International Labour Organization (ILO)

Please note that this country was last updated in 2007 profile and therefore might not
reflect the current state of the law on termination of employment. For updated
information, you are invited to consult the EPLex database.

Termination of employment legislation digest

Country profile Brazil

Updated in 2007 by Leigh Anne DeWine.

Sources of regulation | Scope of legislation | Contracts of employment | Termination of

employment | Dismissal | Notice and prior procedural safeguards | Severance pay | Avenues for
redress | Further Information

Sources of regulation
The Constitution of the Federal Republic of Brazil (FC) of 1988 is the primary source of labour law.
Chapter II, which deals with social rights, contains comprehensive provisions on the rights of workers
(art. 7), security of tenure (art. 7(1)) and protection against arbitrary dismissal.

The source of labour law on termination of employment is to be found in the Consolidation of

Labour Laws (CLL), adopted in Legislative Decree No. 5452 of 1 May 1943. It contains standards of
substantive and procedural law on termination of employment. An additional source of labour law
dealing with compensatory indemnification for termination of employment by the employer is Act
No. 8036 of 11 May 1990, which establishes the Guarantee Fund for Length of Service (see below).

The decisions of the labour courts and arbitration awards (art. 114, FC), international treaties and
case law supplement these sources of law. Case law is a subsidiary source when it is compatible with
the fundamental principles of labour law (sec. 8, CLL).

Scope of legislation
Public employees of the Federal Union, the states and counties, staff working in these administrative
bodies, and employees of parastatal administrative bodies subject to special conditions of service
which put them in the same category as public employees1, are excluded from the scope of
application of the CLL (sec. 7(c) and (d), CLL)2.

Persons employed in the banking and cinematography industries, the telephone services, musicians,
railway workers, crews of vessels of the national merchant marine and vessels engaged in river and
lake navigation, workers employed in cold storage, stevedoring and dockers services, miners,

1
In this respect, the Constitution confers the right to security of employment to public employees with at least
five years continuous service in the public sector (arts. 18 and 19 of the Transitional Provisions of the
Constitution).
2
Secs. 7(a) and (b) of the CLL have been repealed. They formerly excluded domestic workers (art. 7, FC) and
rural workers (art. 7, FC) from the scope of the CLL. These workers are now covered by the legislation.
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journalists, teachers, chemists, women workers and young persons are subject to special labour
protection rules (Part III, CLL).

Contracts of employment
An individual contract of employment is a tacit or express agreement respecting the employment
relationship (sec. 442, CLL). Such contracts may be concluded either orally or in writing, for a
specified or unspecified period. A contract for a specified period is a contract in which duration is
fixed in advance or which depends upon the performance of specified services or on the occurrence
of a particular event, the approximate date of which can be foreseen. Contracts for a specified
period are valid only if they govern services whose nature or transitional character justifies the fixing
of their duration in advance, transitional activities carried out by the undertaking, and contracts of a
probationary nature (sec. 443, CLL).

Contracts concluded on a probationary basis may not exceed 90 days (sec. 445, CLL). The first year of
a contract for an unspecified period is deemed to be a trial period and compensation for termination
of employment is not payable until it has been completed (sec. 478, CLL).

Termination of employment
The CLL does not stipulate the conditions for the termination of the employment contract (other
than at the employers initiative), but it does refer to such conditions in the provisions governing
compensation. Employment may be terminated, other than at the initiative of the employer, as
follows:

by the worker;
for reasons unrelated to the wishes of the parties3;
through the operation of law;
by mutual consent of the parties;
upon the retirement or death of the worker; and
on expiry of the contract period or completion of the task.

Termination of employment by the worker includes resignation. In this regard, the law provides that
if the worker has been employed for more than one year, the letter of resignation or the attestation
releasing the worker from the employment contract, signed by the worker, will be valid only when it
is submitted with the support of the competent trade union or presented to the competent
authority of the Ministry of Labour (sec. 477(1), CLL).

Resignation for valid reasons is also permitted and a worker is entitled to consider his or her contract
cancelled and claim the compensation due in the following cases (sec. 483, CLL)4:

3
For example, force majeure (sec. 502, CLL) and closure of the undertaking (sec. 497, CLL).
4
These circumstances coincide with indirect (constructive) dismissal, whereby the employer deliberately uses
indirect means to make the worker resign from his or her job.
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if he or she is required to perform services which are beyond his or her powers or are
prohibited by law, contrary to morality or not covered by the contract;

if he or she is treated with excessive severity by the employer or his or her superiors;

if he or she runs an obvious risk of serious injury;

if the employer fails to fulfil his or her contractual obligations;

if the employer or his or her representative commits any act detrimental to the honour and
good repute of the employee or a member of the employees family;

if the employer or his or her representative assaults the employee, except in case of
legitimate self-defence or defence of another; or

if the employer reduces the work of an employee who is paid at piece or task rates in such a
manner as to affect materially the amount of the wages earned.

