Glossary/Severance
Labour law
Severance
China's usual measure is one month's average wage per year (N), or N+1 with notice in lieu, with a cap tied to local average wages. Brazil adds a 40% FGTS penalty on dismissal without cause. Mexico uses constitutional severance when dismissal is without cause. Indonesia pays a formula of compensation, service, and rights — lower than the pre-omnibus multiples in some cases, still expensive.
Hong Kong distinguishes severance (redundancy) and long-service payment. Singapore has no single statutory retrenchment formula for all employees. At-will is not the rule in these markets. Build the exit into the hire plan.
FAQ
Questions we get
- Can we terminate at will if we pay enough?
- Not in China, Spain, Brazil, Indonesia, or most of the other markets on this site. Grounds, process, and formula all matter. Paying a lump sum does not always cure a bad ground.
Related
Other terms
Notice period
The time that must run, or be paid in lieu, between a resignation or dismissal decision and the last day of employment.
Indefinite contract
An employment contract with no fixed end date — the default form of employment in most of our markets, as opposed to a lawful fixed-term or contractor invoice.
FGTS (Brazil)
Fundo de Garantia do Tempo de Serviço: an 8% monthly employer deposit on Brazilian CLT pay, including on the 13th salary, held in the employee's name.
Probation
A limited opening period of the employment contract, with its own pay floor and notice rules, after which ordinary termination rules apply.
Reviewed 11 September 2026. Statutory figures follow the country hiring guides. This is a briefing for multinational employers, not legal advice.
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