Did you know that the exact day of an employee’s termination can significantly change the severance costs for your company?. Just one day of difference can increase the final cost by more than 8%.
The Golden Rule: The 15-Day Threshold
Brazilian labor law (CLT) establishes a crucial rule regarding days worked for calculating vacation and 13th-salary entitlements:
- Up to 14 days worked: The employee is not entitled to vacation or 13th-salary for that specific month.
- 15 days or more worked: The month is counted as a full month for these entitlements.
Practical Example: August 14th vs. August 15th
Let’s look at an employee with a BRL 10,000.00 salary, hired on January 1st and terminated in August.
- Termination on August 14th: The total severance cost (including proportional salary, 7/12 of 13th salary and vacation + 1/3, and notice period) would be BRL 28,277.72.
- Termination on August 15th: The cost increases to BRL 30,555.51 because August now counts as 8/12 for both the 13th salary and vacation.
Notice that the difference is BRL 2,277.79 due to a single day.
ConclusionProperly planning these dates helps companies reduce costs and avoid financial surprises. We specialize in accounting for foreign companies and are ready to help you navigate these regulations.