Brazilian courts set new limits on pension seizure and split salary cap for public servants

The Brazilian Superior Labor Court (TST) voted unanimously to allow the seizure of salaries, pensions and retirement benefits in labor lawsuits, limited to a maximum of 50% of the debtor's net monthly income and guaranteeing at least one minimum wage. This overturns a regional court ruling that had deemed such earnings impenhorable under the Civil Procedure Code.

Separately, the Federal Court of Accounts (TCU) approved a controversial administrative decision creating a "dual ceiling" for federal employees. The ruling separates the constitutional salary cap for the permanent position from the remuneration for commissioned or trust functions, effectively establishing a new remuneration regime for public servants.

Both decisions impact a broad segment of Brazil’s public sector, altering how pension assets can be used to satisfy labor debts and redefining the calculation of pay limits for federal workers.