How to calculate termination penalty for an employment contract?

How to calculate termination penalty for an employment contract?

Table of Contents

Every employee has a life cycle in the company and occasionally it comes to an end. When the contractor has a contract based on the CLT regime, it is important to know how to calculate the termination fine for an employment contract.

After all, there are several labor rights to be paid from contractor to contractor and these values ​​must be correct so that injustices do not occur with the professional.

For this reason, we have prepared a complete post for you to learn how to calculate a severance fine in detail, with everything that is rightfully yours at the end of an employment contract with the company!

What is the severance penalty?

The severance penalty is part of the process of dismissal of a professional when dismissed without cause (we will see the cases better below).

As a result, under the labor laws, as from the Federal Constitution / 88 and article 7, item I, the professional is entitled to a monetary indemnity that comprises a series of factors.

What are the terms of termination of the employment contract?

Nowadays, there are five types of terminations that occur in labor relations through the CLT. See which ones are below:

1. Without cause

In the case of unfair dismissal, the employer may break the employment contract without the employee having committed any serious misconduct. For example: constantly underperforming performance, which motivates management to change professionals.

We will still discuss ahead what is the employee's right in this case, but the pending funds in the case of unfair dismissal are:

  • prior notice (which may be proportional, worked or indemnified);
  • the salary balance proportional to the time worked until the dismissal takes place;
  • expired and / or proportional vacations – remembering that an additional ⅓ of the total must be added;
  • proportional thirteenth salary;
  • FGTS and also a fine in the amount of 40% of the updated FGTS balance.

The professional can also, in addition to withdraw the FGTS, apply for unemployment insurance (provided that it meets the requirements for the application).

2. With just cause

Here, there is no need to know how to calculate a severance penalty, since dismissal with just cause is motivated by a serious misconduct under the conditions explained in the Article 482 of the Consolidation of Labor Laws (CLT). Some examples:

  • quit your job for more than 30 consecutive days without any reason;
  • acts of improbity;
  • conduct incontinence or bad procedure;
  • criminal conviction of the professional (if the sentence is not suspended);
  • drunkenness in service;
  • breach of company secrecy;
  • damaging act of honor or good reputation against any person.

As a result, the dismissed person loses the right to some monies and may only have access to the salary balance and the vacation due, if he has one.

3. Resignation

When the resignation is motivated by the employee himself, he has the right to prior notice to the employer – up to 30 days, but which can be negotiated and the sums due are:

  • salary balance proportional to the time worked until the dismissal is completed;
  • expired and / or proportional vacations – remembering that an additional ⅓ of the total must be added;
  • 13th proportional salary.

4. Common agreement

More recently, the joint agreement was the result of the 2017 labor reform, and allows for a negotiation on the best conditions on the calculation of the severance fine and what is due or not, in these situations.

However, there are certain conditions that differentiate the common agreement from unfair dismissal. Are they:

  • advance notice will be due in half (in view of the indemnity requirement);
  • the FGTS fine will be 20%, not 40% as in the case of unfair dismissal;
  • only 80% of FGTS can be handled;
  • there is no right to unemployment insurance.

Now that we know all about the conditions under which the employee can be fired or take the initiative to resign, let's understand how to calculate the severance penalty!

How to calculate the severance penalty?

Knowing how to calculate the severance penalty is the next step in understanding what the type of termination in your case. After all, as we have seen, each one understands different amounts by right.

So, the idea is to do the individual calculation of each right and then add them up. Basically, this is how we do it to calculate the severance penalty.

For the sake of our example, let's consider that a dismissal without cause and without the need for joint agreement. In this situation, we will analyze the following factors, according to the topics below!

Early warning

Advance notice is an amount paid to the employee according to the agreed working time after dismissal.

For each year worked, added three days. Thus, a professional who worked for two years in the company is entitled to 36 days (3 extra days per year) of prior notice.

When unfair dismissal occurs, you only need to divide the remuneration by 30 (regardless of the length of the month in question in which the dismissal occurred) and then multiply by the total number of days of notice.

Wage balance

The salary balance is simply the values ​​for days already worked and not yet paid.

To do so, just divide your remuneration by 30 and then multiply it by the days worked.

If you have a salary of £ 2 thousand, for example, and have worked for 5 days, it is good to know how to calculate the severance fee as follows:

2,000 / 30 = 66.66 * 5 = £ 333.33


In the case of vacation, it is important to assess which periods are past due and those still pending. In general, the value of the vacation consists of the value of one month's salary with an additional ⅓ of the total.

If the professional has an expired vacation period, therefore, he is entitled to £ 2 thousand (still using the previous example) and ⅓ of that amount – which corresponds to £ 666.66.

In other words: if the professional was dismissed just after completing a year in the company, he would be entitled to receive £ 2,666.66 of vacation.

You also have proportional vacations that correspond to at least 14 days worked each month. Thus, if the employee worked for 18 months without taking a vacation, it is easy to learn how to calculate the vacation severance fee.

First, just divide the salary of £ 2 thousand by 12 (each month of the year), being: £ 166.66 per month.

Thus, the professional's right would involve:

  • overdue vacation, of £ 2 thousand;
  • another six months of proportional vacation – totaling £ 1,000;
  • the increase of ⅓, which corresponds to another £ 1,000.

In other words: this professional would be entitled to a total of £ 4 thousand vacation when calculating the severance penalty.

13th proportional salary

Like holidays, the 13º wage it must be proportional to the period worked, dividing the remuneration by 12. If he has not completed one year of service, at the time of dismissal, this benefit must be paid proportionately.

So, if the dismissal occurred during the eighth month of work at the company, we would have to divide £ 2 thousand by eight, being: £ 1,333.33 of the 13th proportional salary.

Guarantee Fund (FGTS)

For those who wish to learn how to calculate the severance penalty, the Severance Pay Fund (FGTS) is an elementary part of this equation.

The calculation can vary according to the hiring model and the employee's remuneration, but there is a standard rate of 8% of the remuneration paid monthly by the employer.

It is also the rate used in our example of a salary of £ 2 thousand to learn how to calculate the severance penalty. The employee can only withdraw this money in the case of unfair dismissal, as we have seen, or as a result of the common agreement.

In such cases, there is still 40% FGTS fine. To exemplify: let's say you have a balance of £ 2 thousand in FGTS. Then, the 40% fine would be in the amount of £ 800 added to this full amount.

Which gives a total of £ 2,800 of FGTS and the termination penalty.

What to do with the amount of the severance fine?

As you may have realized, it is not enough to know how to calculate the severance penalty, but it is important know all your labor rights.

But, in addition, we would like to invite you to take it a step further and learn the best way to manage your money. Especially, in cases of dismissal where your source of income has become compromised, at least until you have a job in the labor market.

So, take the time to check out another article of ours that points out and suggests some ideas of great value to you use your termination money wisely! Thus, you learn all about how to value and make your money earned by right.

In addition, these are the most practical means for you to learn how to calculate the severance penalty and have easy, fair and uncomplicated access to all your labor rights.

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Get to know the tool HR Consultants UKy and learn how the system that implements the on-demand payment, that is, the employees of a company can anticipate part of their wages when they need it.

This tool is changing the way employees deal with their wages and generating more job satisfaction and motivation.

HR Consultants UKy can be one of the most valued benefits for those who work at your company. Talk to an expert and learn more!



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