In the situations envisaged by the fourth and seventh grounds above, the employee may request
cancellation of the contract and payment of the corresponding compensation, whether or not he or
she continues to work in the undertaking until the final ruling has been handed down.

In addition, the employee is entitled to suspend work or cancel the contract if he or she has to
perform any statutory duty that is incompatible with the continuation of the employment. In the
case of an individually owned undertaking, the employee is entitled to cancel the contract of
employment in the event of the death of the employer5.

Dismissal
The employment relationship may be terminated by the employer for just cause (sec. 482, CLL). The
following constitute situations sufficient to establish just cause:

dishonesty;

misconduct or bad behaviour;

habitual engagement by the employee in commercial transactions on his or her own account
or for another without his or her employers permission, if this involves competition with the
undertaking in which he or she is employed or is prejudicial to the performance of his or her
work;

a sentence passed on the employee by a criminal court without suspension of the execution
of the penalty;

idleness of the employee in the performance of his or her duties;

habitual drunkenness or drunkenness while on duty;

5
When the operations of the undertaking are wound up because of the death of the employer, the employee
may claim, depending on the circumstances, compensation based on the highest remuneration paid him or her
during the period of service or twice the normal compensation, as provided by secs. 477 and 497 of the CLL.

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disclosure of a secret of the undertaking;

breach of discipline or insubordination;

desertion of post;

any act detrimental to the honour or good repute of another which is committed during
employment, or an assault under the same conditions, except in case of legitimate self-
defence or defence of another;

any act detrimental to the honour or good repute of, or an assault against, the employer or a
superior, except in case of legitimate self-defence or defence of another; or

habitual indulgence in games of chance.

If it is established by an administrative inquiry that the employee is guilty of acts which are
detrimental to national security, such proof would also constitute valid grounds for the dismissal of
the employee.

Further, the law prescribes the following series of situations as grounds for the employer to
terminate a contract:

abusive acts committed by strikers during a strike action, depending on the nature of any
prejudice caused as regards the rights of others (art. 9(2), FC). In this sense, mere
participation in a strike action does not constitute serious misconduct, but active
participation in a strike which is recognized as illegal, or in violent or restraining acts which
impede the access of others to the workplace, is a valid reason for dismissal6;

in the case of banking employees, the persistent failure to pay debts which are lawfully due
(sec. 508, CLL); and

the unjustified refusal of the employee to obey the employers policies on occupational
safety and health and on the use of personal protective equipment against harmful
substances, supplied by the employer, which are measures taken to safeguard the health of
the worker himself or herself (sec. 158, CLL).

The Constitution also contains provisions on trade union immunity. It prohibits the dismissal of a
unionized employee, except on account of a serious offence, from the moment he or she registers as
a candidate for a leadership or representative position in the trade union and for one year thereafter
(art. 8(VIII), FC)7.

Federal employment law provisions also protect workers representatives on the Internal Accident
Prevention Commission (CIPA) may not be arbitrarily dismissed (sec. 165, CLL). This is also enshrined
in the Constitution, which prohibits arbitrary or unjustified dismissal of employees elected to the
position of a director of the CIPA, from the date of registration as a candidate until one year after
the end of his or her term of office (art. 10(IIa), FC, Transitional Provisions).

6
See Act No. 7783 of 28 June 1989, and court judgement in TRT-4.a, Reg. 4th Round, Proc. 9.016/87, 31 May
1988.
7
This is also the case for legislation relating to trade union officers and alternates from the time of registration
of their candidature up to 90 days following the expiry of their term of office.

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Similarly, the Constitution protects pregnant workers from the date the pregnancy is confirmed until
five months after confinement, and declares dismissals on the grounds of pregnancy null and void
(art. 10(IIa), FC, Transitional Provisions). Moreover, the fact that a woman marries or becomes
pregnant is not regarded as a legitimate reason for the termination of her contract of employment
(sec. 391, CLL). By the same token, a pregnant woman is entitled to terminate the contract of
employment if it is proved by a medical certificate that the work she performs is prejudicial to her
condition (sec. 394, CLL).

Security of employment is guaranteed through reinstatement to employees who, because of an

employment accident or occupational disease, were obliged to suspend the employment
relationship (Act No. 8213 of 24 July 1991).

