Brazilian employment contract termination

How to break a contract of employment in Brazil ?

Terminating an employment contract in Brazil is quite complicated even when the initiative comes from the employee, in part because of the local bureaucracy. For many entrepreneurs, the lack of information ends up being the main reason for the difficulties at that time. 

Among the various types of employment contract termination, resignation is one of the most common. 

In this article, we describe the main types of contract termination existing in Brazil, intending to help you finding the ones right for you.

As an entrepreneur willing to break a contract with one of your employee, you should ask for help from a professional like Europartner to avoid mistakes and future legal demands arising from contractual inconsistencies. The calculation of termination of employment must also be done by a specialist. Feel free to contact us for further information.

10 types of employment contract termination in Brazil

There are at least 10 different types of employment contract termination. They usually vary according to the type of bond established between the employer and the employee. But they also differ with respect to the disruption initiative : the company fires or the employee resigns. 

Below, we list the main types of termination and deadlines for employers to pay legal amounts, also highlighting the rights and duties of each party.

Deadline for payment of resolutionary amounts 

Regardless of the type of termination, the deadline for payment of amounts due by the company is always the same : up to the first business day after termination or up to the tenth day, from the notice of dismissal.

Main types of termination  in Brazil

Dismissal without cause

When the company decides to dismiss the employee for containment of expenses or for being dissatisfied with his results, we talk about “dismissal without cause”. In this case, the decision comes from the company, without legal motivation or breach of contract generated by the employee. Thus, all workers’ rights such as overdue vacation, proportional vacation, 13th salary, notice, FGTS and termination penalty, must be paid

Dismissal with just cause

The Dismissal with just cause occurs when the employee is fired for some serious conduct that violates the contract or the laws in force in the country. In this case, the dismissed employee is not entitled to any severance pay or unemployment insurance. However, employers should be aware of the fact that they need to get concrete and clear evidence of the allegations presented to justify dismissal. Otherwise, the worker can go to court and get the right to the funds and still sue the company.

Indirect termination

This termination occurs when the employer does not comply with the contract. In this case, the employee has the right to resign with the maintenance of all the rights he would have had if he had been dismissed without just cause. Please notice that its legal recognition depends on fitting in at least one of the situations listed by article 483 of the CLT (https://www.planalto.gov.br/ccivil_03/Decreto-lei/Del5452compilado.htm). This type of disruption has already come to be known as “just employer’s cause”.

Reciprocal guilt

The Reciprocal guilt happens when both parties are motivating the breach of contract. The contribution of both parties, however, must occur simultaneously. Otherwise, termination can be dismissed with just cause (when the employee breaks the contract) or indirectly (when the employer is at fault). Once the reciprocal guilt is proven, the employee is entitled to only half of the sums owed to him. Taken to court, cases of this type may vary with respect to the payment of the FGTS fine. There are records of judges who ordered payment of only half the amount and others who waived payment.

In addition to these, other types can also be cited, such as “Termination of a fixed-term contract”, “Termination of a fixed-term contract”, “Early termination of a fixed-term contract”, “Extinction of the contract due to the employee’s death”, “ Extinction of the contract by closing the company ”, among others.

If you need further information or support with your brazilian terminating contract procedure, feel free to contact our team of experts. We’ll provide you with our expertise on the brazilian market, and be delighted to help your business grow and sustain.