O Severance Indemnity Fund (FGTS) was created in the 1960s to financially protect employees fired without cause. Currently, the fund is used mainly to finance their own home, in addition to helping workers who have lost their jobs.
The FGTS is NOT deducted from the worker's salary, the amount is paid by the employer through Caixa Econômica Federal accounts that are linked to the employment contract. The deposit of values is made at the beginning of each month, and the delay generates a fine for the employer.
The worker can have more than one account linked to the FGTS, since each employment contract generates one for deposit. In this way, it is possible to monitor the movement coming from different sources of income in the same place.
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![FGTS is a guarantee of protection for workers fired without just cause. [1]](/f/5f596ea1512d579e5e754e0d5c5e1889.jpg)
How did the FGTS come about?
The FGTS was created in 1966 in the Military dictatorship, to guarantee financial security to the worker fired without just cause. the bottom
emerged as an alternative to ten-year stability provided for in the Consolidation of Labor Laws (CLT), a rule extinguished in 1988.Until the creation of the FGTS, workers who reached 10 years of work, by the CLT, could only be dismissed for just cause (ten-year stability). Thereby, many employees were laid off before the 10-year contract.
Bosses who fired their employees before 10 years of tenure would have to pay a indemnity for the working time dedicated to the company. Each year worked was equivalent to one month's salary (about 8% of all income as an employee). This generated large one-time costs for employers.
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To give the employee financial support in case of dismissal before 10 years of work, in addition to reducing employers' expenses with terminations, the FGTS was created in 1966 and entered into force in 1967. The employee now has the right to opt for the Guarantee Fund (8% monthly deposit in your account and 40% fine in case of unfair dismissal) or remain stable decennial.
With the validity of the Federal Constitution of 1988, ten-year stability and indemnity per year of work no longer exist. Workers started to be supported exclusively by the FGTS. For the employer, the impact of contract terminations is now smaller, the fine is no longer applied due to length of service and is now calculated at 40% on the fund's account balance. The 8% monthly salary started to serve as “savings” for the indemnity.
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Who is entitled to the FGTS?
The FGTS deposit became mandatory for signed contracts from the Federal Constitution of 1988.
You are entitled to FGTS:
Brazilian workers who have a formal employment contract, according to the Consolidation of Labor Laws (CLT);
Domestic workers;
Temporary workers;
Workers with an intermittent contract (valid from 2017);
Individual workers;
Safreros (rural workers who work only during the harvest period);
Professional athletes.
What is the FGTS value?
The employer must deposit the equivalent of 8% of wage of the employee at the beginning of each month. However, there are some cases with different values:
11.2% for domestic workers (8% monthly deposit and 3.2% in early termination payment);
Only 2% for young apprentices.
Does FGTS yield anything?
Yes. Despite being considered a small amount, there is a monthly monetary update every 10th. There is also an increase in interest of 3% per year.
The FGTS yield and its obligation have different points of view. Liberal groups in the economy advocate the end of mandatory payment, using as justification the low profitability of the balance (below direct treasury and even savings).
Managers, governments and other individuals, on the other hand, defend the maintenance of the FGTS. The obligation to pay and the impossibility of withdrawing the balance at any time, thus forcing the employee to have savings, are justified by the lack of financial control and planning on the part of the population.
When can you withdraw the FGTS?
The FGTS cannot be withdrawn at any time. There are some specific situations for withdrawing or using money accumulated in the background.
Dismissal without cause;
Termination of contract for a fixed period;
Contract termination agreement between employer and employee: in which case the withdrawal of only 80% of the balance is allowed;
Retirement;
Financing/purchase of own home: purchase of new or used property, construction, settlement or repayment of debt that is linked to the housing finance contract;
Age 70 years or older;
Serious illnesses like çancer or Theids;
Closing of the place of employment;
Worker's death;
For the acquisition of orthosis and/or prosthesis not related to the surgical act and listed in the Table of Orthosis, Prosthesis and Auxiliary Means of Mobility (OPM), of the Health Unic System (SUS).
