The Brazilian government recently announced plans to implement the annual withdrawal of the End-of-Service Compensation Fund (FGTS) starting in 2024. Under the new scheme, resources will be provided according to each worker's month of birth.
Currently, workers have the option to withdraw a portion of their FGTS in the month of their birthday, with access to the full fund limited to certain circumstances, such as layoffs. However, the Ministry of Labor intends to allow workers who choose to withdraw from the date of birth the possibility of withdrawing the entire balance from their accounts, instead of being limited to the end-of-service gratuity.
-Expulsion without just cause
The government is also looking to change legislation to allow full withdrawal from the fund in cases of unfair dismissal. This would put workers who choose to opt out of the date of birth on an equal footing with those who have not joined the scheme.
Future developments
The Minister of Labor and Employment, Luiz Marinho, expressed at the end of 2023 his intention to introduce a draft law with these changes by March 2024. The plan is that, if the changes are approved, they will come into force in time for the cycle of withdrawals from the 2024 FGTS.
How will the FGTS withdrawal be organised?
Funds can be withdrawn in each worker's birth month, following a specific calendar. Release dates are spread throughout the year, giving workers multiple opportunities to withdraw their funds.
These changes are an attempt to give workers more flexibility regarding access to their FGTS. However, further clarification and guidance on the process may be needed to ensure everyone is aware of their options and how the new system works.
