar days from the date of dismissal. This applies to any form of termination, whether indemnified or worked. If paid after this period, a penalty equal to one salary is imposed in favor of the employee.
6. Updating the Work Card: Currently, the Work and Social Security Card is digital, and any updates are made automatically. Therefore, the employer is not obligated to make annotations in the physical work card.

Situations That Can Prevent the Dismissal Process

In the following cases, employee stability may prevent dismissal without cause:

• Pre-Retirement Stability: Some professional categories have collective agreements that guarantee stability for workers close to retirement, generally for a period of 12 to 24 months before retirement.
• Medical Leave for Work Accident and Work-Related Illness Leave: If the employee is on leave due to illness or a work-related accident for more than 15 days, they have 12 months of stability after returning to work.
• Pregnant Women: Pregnant employees have stability from the confirmation of pregnancy until five months after childbirth.
• Union Leaders: Employees who hold leadership positions in unions have stability from the registration of the candidacy until one year after the end of the mandate.
• Work Accident: Employees who suffered a work accident have 12 months of stability after returning to work.
• CIPA (Internal Commission for Accident Prevention) Members: Elected CIPA members have stability from the registration of the candidacy until one year after the end of the mandate.

Points of Attention Before or During the Dismissal Process

Before proceeding with the dismissal, check the collective agreements of the employee’s category to identify possible protections and specific rights.

• Verify that there are no legal restrictions that prevent the dismissal.
• Pay attention to the legal deadlines for paying termination payments and communicating with the competent authorities.
• Verify all calculations of termination payments to avoid errors that may generate labor liabilities.
• Ensure that all documents are correct and signed to avoid problems with approval.

Conclusion

In summary, dismissal without cause is a process that involves several steps and requires attention to detail to ensure that employee rights are respected and that the company fulfills all its legal obligations. Dismissal is a delicate moment, so it is essential that the company handles the process with sensitivity and professionalism.