Fired Workers to Pay More Taxes on Amounts Received under Settlement Agreements

The change in labor legislation is contained in a law sanctioned by President Jair Bolsonaro last Friday, September 20th.

RIO DE JANEIRO, BRAZIL - Companies will no longer be able to classify amounts such as unpaid vacations, 13th month's salary and overtime as indemnities, when included in judicial or extrajudicial settlements with dismissed workers. These amounts must now be classified as remuneration, on which taxes are levied.

The new law seeks to put an end to a practice hitherto common among companies and workers, of classifying the entire amount of the settlement - which should be limited to . . .

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