Aviso prévio and dismissal in Brazil: notice, the 40% FGTS fine and the final settlement

An employer in Brazil may end a CLT contract without giving a reason, but it pays for the privilege: a notice period that grows with service, a fine of 40% on everything deposited into the employee’s FGTS account, and a final settlement of accrued pay. The dismissal itself is simple; the bill is what needs planning.

Three blocks make up that bill. The aviso prévio (notice) lasts at least 30 days and can stretch to 90 for long service. The multa de 40% do FGTS is calculated on the deposits made over the whole contract. The verbas rescisórias (termination payments) settle salary to date, the proportional 13º salário and holiday entitlement, and must be paid within 10 days.

For a company used to at-will employment, the useful habit is to treat these costs as a liability that builds from the first month, not as a one-off event. Every salary payment adds to the FGTS base, and every anniversary adds three days of notice.

Currency is shown in the Brazilian style, where R$ 21.000,00 is twenty-one thousand reais, and every figure applies to 2026.

Aviso prévio is 30 days for an employee with up to one year of service, and three more for every full year worked, with the extra days stopping at 60, which puts the ceiling at 90. The scale comes from Lei 12.506/2011, which extended the 30-day base in CLT art. 487.

• Under one year of service: 30 days.
• Four completed years: 30 + 12 = 42 days.
• Ten completed years: 30 + 30 = 60 days.
• Twenty completed years or more: 90 days, the ceiling.

Only completed years add days. An employee three months short of their fourth anniversary has three completed years and 39 days of notice, so the timing of an exit can move the figure by a few days of salary.

Long-serving staff therefore carry up to three months of notice, which becomes a real cost when an employer restructures a team built up over a decade. The statute is short and worth reading in the original on the Planalto portal.

Notice can be worked (trabalhado) or settled in the final payments (indenizado), and the practical rules on each differ. Confirm with the employing company which approach it will use, and how the long-service days are handled, before an exit date is fixed.

Lei 8.036/1990 art. 18 makes the employer pay, when it dismisses without cause, a sum equal to 40% of every FGTS deposit over the life of the contract. Where a court finds both sides at fault (culpa recíproca) or the contract ends through force majeure, the fine is 20%.

The base grows every month, because the employer deposits 8% of each payment into the employee’s FGTS account, including the 13º salário and holiday pay with its one-third bonus. For a salary of R$ 15.000,00, that is R$ 16.000,00 of deposits a year on the pattern used in our São Paulo cost example.

The fine is paid for the employee’s benefit, over and above the deposits already in their account. It is a cost that does not appear in any monthly payroll, so it is easy to miss in a budget until the day a contract ends. The FGTS statute is available on the Planalto portal.

A dismissal for cause (justa causa) does not trigger the 40% fine, since the statute attaches it to dismissal without cause. That difference is one reason employers are tempted to allege cause, and one reason employees challenge it.

A simple way to budget for the fine is to accrue it monthly. Forty per cent of an 8% deposit equals 3.2% of pay, so on R$ 200.000,00 of annual gross pay the exposure builds by R$ 6.400,00 a year. Holding that provision spreads the cost of a future exit across the years of employment instead of landing it in a single month.

Most dismissals in Brazil are sem justa causa (without cause), open to any employer that pays the statutory amounts. Dismissal por justa causa (for cause) needs a reason that appears on the closed list in CLT art. 482, while a consensual termination under art. 484-A sits between the two.

Justa causa is serious and hard to sustain. The employer has to show conduct that fits one of the art. 482 grounds, and a labour court can review the decision if the employee challenges it. The reasoning and the evidence therefore need to be solid, and reviewed with a Brazilian labour lawyer, before anything is put in writing.

The consensual route is the acordo of CLT art. 484-A. Both parties agree to end the contract; the employer pays half the notice and a 20% FGTS fine instead of 40%, the worker can take out 80% of the money in the FGTS account, and gives up access to unemployment insurance (seguro-desemprego). It suits an exit both sides want, and should never be pressed on an employee who would prefer a dismissal.

