Brazil Pressures Companies to Make Severance Fund Payments

The Brazilian government is urging companies that have not made their required payments into employees’ Guarantee Fund for Length of Service (FGTS) accounts to fulfill their obligations.

Every month, Brazilian employers are required to contribute an amount equal to 8% of each employee’s total salary to the fund, whose contents amount to severance pay and are released when an employee is terminated without cause. But many companies are behind in these payments and 225,000 of them are listed as having FGTS debts that collectively total U.S. $8.5 billion. Brazilian officials believe the true total FGTS debt is double this.

The ...