Notice and prior procedural safeguards

Pursuant to sec. 487 of the CLL, a party who wishes to cancel the contract without lawful cause is
bound to give notice to the other party of his or her intention as follows:

eight days in advance if wages are paid weekly or at shorter intervals;

thirty days in advance if wages are paid fortnightly or monthly, or if the employees length of
service in the undertaking exceeds 12 months;

If the employer fails to give due notice, the employee is entitled to his or her wages for the period of
notice, and that period is always deemed to be included in the period of employment. If the
employee fails to give due notice, the employer is entitled to deduct the amount of wages
corresponding to the period of notice. In the case of wages paid at piece rates, the calculation for
the purposes of these two instances is to be based on the average of the wages for the last 12
months of employment.

If the contract is cancelled by the employer during the notice period, the employees normal hours
of work must be reduced by two hours a day during the period of notice, without any reduction in
wages. A worker who decides to continue working normal working hours is also allowed to be
absent from work for one to seven days depending on the case (see sec. 487(I) and (II), CLL (see
above)).

After the submission of notice, termination of the contract will take effect upon expiry of the term of
notice. However, if the party which gave notice reconsiders his or her decision before the expiry of
the term of notice, the other party is entitled to either accept or reject the withdrawal of the notice.
If the withdrawal is accepted, or if work continues to be performed after the expiry of the term of
notice, the contract continues in operation as if notice had not been given (sec. 489, CLL).

If, during the period of notice given to the employee, the employer commits any action justifying
immediate cancellation of the contract, he or she is obliged to pay the wages for the period of
notice, without prejudice to any compensation which may otherwise be due (sec. 490, CLL). An
employee who, during the period of notice, commits any action deemed by law to be a lawful
ground for the cancellation of the contract forfeits the right to wages for the remainder of the
period of notice (sec. 491, CLL).

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Severance pay
Job security provisions, in the form of severance pay, existed in Brazil well before its new 1988
Constitution. Since the early 1940s, workers with less than ten years and more than one year of
tenure were, upon dismissal, entitled to the equivalent of one monthly wage per year worked at the
firm in severance payment. Workers with more than ten years could only be dismissed for just
cause or after a severance payment of two months wages per year on the job. In 1966, Law
5107/66 established the Unemployment Guarantee Fund (FGTS), a welfare initiative intended as an
alternative to the tenure system (sec. 9, Decree No. 1382)8. It has since become compulsory. The
FGTS system required employers to deposit 8% (8.5% since September 2001) of each employees
formal monthly wage into an account managed by a state bank on behalf of the employee. Deposits
are adjusted for inflation and an annual interest rate.

Any employee unfairly dismissed under FGTS is entitled to withdraw a proportion of the FGTS
balance accumulated while he or she was at the firm. Originally fixed at 10%, the 1988 Constitution
increased the penalty amount to 40% of the balance (art. 7(I), FC). Legislation passed in 2001
increased the fine for unjustified dismissals to 50% of the FGTS balance, with the extra 10% paid by
the firm directly to the government (not the worker) (Complementary Law 110)9. This holds even
where the termination is indirect (constructive), produced by mutual fault, through force majeure,
or if the normal expiry of the contract is confirmed (including in the case of temporary workers). The
employer is obliged to pay even if the worker has not collected wages (sec. 9, Decree No. 1382) 10.
All payments are made without prejudice to any legal proceedings that may follow dismissal and
respecting the minimum limit of 60 per cent of the compensation prescribed by the CLL (sec. 14(2),
Act No. 8036).

For those workers who had acquired the right of security of tenure after ten years of service before
the adoption of the Constitution in 1988 the CLL is still applicable and prohibits dismissal except on
account of a serious offence or force majeure (sec. 492, CLL, and sec. 14, Act No. 8036 of 11 May
1990)11 , as well as providing other guarantees for security of employment prescribed by law12.

