Financial benefit: what is it and how to calculate?

Popularly known as “selling vacations”, the Pecuniary Allowance is the official name of the practice described in article 143 of the CLT in which the worker can convert ⅓ of the vacations he is entitled to take in cash.

In order for workers to maintain physical and mental health they need a period of rest . That is why CLT guarantees the right to paid vacation.

There are 30 days off after 12 months of work. 

However, the worker can convert a part of this period into a cash bonus . That is, he can sell part of the vacation in exchange for financial resources.

The holiday bonus is a common practice and a guaranteed right of the worker. But it is critical that employers understand how it works to comply with labor law standards.

Want to know what is a financial benefit and how to calculate? Continue reading the article below:

What is a financial allowance?

Considered a common practice, the pecuniary allowance is the employee’s right to sell ⅓ of his vacation to receive a portion in cash.

After one year of work, every employee is entitled to 30 days of vacation . If he opts for the vacation allowance , he can sell 10 days of that period to the company. In other words, he has 20 days of rest and 10 days of work remaining – to be paid by the company.

As it is a right of the employee, the financial allowance cannot be imposed by the company, the wish must come from the employee, as long as he makes the request at the right time.

The company must in no way rebuke the employee for making such a request.

The law of financial allowance

Many people are unaware of the term financial allowance , but it is a worker right provided for in the CLT rules. More specifically in article 143 , as you can read below, in full:

Art. 143 – The employee is allowed to convert 1/3 (one third) of the vacation period to which he / she is entitled to a cash bonus, in the amount of the remuneration that would be due on the corresponding days.

1st – The vacation allowance must be requested up to 15 (fifteen) days before the end of the acquisition period.

2 – In the case of collective vacations, the conversion referred to in this article shall be the subject of a collective agreement between the employer and the union representing the respective professional category, regardless of the individual requirement for the grant of the allowance.

Are there any criteria for receiving the financial allowance?

The benefit cannot be granted to those who work up to 25 hours a week . Except domestic workers who work more than 3 days a week. However, it is necessary to request the allowance 30 days before the purchase period .

Another important point in the criterion for receiving the allowance is the period of collective vacation . As it is a period used by all company employees, individual orders are not accepted.

Other social security contributions, such as FGTS and INSS, are not related to the financial allowance .

What are the advantages and disadvantages of the financial allowance?

The main advantage of selling 10 days of vacation is financial . In addition to receiving twice for the days sold (on the cash bonus and on the salary payment day), the employee can use the money to make an investment , buy a high-value item or cover any debt.

The company also wins because the employee’s absence time on vacation is reduced. So he can return to normal activities in up to 20 days , freeing his team from accumulated work.

The disadvantage of the financial allowance would be the reduced rest period . If the worker is tired or stressed, it is much better to fully enjoy the vacation for physical and mental recovery.

How to calculate the financial allowance?

The criteria for calculating the financial allowance are not unanimous, since the text of the law gives scope for different interpretations.

Many experts argue that there are three ways to calculate the value of holidays sold, each with a different result. But here we will use the formula most applied by scholars.

Firstly, it is necessary to add the employee’s salary to the third guaranteed by the constitution. The calculation of holidays with financial allowance must be made on this result.

As an example, let’s consider an employee who receives R $ 3,000.00 monthly and is entitled to 30 days of vacation .

In this case, the account is as follows:

 

30-day remuneration: R $ 3,000.00

1/3 constitutional: R $ 1,000.00

Total receivable: R $ 4,000.00

 

Then, just divide the total amount into three parts, each equivalent to 10 days of rest. ⅔ of the result refers to the normal vacation payment and must be recorded as such.

The other ⅓ must be registered as a cash benefit . The difference is that this fraction corresponding to the days sold does not suffer from INSS and Income Tax discounts.

The extra days worked should be paid normally, as in an ordinary month. Therefore, the worker who decides to sell 10 days of his vacation ends up receiving twice for them: once for the financial benefit and once for the period actually worked.

That is, in practice the person receives 40 days of payment in a single month, and still has reduced discounts.

If you still have doubts on how to calculate the vacation cash benefit , we will teach you in this video:

What is the deadline for applying for and paying the financial allowance?

According to article 143 of the CLT:

“§ 1: The vacation bonus must be requested up to 15 (fifteen) days before the end of the acquisition period” (Decree-Law No. 1535, 4.13.1977).

The purchasing period mentioned in the article concerns the 12-month cycle. Whenever this time is close to ending, the worker must request the financial allowance if he wishes.

For example: if an employee joined the company on March 31, 2018, he or she can go on vacation from March 30, 2019. If you choose to receive the vacation allowance , you must apply until March 15, 2019.

On the part of the company, there are also deadlines to be respected. The payment of the financial allowance must be made together with the remuneration for the rest period, that is, up to two days before the start of the vacation.

How and where to declare the financial benefit?

The Income Tax is not discounted in the amount of the allowance , so the employee can correctly declare the amounts and include them in the “Exempt and Non-Taxable Income” field .

In this way, he will be able to declare receipt of this amount peacefully, without suffering taxation and without falling into the fine mesh.

How does the allowance work in exceptional situations?

The rules for payment of the cash allowance may change in specific cases. Check out some of them:

 

Double payment

According to labor laws , if holidays are granted to workers after the concession period (12 months after the acquisition period), the benefit payment must be doubled.

When this happens, the financial allowance is also twice as high, since the basis for calculating the days sold accompanies the vacation remuneration.

 

Incomplete vacation

It may happen that the worker is not entitled to the full 30 days of vacation due to unjustified absences during the acquisition period – non-justified absences are those that were not paid by the employer.

In this case, the possibility of selling holidays is maintained, but in a reduced way. The employee must apply for the financial allowance in proportion to the days to which he is entitled.

 

Collective vacations

When collective vacations occur , individual employee orders are not taken into account.

The conversion of ⅓ of holidays into allowances is decided by a collective agreement, negotiated by the company and the union of the category.

What are the main doubts about the financial allowance?

Still have doubts about the financial allowance ? See below for more common questions and answers on the subject:

 

Is there a maximum number of days to convert to a cash benefit?

The maximum that can be sold is 10 days. Except in cases where the employee and the company have a vacation agreement that exceeds 30 days.

In this case, the equivalent of one third of the financial allowance does not accompany the increased period.

 

Can the company deny the financial allowance?

The deadline established by CLT for requesting the cash bonus is 15 days from the acquisition period. When the employee makes the request at the right time, the company cannot refuse the order. 

If it is not delivered within this period, the company can decide whether or not to serve the employee.

 

Can the company force the employee to sell vacations?

If the company compels the employee to take a 20-day vacation and convert the remaining 10 days into a cash bonus , the employee is breaking the law and may be convicted of a labor claim .

If this happens, she is forced to pay double to the employee.

 

We have reached the end of our financial allowance guide!

Keep these tips at hand when granting employees this right.

This way, you ensure that the calculations are done correctly and the laws are respected. It is also important to be flexible as far as possible when it comes to vacations, taking into account the employee’s wishes and facilitating their personal planning.

Did you like our post about what monetary allowance means and how to calculate? Then follow us on social media and check out much more content about the labor market and HR!

 

Leave a Comment