Some employees cannot be dismissed without cause at particular moments. A further protection starts on 1 January 2027 under Lei 15.371/2026: no dismissal is allowed from the first day of paternity leave until a month after it ends; other protected situations also exist, so check the employee’s status with the employing company before any decision.

The final settlement is due no more than 10 days after the contract ends (CLT art. 477 §6), and paying late triggers a separate penalty under §8. It gathers every amount owed to the employee that is still unpaid.

• Salary for the days worked in the final month.
• A pro rata share of this year’s 13º salário.
• Any accrued férias not yet taken, plus proportional férias for the current period, each with the one-third bonus.
• Notice pay, where the period is not worked.
• The 40% FGTS fine on a no-cause dismissal.

The termination is reported through eSocial as event S-2299, the same system that carried the employee’s admission and monthly pay. Each item in the settlement has its own tax and contribution treatment, which the payroll team applies when it prepares the termination statement.

Holiday entitlement is often the largest variable. Férias are earned over each 12-month acquisition period under CLT art. 130, so an employee who has built up a full period without taking it leaves with 30 days of pay plus the bonus, before any proportional period is added. At R$ 15.000,00 a month, one full unused period is worth R$ 20.000,00 including the bonus.

For an employee in São Paulo on R$ 15.000,00 a month, dismissed without cause after four completed years, notice and the FGTS fine alone come to about R$ 46.600,00, before the final-month salary, proportional 13º and holiday balances.

The assumptions: salary unchanged for all four years; each year included twelve salaries, the 13º salário and a full month of leave paid with the one-third bonus, as in our São Paulo cost example; FGTS deposited at 8% on all of it; interest credited to the FGTS account ignored.

• Notice: 30 days plus 3 for each of four completed years gives 42 days, which at R$ 500,00 a day (R$ 15.000,00 divided by 30) is R$ 21.000,00.
• FGTS fine: deposits of R$ 16.000,00 a year for four years total R$ 64.000,00; 40% of that is R$ 25.600,00.
• Final-month salary, proportional 13º and férias: these depend on the exact exit date and leave record, so they are calculated at the time.

Service length changes the picture quickly. On the same assumptions, after ten completed years the notice would be 60 days, R$ 30.000,00, and the fine would be 40% of R$ 160.000,00 of deposits, R$ 64.000,00, for a combined R$ 94.000,00.

If the same employee also had a full holiday period earned and not taken, the settlement would add R$ 20.000,00 for those 30 days plus the one-third bonus, taking the identifiable total to about R$ 66.600,00 before the final-month items.

A consensual termination under art. 484-A would halve the notice to R$ 10.500,00 and the fine to R$ 12.800,00 on the same facts. The comparison with countries where employment ends at will is set out in our article on at-will versus CLT dismissal rules.

The employee has two years from the end of the contract to bring a claim in the Justiça do Trabalho, and the claim can reach back five years (CF art. 7º, XXIX). A clean, well-documented exit is the best way to keep that window quiet.

Two further rules affect what happens next. Lei 6.019/1974 blocks a quick return as a contractor: for 18 months after dismissal, the former employee cannot serve the same business through a company that provides services (arts. 5-C and 5-D). The FGTS balance and the 40% fine also go to the employee, not back to the business.

When the hire was made through Employer of Record Brazil, the paperwork falls to us as legal employer: we serve the notice, calculate the rescisão, report the S-2299 event and pay the settlement within the deadline. You make the business decision, share the reasons and the timeline, and fund the final invoice. The whole lifecycle, from admission to exit, is described in CLT onboarding through an EOR, and the invoice structure is on our pricing page.

Keep a written record of the reasons for the decision, the performance history and any earlier warnings, even for a no-cause dismissal. None of it is needed to end the contract, but it is the material you will want if the employee files a claim within the two-year window.

Give us as much notice as you can. A decision shared a few weeks ahead leaves time to check protected status, agree whether notice is worked and prepare the settlement figures before the conversation with the employee.