Grounds for Termination
In Brazil, employments are at will, meaning that any party may terminate the employment agreement without cause upon the mandatory prior notice and payment of the severance. It is not necessary to mention any reason for termination, except if it is a termination with cause. Termination with cause is the most severe sanction for an employee and results in the reduction of the employee’s severance entitlements. Fixed-term employment relationships may terminate exactly on the last day of such term or may end before it. If it terminates on the last day, the employee is entitled to the severance payments set forth by law.
Labour legislation in Brazil is silent on the concept of mass termination (collective dismissal). Collective dismissal does not require prior negotiation with the union. However, mass termination is still a very controversial matter in Brazilian Labour Courts and depending on the industry and number of employees involved, a prior negotiation with the union may still be recommendable.
Since employment agreements are at will, an employer can terminate an employment agreement at any time, provided that the notice period is granted. Some employees cannot be terminated without cause due to temporary job stability.
Is Severance Pay Required?
In Brazil, severance pay is mandatory, but the amount differs based on the type of termination, i.e. in case of resignation, termination by mutual agreement, without cause, and with cause in indefinite term/fixed-term agreements.
Brazilian Labour Law does not require a separation agreement. However, it may be considered good practice in the event of termination of a high-level employee/worker, who would be entitled to a special severance package beyond the severance payments determined by Brazilian Labour Law, or by the contract executed between the parties. Additionally, the separation agreement has a moral effect upon the employee/worker and is very useful to avoid claims and if he/she is satisfied with the negotiation he/she will likely not file a claim after signing the agreement.
Remedies for Employee Seeking to Challenge Wrongful Termination
There is no specific provision about wrongful termination in Brazil. However, since the Brazilian Federal Constitution prohibits any type of discrimination, if an employee evidences that his/her termination has resulted from a discriminatory act, he/she may file a lawsuit against the company claiming reinstatement and moral damage indemnification.
While there is no specific law regulating whistleblowing systems, the Brazilian Clean Company Act provides credits for companies that have implemented a compliance program. In this context, a whistleblowing channel is an important element of a compliance program. Internal policy should regulate it, establishing provisions about confidentiality, privacy and non-retaliation, among others. Principles such as the right of privacy and intimacy, the protection of image and reputation and non-discrimination rights, should be complied with when implementing a whistleblowing program.