Labor settlements in Brazil: how they work and what to check before accepting

*A labor settlement (acordo trabalhista) is a negotiated solution between the worker and the employer. When approved at the hearing, it has the force of an unappealable decision (CLT, art. 831, sole paragraph — the CLT is Brazil's Consolidated Labor Laws) — so it is essential to understand what you are receiving and what you are releasing before accepting.*

Quick summary

• At the hearing (in court): the judge proposes conciliation; once approved, it ends the case and cannot be appealed.
• Out of court: the employer and the worker bring a ready-made agreement to the judge, each with their own lawyer (arts. 855-B to 855-E).
• Termination by agreement (art. 484-A): something different — it ends the contract with half the notice, a 20% FGTS penalty and no unemployment insurance.
• Release: the settlement may release only the claims in the case or "the terminated employment contract" as a whole, preventing new claims.
• Taxes: INSS (social security) and income tax apply to the salary items itemized in the settlement.

Types of settlement

• Settlement at the hearing — How: proposed by the judge or the parties during the case · Effect: has the force of an unappealable decision
• Out-of-court settlement (855-B) — How: joint petition, separate lawyers, approval by the judge · Effect: release as approved by the judge
• Termination by agreement (484-A) — How: mutual agreement to end the contract · Effect: reduced amounts, no unemployment insurance — see Severance pay

What to check before accepting

1. Net amount: how much reaches your account after INSS, income tax and your lawyer's fees.
2. Installments and dates: number of installments, due dates and late-payment penalty (a penalty of 50% or 100% on the late installment is common).
3. Release: whether it covers only the claims in the case or the whole contract.
4. Obligations to act: work card termination entry, unemployment insurance forms, release of FGTS (the Severance Indemnity Fund).
5. Nature of the amounts: how the amount was split between salary and compensatory items.
6. Compare with what you would probably receive in a judgment, considering the time and risk of the case.

Frequently asked questions

Can I withdraw from the settlement after it is approved?

As a rule, no. An approved settlement has the force of an unappealable decision; it can only be undone in exceptional situations, through an action to set aside a judgment (ação rescisória).

The employer paid a settlement installment late. What now?

Inform the court in the case: generally the penalty provided in the settlement applies and enforcement of the amount begins.

Do I need a lawyer to settle?

At the hearing, not necessarily (jus postulandi). For the out-of-court settlement under art. 855-B, yes: each party with their own lawyer.

Read more in this series

• Labor Court: how it works and how to file a claim
• Severance pay: what you receive for each type of dismissal
• Labor lawyer fees: contingency, contract and loser-pays
• Ordinary appeal in labor cases: deadline, costs and how it works
• Index: complete guide to labor rights