Vacation Pay and Termination: What Actually Goes Into the Math

How vacation pay is calculated (the constitutional third)

Under Brazil's labor code (CLT), after twelve months on the job — the "acquisition period" — an employee earns the right to 30 days of paid vacation, to be taken within the following twelve months. The number of days shrinks only with frequent unjustified absences: up to 5 absences keep all 30 days; 6 to 14 drop it to 24; 15 to 23 drop it to 18; 24 to 32 drop it to 12; beyond that, the right to vacation in that period is lost.

The amount starts from a simple constitutional rule (art. 7, XVII): on top of the regular pay for the period, the worker gets an extra one third. That bonus is the "terço constitucional," the constitutional third.

Workers with variable pay — commissions, habitual overtime, night-shift premiums — are entitled to the average of those amounts added to the base. And there is a penalty for the employer who fails to grant vacation in time: it becomes double vacation pay (art. 137). To go from the gross figure to the net one, pair the result of the Vacation Pay Calculator (Brazil) with the Net Salary Calculator.

Selling vacation days (the "abono pecuniário")

Article 143 of the CLT lets an employee convert up to one third of their vacation into cash. For someone entitled to 30 days, that means selling at most 10 days: you rest for 20 and receive the other 10 as money. The request has to be made up to 15 days before the acquisition period ends.

The detail many people miss: this cash conversion is exempt from social security and income tax. That is why selling 10 days usually yields a proportionally higher net amount than taking the whole month off.

Notice the gross is the same as taking all 30 days (R$ 4,000), but only R$ 2,666.67 lands in the tax base. Selling days is the employee's choice — the company cannot force the sale, nor refuse a request made within the deadline.

Types of termination and what each one pays

When a contract ends, the bundle of payments (the "acerto," or settlement) depends on the reason for the separation. The main scenarios are: dismissal without cause, resignation, dismissal for cause, and the mutual-agreement separation created by the 2017 labor reform (art. 484-A). The table below sums up who gets what.

Keep in mind that accrued vacation — from an acquisition period already completed but not yet taken — is always paid, with the third, in every scenario, including dismissal for cause. The Severance Pay Calculator (Brazil) assembles that settlement for each case.

Resignation vs dismissal without cause

These two are the most common, and the gap in your wallet is wide. In a dismissal without cause, it is the company that ends the contract, so it pays the full bill: notice period, the 40% FGTS penalty, release of the fund for withdrawal, and the employee still qualifies for unemployment insurance.

In a resignation, the initiative is the worker's. On top of that, the notice period now becomes the employee's obligation: if they do not work the 30 days, the company can deduct that amount from the settlement. There is no 40% penalty, no access to the deposited FGTS, and no unemployment insurance.

Two close cousins matter too. An indirect termination (art. 483) happens when the employee proves serious misconduct by the company — late wages, harassment, demands for illegal work. For payment purposes it is treated like a dismissal without cause: the worker receives everything. A mutual-agreement separation sits in between: half the notice period, a 20% FGTS penalty, withdrawal of up to 80% of the balance, but no unemployment insurance.

Notice period, FGTS penalty and salary balance

Salary balance

This pays for the days actually worked in the month of separation. The math is direct: salary ÷ 30 × days worked. Someone let go on the 10th with a R$ 3,000 salary receives R$ 3,000 ÷ 30 × 10 = R$ 1,000 as the balance.

Notice period

Since Law 12,506/2011, the notice period starts at 30 days and gains 3 days per full year of service, capped at 90 days (reached at 20 years). It can be worked or paid in lieu. When paid in lieu, it "projects" the contract end forward, and that projection increases the proportional 13th and vacation. After 2 full years, the notice is 30 + 6 = 36 days.

FGTS penalty

Every month the employer deposits 8% of the salary into a linked FGTS account. On a dismissal without cause, it also pays a 40% penalty on the entire deposited balance (the old extra 10% contribution was abolished in 2020). If, say, R$ 7,200 was deposited over the contract, the penalty is R$ 2,880 — and that amount is tax-exempt.

One caveat: the real FGTS balance is not just "8% × salary × months." It earns monetary correction plus 3% interest a year, so the figure is usually a bit higher. Add the salary balance, the notice, the 13th and the proportional vacation and you get the gross settlement; the Severance Pay Calculator (Brazil) already applies the notice projection and the deductions. Remember that payment is due within 10 days of the contract's end (art. 477).

Frequently asked questions

Is vacation pay reduced by social security and income tax?

Yes. Vacation pay, including the constitutional third, enters the INSS and income-tax base — only the days sold for cash are exempt. That is why the net amount is lower than the R$ 4,000 in the example. Use the Net Salary Calculator to estimate the deductions.

Can I sell more than 10 vacation days?

No. The legal limit for the cash conversion is one third of the period — that is, 10 days for someone entitled to 30. There is no provision to convert more than that into money.

Does someone who resigns get anything?

Yes: salary balance, proportional 13th, and accrued plus proportional vacation with the third. What is lost is the 40% penalty, the FGTS withdrawal and unemployment insurance. They must also work (or pay in lieu of) the 30-day notice.

Does a dismissal for cause leave the worker with nothing?

Not nothing, but little: salary balance and accrued vacation with the third. They lose the proportional 13th, proportional vacation, notice period, FGTS penalty and withdrawal, and unemployment insurance.

How long does the company have to pay the settlement?

Within 10 calendar days of the contract's end, under art. 477 of the CLT, regardless of the type of notice. A late payment triggers a fine equal to one of the employee's salaries.

This content is informational and uses the general rules of the CLT. Cases involving collective bargaining agreements, variable pay or specific disputes should be checked with HR, the union or a labor lawyer.