Find out if your salary is included in your severance pay and learn how to proceed.

Does your salary come with your severance pay? This article will help you understand and know how to proceed when you are laid off.

The departure of an employee from a company is very common, and can be initiated by the employee or the company.

However, the termination of an employment contract still leaves workers with many doubts, since each one has different requirements to fulfill.

One of the main questions that usually arises is regarding payment amounts and whether the salary is included with the severance pay.

But this happens because if you are dismissed without just cause, you will be entitled to the salary corresponding to the notice period, whether it is worked or paid in lieu of notice.

However, the termination falls under severance pay and its payment has a different deadline.

So if you still have this question—whether the salary comes with the severance pay, the payment deadline, and how you should proceed—rest assured that we will help you.

Therefore, continue reading and understand everything about severance payments and the different situations in which they apply.

What is contract termination?

Contract termination is the formalization of the end of an employment relationship; in other words, it is the formal way to end the employee's working relationship with the company.

However, it's important to understand that there isn't just one type of termination and that each has different rules for receiving payment.

That's why there are so many questions regarding termination, such as whether the salary is included in the severance pay and whether you are entitled to benefits.

Therefore, it is through the termination process that the rights and obligations of both the employee and the company will be determined.

How does termination work, and does the salary come with it?

As mentioned above, the termination of an employment contract is basically the official end of an employment relationship.

And according to CLT (Consolidation of Labor Laws), upon leaving the company, the employee is entitled to receive severance pay.

However, this payment will depend on the type of termination the employee received.

And that's exactly why it's important for you to understand what type of dismissal you're going through, the payment schedule for your salary, whether it comes with the severance pay, and the dates for the formal approval process.

But the most important point for you to be able to calculate your severance pay is to know exactly what type of dismissal you are going through.

And to help you with that, we're going to list the most common forms of dismissal under labor laws.

This way you can identify and know exactly how to proceed according to your termination and whether your salary will be included.

So check out the list below and discover what variations exist when it comes to termination.

Termination due to dismissal without just cause

Termination without just cause is very common in companies, and it occurs when an employee is dismissed without a serious reason.

In this situation, the employee is entitled to receive a severance payment, since there is no reason for the termination of the employment contract.

Therefore, the law understands that the employee will need assistance to support themselves while they look for a new job.

In this case you should receive:

• Salary balance;
• Accrued vacation time, if any, and accrued vacation time plus one-third;
• Proportional 13th salary;
• Whether the notice period is paid in lieu of working or worked will depend on what was agreed upon between the company and the employee.
• Termination penalty, which is calculated using 40% on the amount deposited in your FGTS (Brazilian severance fund) during your employment with the company.

Therefore, when working the notice period, the salary may not always be paid along with the severance pay, but rather at the end of the notice period, like a normal month of work.

Termination of employment due to dismissal for cause

Dismissal for just cause occurs when an employee is terminated from the company for committing a serious offense.

These offenses can range from workplace misconduct and excessive unjustified absences to harassment, among other reasons stipulated by law.

Therefore, in this case, the employee will lose all rights to the benefits they would have in the case of termination without just cause.

In the case of dismissal for just cause, the employee will receive:

• Salary balance;
• Accrued vacation time (if any) and the one-third bonus if you have already completed 12 months of work.

Termination due to resignation at the employee's request.

There are also cases where the employee no longer wishes to remain with the company, and in that case, they can request to leave the company.

This can happen due to dissatisfaction with the company you work for or even because you've received a new job offer.

And if there is no serious reason that necessitates constructive dismissal, the employee will not be entitled to their FGTS (Brazilian severance fund), but will receive:

• The salary balance;
• Proportional 13th salary;
• Accrued vacation time, if any, and accrued vacation time plus one-third extra pay.

Furthermore, in this case, the employee will be required to work the 30-day notice period.

However, if the employee chooses not to comply, they will have to pay a fine to the company for not fulfilling the notice period.

Termination by mutual agreement

For a long time, this type of dismissal was practiced illegally, but it was very common among companies and employees.

However, with the labor reform, termination by mutual agreement has become legal since 2017.

Also known as consensual termination, this type of termination occurs when both parties reach an agreement and consent to the employee's dismissal.

In this case, the employee will be entitled to receive:

• Salary balance;
• Accrued vacation time (if any) and accrued vacation time plus one-third;
• Proportional 13th salary;
• Half the value of the worked or compensated notice period;
• Termination penalty of 20% on the total amount deposited in the FGTS (Brazilian severance fund);
• Withdrawal of up to 80% from FGTS.

The salary comes with the indirect termination payment.

Another, less common, type of termination is... indirect termination, or "dismissal by the boss".

In this case, you can think of it as a dismissal for cause, but in reverse.

Therefore, this happens when the company commits a serious offense and fails to fulfill its obligations to the employee.

For example, failing to pay wages, committing harassment, failing to deposit FGTS (Brazilian severance pay fund), among others.

In this case, the termination must be done through the courts, where the employee must prove the company's alleged misconduct.

In addition to severance pay for a dismissal without just cause, the employee may also be entitled to compensation for moral damages.

Does the salary come with the severance pay?

The severance pay must be paid within 10 calendar days from the date the termination agreement is signed.

The company also has the same deadline to pay the amounts owed, and this may include prorated salary.

In other words, the salary may be included with the severance pay. But pay attention to the payment deadlines and amounts.

Given that

I am a member of the O Administrador team and I produce content about career, personal finance, financial education, productivity, and professional development. My goal is to share clear and practical information to help readers with their day-to-day decisions.

April 11, 2023