The Severance Indemnity Fund, better known as FGTS, is a way of helping the formal worker if he becomes unemployed.
In this post you will find out everything about the Severance Indemnity Fund, how it works and mainly: who is entitled and what needs to be done to withdraw it.
What this article covers:
What is the Severance Indemnity Fund?
As the name suggests, the FGTS is a guarantee, one of the main benefits of a formal worker. You know that percentage discounted every month from your paycheck? Well, it comes back to you through the Severance Indemnity Fund, or rather your reserve fund.
Although you don’t have the FGTS amount in hand every month, you don’t have to worry, know that it is being saved for the right time.
Have there been changes in the FGTS with a recent labor reform?
Yes, the main one was that now the worker and employer have the possibility of a mutually agreed dismissal, which was not possible before.
In the new rule, if the worker resigned or was dismissed with just cause, he lost the right to a 40% fine, now entering an agreement, the worker receives a 20% fine and is entitled to withdraw 80% of the total balance of his FGTS , with this option, the right to unemployment insurance is lost.
Who is entitled to the Severance Indemnity Fund?
The Severance Indemnity Fund is a right of the formal worker (CLT), rural, domestic and also of professional athletes.
What the value?
The value of the FGTS is based on the worker’s gross income and corresponds to installments of 8% on top of this income, for this reason, the value of the Severance Indemnity Fund is variable.
Let’s say you receive a minimum wage as income, in the amount of BRL 1,212.00 in 2022, your monthly FGTS fee will be BRL 96.96. The rule only changes for Young Apprentice contracts, and from 8% it becomes 2%.
How should FGTS deposits be made?
FGTS deposits are made monthly, until the seventh day of each month and deducted directly from the worker’s paycheck, that is, it is the company that makes the deposit directly to the employee’s Severance Indemnity Fund account.
If the 7th is not a business day, the deposit must be made in advance.
What is a FGTS fine?
Also known as a termination fine, the FGTS fine is equivalent to 40% of the balance deposited to the worker by a company, this fine is only paid when the employee is terminated without just cause within 10 days of dismissal.
This value does not change even if the worker has made withdrawals during his stay at the company.
What are inactive FGTS accounts?
The FGTS accounts become inactive when the contract with them ends, for example, if a worker “X” receives the account of company “Y” and is fired or makes some change of account, then the account of company “Y” ” becomes inactive, so when a new employment relationship is created, a new account is created, “Z” and as it is current, it is receiving deposits, it is the active account.
What to do if you have money in an inactive account?
If your account remains inactive for 3 years without deposits, you can withdraw the amount. But, there are already other forms of loot such as birthday loot and extraordinary loot.
How can the Employee Severance Indemnity Fund balance be selected?
The main way to keep track of your Employee Severance Indemnity Fund balance is through the FGTS app available for Android and IOS devices, it is also possible to activate deposit SMS.
When can the FGTS be withdrawn?
The FGTS balance can be withdrawn in some situations such as:
- Dismissal for just cause;
- Purchase or financing of a property;
- Extinction of the company, retirement;
- Death from work;
- Age over 70 years;
- Birthday withdrawal.
Since 2020, the birthday withdrawal has become one of the most popular forms of withdrawal from the FGTS, where workers can withdraw 50% of their account balance in the month of their birthday (release dates are announced annually by a calendar). But, by opting for the birthday withdrawal, the worker loses the right to full withdrawal in the event of dismissal.
Whichever method of withdrawal you prefer, what does not change is that the Severance Indemnity Fund is your right and you need to understand how it works in order to use it.