As a new year of controversial national politics begins, Luiz Marinho, the current Minister of Labor, proposes changes to the withdrawal method for the FGTS anniversary. Since taking office, Marinho has expressed his disagreement with these facilities for workers and is now seeking to improve them rather than abolish them. His proposal, which aims to allow the withdrawal of the remaining value of the FGTS in cases of dismissal, will be sent to the Civilian Chamber of Deputies in the form of a draft law.
Although the birthday withdrawal method provides the worker with the option to partially withdraw FGTS in his or her birthday month, it also prevents him from withdrawing the entire balance in the event of unfair dismissal. Marinho seeks to solve this shortcoming with his bill allowing full recovery of FGTS in cases of dismissal. It is estimated that this proposal, if approved, could inject up to R$14 billion into the Brazilian economy.
Understanding FGTS Birthday Withdrawal
This withdrawal was implemented in 2020, during the administration of former President Jair Bolsonaro, and allows workers to withdraw a portion of the funds deposited in their FGTS account annually. The amount available for withdrawal ranges from 500 to 2,900 riyals, depending on the total balance in the account. However, when adopting this method of withdrawal, the citizen waives the possibility of withdrawing the entire amount in the event of unfair dismissal, and is only entitled to a penalty of 40% on the FGTS balance. This is precisely the issue that the Ministry of Labor wants to change.
What are the proposed changes?
The project submitted by Marinho stipulates that even workers who have chosen to withdraw by date of birth can withdraw the total balance from their FGTS account in the event of unfair dismissal. This means that, if the proposal is approved, workers who have already made a Christmas withdrawal and are subsequently dismissed will be able to recover the remaining balance that was in the fund at the time of dismissal.
An important note is that this proposal will not allow workers who have fully withdrawn after dismissal to return to the annual withdrawal method in the new employment contract. Therefore, if the law is approved, over time there will be a decline in the number of participants in the Christmas draw option.
How will this project impact the FGTS annual withdrawal forecast?
Another aspect to take into consideration is the impact of this proposal on the type of credit known as “annuity draw expectation”, which some banks offer. In this case, the worker can advance the amount he is entitled to receive over the next five years with the Christmas withdrawal, while the banks receive the installments directly from the worker’s fund. According to Marineo’s project, if a worker is fired and decides to withdraw the remaining FGTS balance, he will only be able to withdraw the difference between the amount he still owes to the bank and what he deposited in the fund.
This is a controversial topic that is sure to continue to be discussed in 2023, as Brazil advances its political and economic discussions. Everything indicates that these changes, if approved, will not come into effect until 2024.
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