Brazil Temporarily Loosens Rules for Workers’ Severance Fund Access

Brazil has introduced an executive order easing restrictions on workers’ access to their severance fund (FGTS), which could potentially free up 12 billion reais for 12 million workers. The change allows dismissed employees to withdraw their remaining balances, reinstating rights lost with earlier withdrawal options. Payments are anticipated to commence in March.

On Friday, Brazil’s government announced an executive order that temporarily relaxes the rules surrounding disbursements from the workers’ severance fund, known as FGTS. This measure is expected to release up to 12 billion reais (approximately $2.04 billion) to around 12 million workers across the country.

A law enacted in 2019 allowed formal workers to withdraw a portion of their FGTS balance during their birthday month annually. However, those who chose this option forfeited their right to withdraw their remaining balance upon dismissal, regaining full rights only after 24 months.

Under the new policy introduced by President Luiz Inácio Lula da Silva’s administration, employees dismissed from January 2020 until the present will again have access to their remaining FGTS balances, regardless of their previous participation in the annual withdrawal scheme. The government confirmed that these payments are set to begin in March.

This change is significant for workers who had previously opted for the limited withdrawal scheme, allowing a more immediate influx of funds during a critical time for many.

In summary, Brazil’s government has relaxed withdrawal restrictions on the FGTS, facilitating access to severance funds for approximately 12 million workers who were previously constrained by the 2019 law. The initiative, effective from March, allows for immediate disbursement of funds to those dismissed since January 2020, thus addressing the financial needs of affected workers more effectively.

Original Source: money.usnews.com