Any employee working in Brazil is likely familiar with the acronym FGTS, though many may not fully understand what it entails. The Fundo de Garantia do Tempo de Serviço (FGTS) was established by Brazilian law in 1966 to provide employees with a personal savings reserve.
Additionally, the fund plays a critical role in financing low-income housing programs, urbanization projects, and infrastructure development.
How Does the FGTS Work?
The FGTS is both a right for employees and a legal obligation for employers. All employees covered by the Consolidação das Leis do Trabalho (CLT), including temporary workers, freelancers, rural workers, athletes, and even non-employee directors (CEOs), must be registered with the FGTS. Employers are responsible for opening a personal FGTS account at Caixa Econômica Federal in the name of the employee.
Monthly Deposits and When Employees Can Withdraw FGTS
Employers must deposit 8% of the employee's monthly salary into the FGTS account by the 7th day of each month. However, employees can only withdraw the funds in specific circumstances outlined by law.
Here are the main situations in which employees can access their FGTS:
Dismissal without cause
End of a fixed-term employment contract
Company closure
Retirement
Employee's death
Personal emergencies, such as natural disasters affecting the employee's home
Serious illness, such as cancer or AIDS, affecting the employee or their dependents
Purchasing a home
After three years of inactivity in the FGTS account, such as when an employee resigns and does not withdraw the funds
when the worker reaches 70 years of age or older
If the employee has been out of the FGTS system for at least 3 years, such as expatriates who have left Brazil and are no longer part of the FGTS scheme.
Why Is the FGTS Important?
The FGTS is not only a forced savings plan but also a financial safety net in times of need, such as during sudden unemployment or medical emergencies. Furthermore, the FGTS helps fund significant social projects in Brazil, making it a benefit not only for employees but for society as a whole.
The obligation to pay FGTS applies to all employers, even if the employee is a foreigner. From the moment the employee is hired in Brazil to work, they will be entitled to FGTS
How to Check Your FGTS Balance
Employees can easily check their FGTS balance through the official Caixa Econômica Federal app, available for smartphones, or by visiting the Caixa website. It's essential to regularly monitor these deposits to ensure that the employer is fulfilling their obligations.
New Update on FGTS Withdrawals
The FGTS can now be withdrawn using the official Caixa Econômica Federal app. However, the funds can only be transferred to a bank account in Brazil. If the employee no longer has a bank account in Brazil, they will need the assistance of a trusted person with a Brazilian account to receive the funds on their behalf.
Conclusion
The FGTS is an important right for all Brazilian workers, offering financial assistance during challenging times. Understanding how and when you can access these funds can make all the difference. Stay informed about your rights, and regularly check the deposits made by your employer to ensure everything is in order.
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