FGTS: understand what is at stake in the billionaire review – 11/08/2023 – Market

The review of the FGTS (Service Time Guarantee Fund) may change the correction applied to workers’ money in accounts linked to the fund managed by Caixa Econômica Federal.

The case is being debated by the STF (Supreme Federal Court), and there is no certainty as to when a final decision will be made on it.

As it is a billion-dollar action — estimated to cost R$660 billion to public coffers — the issue has been treated with caution by court ministers, the federal government and trade union centrals.

The FGTS has a correction of 3% per year plus TR (Referential Rate), which has a return close to zero.

The request in ADI (Direct Action of Unconstitutionality) 5,090 is for the TR to be considered unconstitutional and in its place an inflation index to be defined, which can be IPCA-E (Extended National Consumer Price Index – Special) or INPC (National Consumer Price Index).

The centers want to postpone the decision to try to reach an agreement with the government and receive arrears from the action. This is because the vote of minister Luís Roberto Barroso, rapporteur, is in favor of paying the FGTS at least the income from savings, currently at 6.17% per year plus TR, but without this new index being applied retroactively.

Understand what is at stake in the FGTS and what could happen in the STF

WHAT IS THE FGTS REVIEW?

It is a legal action in which the constitutionality of the correction of the money deposited in the Guarantee Fund is questioned. Today, the FGTS return is 3% per year plus the TR (Reference Rate), which yields close to zero.

As a result, the updating of money is below inflation, failing to replace the worker’s losses. The request is for the TR to be considered unconstitutional and an inflation index to be used in the FGTS.

Since 1999, when there was a change in the TR calculation, workers have accumulated losses. The review would correct these losses, which reached 88.3% by 2013.

WHO HAS THE RIGHT?

All workers with money in the fund from 1999 onwards may be entitled to correction if the Supreme Court understands that the index used was wrong and caused losses. According to Caixa, there are 117 million Guarantee Fund accounts, both active and inactive.

Experts estimate that at least 70 million workers could benefit. It is possible for a worker to have more than one account, opened for each new job with a formal contract.

If there is unconstitutionality and the correction index is changed, the expectation is that everyone will have their deposits corrected according to the new rule from then on. To define issues such as the payment of amounts from previous years, for example, the STF will have to modulate the topic.

In modulation, you can decide that Caixa must pay only to those who filed a lawsuit until 2014 or until the date on which the trial was scheduled or even only to those who are part of collective actions. However, it is necessary to wait for what the Supreme Court will decide and how it will regulate the issue.

IS IT STILL POSSIBLE TO GO TO COURT TO HAVE THE FGTS REVIEWED?

Experts do not recommend that the worker file a FGTS lawsuit in court to replace losses. The reason is that Barroso’s vote already guarantees a new correction for all Guarantee Fund accounts, as of the Supreme Court’s judgment – it is not known whether as of the final date of the judgment, the publication of the minutes or the day on which ministers began to judge the issue in April this year – but without correcting past values.

Anyone who goes to court now could lose money.

HOW DOES THE GUARANTEE FUND WORK?

The FGTS works as a savings account for the worker. The fund was created in 1966, with the end of job security, and came into effect in 1967. Every month the employer deposits 8% of the employee’s salary into an account opened for that job.

There is also a 40% fine on the FGTS if the worker is fired without just cause. Since the 2017 labor reform, there is also the possibility of withdrawing 20% ​​of the fine after agreement with the employer upon dismissal.

WHO HAS THE RIGHT TO FGTS?

Every worker with a formal contract must have the FGTS deposited, which currently includes domestic workers. Until 2015, domestic workers were not entitled to FGTS. The PEC das Domésticas, however, brought this possibility in 2013, but the law that regulated the measure and made it possible for employers to deposit amounts came into effect only two years later.

What can happen during the FGTS review?

The case could be judged and come to an end, with victory or defeat for the workers. So far, there are two votes for changing the correction, from Barroso and Minister André Mendonça, but there has been no declaration that the TR is unconstitutional.

The trial stopped after a request from minister Kassio Nunes Marques, who returned the case about two months ago. The decision was postponed in October and may be postponed again. There is also the possibility that a minister will request a new review, to analyze it further, and the case will remain on hold until it is returned.