Work Compensation Fund and Guarantee

The Decree-Law No. 115/2023, dated December 15, was published, coming into effect on January 1, 2024, amending the legal frameworks of the work compensation fund and the work compensation guarantee fund.

Due to this decree, it became mandatory only to identify the FGCT (Work Compensation Guarantee Fund) and no longer the FCT (Work Compensation Fund). However, the obligations related to FCT were suspended during the validity of the medium-term agreement for the improvement of income, salaries, and competitiveness. Consequently, the obligation to make monthly payments to the FGCT remains in effect.

The FGCT remains a mechanism designed to ensure workers’ rights to receive half of the compensation amount due upon termination of the employment contract, calculated in accordance with Article 366 of the Labor Code.

With the entry into force of the changes to the mentioned regime, it is expected that the FCT will be converted into an accounting closed fund, consisting of the overall accounts of employers to be used by them for the following purposes:

a) Support the costs and investments related to housing for workers;

b) Support other investments made by mutual agreement between employers and representative structures of workers;

c) Finance the qualification and certified training of workers;

d) Ensure workers’ rights to receive half of the compensation amount due upon termination of the employment contract, calculated in accordance with Article 366 of the Labor Code, in cases where employers have contributed to the FCT.

The balance of the FCT can be utilized by the employer from the last quarter of 2023 until December 31, 2026.