The new Labor Law in Brazil no. 13.467 / 11,
in effect since November of 2017, provides for the termination of employment contract by mutual agreement between employee and employer.
This new modality of contractual termination allows the employer to reduce costs, without the harming the employee, given the reciprocity of the agreement.
The rules for the legal termination agreement are set forth in Article 484-A of the CLT, which describes the obligations of the company and the rights of the employee. The most noteworthy are the following:
- If the employee is entitled to a 30 days’ notice, he will receive 15 days on termination;
- The company will pay 20% of the FGTS fine;
- The others labor benefits (days worked, 13th salary and expired / proportional vacations) will be paid in full.
- The employee may withdraw up to 80% of his FGTS, the other 20% will remain with the Bank.
- The employee will not receive Unemployment Benefit.
The termination of the contract by common agreement will occur when the interest is mutual, so that in no case can be imposed on any of the parties.
In the section relating to the rules of payment and formalization, the provisions of the other modalities of termination of the employment contract must be applied. The compensation must be paid within 10 days following the date of termination of the contract. In addition, the agreement between employee and employer must be formalized in a handwritten document by the employee and the company must make the entries in the “Employee’s Workbook” (document containing the working life of the worker) within the period established by law.
The aim of the new law was to prevent the simulation of unlawful dismissals, an illegal practice generally adopted by companies, as an “informal” agreement between the employee and the employer, which provides legal certainty to the employer, avoiding future labor procedures.