FGTS is the acronym for Severance Indemnity Fund. It is a monthly deposit, referring to a percentage of 8% of the employee's salary, which the employer keeps obligated to deposit in a bank account in the employee's name which must be opened at Caixa Econômica Federal.
The FGTS has the objective of helping the worker, if he/she is dismissed, in any event of termination of the employment relationship, whether due to serious illnesses or even natural catastrophes. The FGTS is not deducted from the employee's salary, but an obligation of the employer.
The FGTS was instituted in 1966 and is regulated by federal law. Initially, the FGTS existed only as a form of employment guarantee, called stability, that is, when the employee completed 10 years of work in a company, he could no longer be fired, except in fair cause.
Those who are entitled to the FGTS are urban and rural workers, through the CLT (Consolidation of Labor Laws), independent workers, domestic workers. Individual or self-employed workers, that is, people who do not have an employment relationship, are not entitled to the FGTS.