Brazil Severance Pay Calculator (2026)
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Estimate what an employee receives when a Brazilian CLT contract ends. The calculator applies the rules in force in 2026 — proportional notice under Law 12,506/2011, pro-rata 13th salary and vacation with the constitutional one-third bonus, the FGTS severance penalty and the INSS and income-tax withholdings — across the four termination types recognized by Brazilian labor law.
The four ways a Brazilian employment contract ends
Brazilian severance is not a single lump sum negotiated case by case: it is a statutory package whose composition depends on who ended the contract and why. Dismissal without cause triggers the full package. Resignation removes the notice indemnity, the FGTS penalty and unemployment insurance. Dismissal for cause (justa causa) strips the package down to worked days and any untaken accrued vacation. Mutual agreement under Article 484-A, created by the 2017 labor reform, sits in between.
Employers should budget for the full package whenever a dismissal without cause is on the table, because most items are non-negotiable statutory minimums, and collective bargaining agreements can only add to them.
| Severance item | Without cause | Resignation | For cause | Mutual (484-A) |
|---|---|---|---|---|
| Salary balance (days worked) | Yes | Yes | Yes | Yes |
| Notice pay in lieu | Full | No (may be deducted) | No | 50% |
| Pro-rata 13th salary | Yes | Yes | No | Yes |
| Pro-rata vacation + 1/3 | Yes | Yes | No | Yes |
| Accrued vacation + 1/3 | Yes | Yes | Yes | Yes |
| FGTS penalty | 40% | No | No | 20% |
| FGTS withdrawal | 100% | No | No | Up to 80% |
| Unemployment insurance | Yes | No | No | No |
How each item is calculated
The salary balance is the monthly salary divided by 30 and multiplied by the days worked in the final month. Notice pay follows Law 12,506/2011: 30 days for up to one year of service, plus 3 days for each completed year, capped at 90 days. When the notice is paid in lieu rather than worked, it also extends length of service, typically adding one more twelfth of the 13th salary and of vacation.
The 13th salary accrues in twelfths: any month in which the employee worked 15 days or more counts as a full twelfth. Vacation accrues the same way over the anniversary-based accrual period and always carries the constitutional one-third bonus, so the formula is salary ÷ 12 × twelfths × 4/3. Accrued vacation that was never taken is paid as a full month plus the one-third bonus, and is owed even in a dismissal for cause.
FGTS is a severance fund into which the employer deposits 8% of gross pay every month, on top of the salary. On dismissal without cause the employer must additionally deposit a penalty of 40% of everything deposited over that contract; under a mutual agreement the penalty is 20%.
Taxes on severance: what is withheld and what is exempt
Brazilian law distinguishes remuneration from indemnity. Remuneration is taxed; indemnity is not. In practice, the salary balance and the pro-rata 13th salary are subject to INSS social security and IRRF income tax, with the 13th assessed on a separate basis at source. Notice pay in lieu, vacation pay (accrued and pro-rata) including the one-third bonus, and the FGTS penalty are all exempt from income tax.
From January 2026, Law 15,270/2025 zeroes withheld income tax on taxable monthly income up to R$5,000 and phases the relief out up to R$7,350. Because most severance packages are dominated by exempt indemnity items, the effective tax bite on a Brazilian termination payment is usually small — often only the INSS contribution on the salary balance and on the 13th salary.
Deadlines, paperwork and common pitfalls for employers
Article 477, § 6 of the CLT sets a single deadline of 10 calendar days from the end of the contract to pay all severance amounts and hand over the paperwork — the TRCT termination statement and the FGTS release code. Missing it triggers a penalty equal to one month of the employee’s pay under § 8, plus an administrative fine; recent labor-court rulings compute that penalty on all salary-nature amounts, not just base pay.
Three mistakes recur in foreign-owned operations. First, applying payroll tax to exempt indemnity items, which employees can later reclaim in court. Second, using 30 days of notice regardless of tenure, ignoring the proportional add-on. Third, framing a decided dismissal as a mutual agreement to halve the FGTS penalty — labor courts routinely void such agreements and reinstate the full without-cause package, with interest.
Frequently asked questions
Is severance pay mandatory in Brazil?
Yes. Unlike at-will employment, Brazilian severance is a set of statutory entitlements defined by the CLT. The employer cannot contract out of them, and a signed release does not waive amounts that were never paid.
How much does a dismissal without cause cost the employer?
Roughly the salary balance plus one to three months of notice pay, the pro-rata 13th salary and vacation with the one-third bonus, and a 40% penalty on the entire FGTS balance accumulated during the contract. For a long-tenured employee the FGTS penalty alone can exceed several months of salary.
What is the FGTS and why does it appear twice?
FGTS is a government-run severance fund. The employer deposits 8% of gross pay monthly into the employee’s account throughout the contract, so the balance is money already set aside. On a dismissal without cause the employer adds a 40% penalty and the employee withdraws both. The calculator shows the penalty as a severance item and the total withdrawal as a separate reference line.
Can employer and employee simply agree to terminate?
Yes, under Article 484-A of the CLT. The employee then receives half the notice indemnity and a 20% FGTS penalty, may withdraw up to 80% of the fund balance, and loses the right to unemployment insurance. The agreement must be genuinely bilateral, or a labor court may re-characterize it as a dismissal without cause.
How accurate is this estimate?
It reflects the statutory formulas and the 2026 INSS and income-tax tables, using the informed monthly salary as the base for every item. Actual figures may differ where variable pay (overtime, commissions, night or hazard premiums) must be averaged into the base, or where a collective bargaining agreement adds entitlements.
Sources
Estimate based on the Brazilian CLT, Law 12,506/2011, Article 484-A of the CLT and the 2026 INSS and income-tax tables, including the Law 15,270/2025 reduction. Simplifications: indemnified notice adds exactly one twelfth to the 13th salary and vacation; double vacation pay, averaged variable pay, alimony and benefit deductions and the Article 477 late-payment penalty are not modeled. Not legal or accounting advice.
Related calculators
Also available in Portuguese: Calculadora de Rescisão Trabalhista 2026