Urgent personal need arising from a natural disaster that has affected the worker's area of residence;
In an emergency situation or in a state of public calamity recognized by an ordinance of the Federal Government.
birthday withdrawal
The birthday draft is the modality that allows the worker withdraw part of the FGTS balance always in the month of your birthday. Membership is NOT mandatory, therefore, it must be requested on Caixa's website or through the FGTS application.
When opting for the birthday withdrawal, the worker will no longer enjoy the sthat-rsplit (withdraw the full amount when being fired without just cause).
The worker can choose to return to withdrawal withdrawal at any time. However, the modality is valid for termination purposes only in the 25th month after the employee's request.
![Value of the portion of the withdrawal-birthday changes according to the worker's balance. [2]](/f/b15b6998f489f66ee79cd06a8d679f14.jpg)
Emergency withdrawal
The emergency withdrawal was a withdrawal modality released by the Federal Government because of theCovid-19 pandemic. As it is exceptional, its validity was only effective in 2020, a period in which each worker had the opportunity to withdraw up to R$1,045 once, according to the calendar established by Caixa.
Where and how to withdraw the FGTS?
Withdrawals of up to R$1,500 can be made at:
lottery houses;
correspondents Box Here;
ATMs;
in the self-service rooms for those who have a Citizen Card and password.
Caixa's branches, on the other hand, allow withdrawals of any amount.
Another possibility is the digital loot, in operation since February 2020. The worker accesses the FGTS application, views their accounts and balances, and requests the withdrawal. the user must indicate one Bank account from Caixa or any agency of your choice.. There is no transaction cost, and the amount is available within five business days.
In case of contract termination, the employer contacts Caixa through the Social Connectivity channel and informs the situation. The money is made available to the worker within five working days.
In other cases, the worker (or his representative) must seek the Caixa branch with the documentation described on this link to request the withdrawal.
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What is the FGTS fine?
In addition to the possibility of withdrawal in case of unfair dismissal, the employer must pay a termination fine of 40% on the account balance.
Even if part of the balance is withdrawn by the worker in cases such as birthday withdrawal, emergency withdrawal or real estate financing, for example, the 40% fine will be calculated on the total amount deposited during the contract with the company, not just on what was left in the account after using the cash.
How to consult the FGTS?
The worker can check his FGTS balance and movements through the Caixa Econômica Federal website. It is necessary to register with the PIS/PASEP number.
It is possible to manage your FGTS accounts in the free background app. The app can be downloaded from the iOS and Android system app stores. To use it, you will need to be registered on Caixa's website.
Use of FGTS by the government
The FGTS resources are used by the Federal Government, through the FI-FGTS, an investment fund managed by Caixa Econômica Federal, to encourage investments in the areas of health, housing, infrastructure and sanitation.
But don't worry! You will be able to withdraw your FGTS balance whenever you are in one of the situations where withdrawal is allowed.
These are programs promoted by the FGTS:
Sanitation for All: promotion of improvements in the quality of life of urban and rural populations through investments in basic sanitation, in an integrated manner with other sectorial policies.
Individual Letter of Credit (CCI): access to housing by granting financing to individuals.
Associative Letter of Credit: financing for individuals, contracted in an associative manner, for housing construction, production of urbanized lots, urban rehabilitation or purchase of construction materials.
FGTS-Health: credit program aimed at philanthropic and non-profit hospital entities that participate, in a complementary way, in the SUS.
Pro-housing: line of credit for people with a monthly family income of up to three minimum wages, with the intermediation of financing for states, municipalities or the Federal District, directly or indirectly.
Pro-Shareholder: credit line for workers with a FGTS linked account for the purchase of their own house, in compliance with the criteria for using the fund's balance.
Construction Material Financing (FIMAC): financing aimed at the purchase of construction materials for residential properties.
Pro-Transport: investments in urban mobility (prioritizing public transport).
Pro-Cities: provide states and municipalities with conditions to reformulate and implement urban development policies.
Image credits
[1] Antonio Salaverry / Shutterstock
[2] Federal Savings Bank
By Lorraine Vilela
Journalist
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