8
Decree No. 1382 of 31 January 1995, which amends the regulatory standards of the Guarantee Fund for
Length of Service (Diario Oficial, 1 February 1995).
9
Complimentary Law 110 of 06/25/2001, regulated by the Decree-law 3914 of 09/11/2001).
10
10 Decree No. 1382 of 31 January 1995, which amends the regulatory standards of the Guarantee Fund for
Length of Service (Diario Oficial, 1 February 1995).
11
Act No. 8036 of 11 May 1990 groups in one piece of legislation the regimes of the Guarantee Fund for
Length of Service and the CLL. It provides that, after 5 October 1988, all workers will have the right to an
interest-bearing account, adjusted for inflation, in which an employer makes monthly deposits of 8 per cent of
the employees wages in the previous month. Security of tenure acquired before 15 October 1988 (date on
which the Constitution was promulgated) is thereby safeguarded. It further states that the period of service of
workers who entered into contracts under the protection of the CLL before the Constitution took effect will be
compensated on the basis of the provisions of the CLL.
12
As, for example, under secs. 497 and 498 of the CLL, by virtue of which, in the event of the closing of the
undertaking, establishment, branch or agency, or of necessary downsizing, for reasons other than reasons of
force majeure, a permanent employee who is dismissed is entitled to twice the amount of compensation due
in the event of the cancellation of a contract of indeterminate duration. Note that an application for the
dismissal of a permanent employee is valid only if it is made with the cooperation of the trade union
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Non-permanent employees who have not chosen to participate in the FTGS remain governed by the
provisions of the CLL, under the following terms (secs. 477, 478 and 497, CLL, and sec. 14(1), Act No.
8036):

compensation is based on the highest remuneration which the employee has received in the
undertaking (sec. 477, CLL);

compensation for the cancellation of a contract of indeterminate duration must be equal to

one months remuneration for each year of actual service or any fraction of a year exceeding
six months;

if the wages are paid by the day, compensation is calculated on the basis of 30 days;

if the wages are paid by the hour, compensation is calculated on the basis of 240 hours a
month;

if the worker is paid by commission or entitled to a supplement, compensation is calculated

on the basis of the average amount of the commission or percentage received during the
last 12 months of employment;

if the worker is employed at piece rates or by the job, compensation is calculated on the
basis of the average time usually spent by the person concerned in the performance of his or
her task, according to the work which would be done in 30 days (sec. 478, CLL); and,

in the case of contracts for which a time limit has been fixed, if the employer dismisses the
worker without a valid reason, he or she is obliged to pay the worker, by way of
compensation, a sum equal to half the remuneration to which he or she would have been
entitled on the expiry of the contract. For the purpose of the application of the legislative
provisions, the variable or uncertain part of the wages is to be calculated in the manner
prescribed for the calculation of the compensation payable for the cancellation of a contract
of indeterminate duration (sec. 479, CLL).

Avenues for redress

Pursuant to sec. 643 of the CLL, disputes arising out of relations between employers and employees
should be settled by the labour courts. The Labour Appeal Court, regional labour courts, and the
conciliation and arbitration boards or the courts of ordinary jurisdiction have jurisdiction (sec. 644,
CLL). Recourse to the labour courts is compulsory, without exemption, except for good and sufficient
reason (sec. 645, CLL). The conciliation and arbitration boards are competent to judge and settle
(among others) disputes in which the recognition of the security of tenure of the employee is
claimed and disputes relating to compensation for the cancellation of a contract of employment
(sec. 652, CLL)13. The regional courts, on the other hand, are responsible for conducting conciliation
proceedings and handing down judgement in the last instance on appeals against decisions of the

concerned, or, if there is no union, before the competent local authority of the Ministry of Labour (secs. 498
and 500, CLL).
13
In localities which do not fall within the jurisdiction of the conciliation and arbitration boards, the judges of
ordinary jurisdiction shall be responsible for the administration of justice in labour matters (secs. 668 and 669,
CLL).

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conciliation and arbitration boards and the ordinary courts dealing with labour matters (sec.
678(1)(c), CLL).

In terms of remedies, if both parties are to blame for the act which brought about the termination of
employment, the labour court may reduce the compensation to half the amount which would
otherwise be due (sec. 484, CLL).

Further information
ILO NATLEX Brazil

National Legislation of Brazil, (Legislao Federal Brasileira),

LexUniversal: Labor Law in Brazil

Cook, Maria Lorena, Labor reform and dual transistions in Brazil and the Southern Cone, in
Latin American Politics and Society. Spring, 2002.

Gonzaga, Gustavo, Labor Turnover and Labor Legislation in Brazil, in Economia. Fall 2003.
Vol. 4, n.1.

Heckman, James, and Carmen Pags, The Cost of Job Security Regulation: Evidence from
Latin American Labor Markets, Working Paper, Inter-American Development Bank. August,
2000.

Marshall, Adriana, Labor market policies and regulations in Argentina, Brazil and Mexico:
Programmes and impacts, International Labour Organization Employment Strategy Papers.
2004.

Sabatini, Christopher, The Urgent Need for Labor Law Reform, in Journal of Democracy.
Vol. 17.4, 2006, p. 50-64.