Brazil

Brazil PEO & Employer of Record

WeHG provides an International PEO and Global Employer of Record service to companies which are to enter the Brazilian market or hire local/expat employees in Brazil.

In Brazil, traditional approach to global expansion includes the establishment of local subsidiaries.  However, our solution allows you to conduct operations in Brazil within days therefore saving time and money. WeHG would hire candidates on your behalf while you maintain full operational control of their work. Legally, they will be our hired employees, on our payroll, 100% compliant  but workng on your behalf.

Brazil fast facts

Population, million: 210,15 
Land area: 8,515,767 km²
Capital: Brasilia
Local currency: Real (BRL)

Hiring, Negotiating, and Doing Business in Brazil

To hire an employee, the employer must:

  • Record the contract in the Work and Social Security Card (CTPS), including information on the job position, salary and admission date. The CTPS is a document owned by the employee, and it must remain with the employee and be returned to him or her after the employer has completed the data.
  • Fill in the employee data in the employee’s records book (an employer’s file that must be available for the auditing authorities). This is a document containing all information relating to employment contracts.
  • Inform the government of the hiring, through the General Register of Employed and Unemployed (Cadastro Geral de Empregados e Desempregados). This is a register that provides information to governmental institutions.
  • Subscribe the employee to the Social Integrated Program (Programa de integração Social).
  • Provide monthly information on the employee’s remuneration in the Guia de Recolhimento do Fundo de Garantia por Tempo de Serviço e Informações à Previdência Social system (that is, a guide to government control of the Brazilian Government Severance Indemnity Fund Law and social security contributions).
  • Present annually information to the Annual Social Information register (Relação Anual de Informações Sociais). This is a register that provides information related to employment contracts to governmental institutions.

Different forms of engagement: employment, contracting, work with private entrepreneur

In general terms, Brazilian workers can be classified into the categories discussed below.

Employees. To be classified as an employee, the following elements must be present:

  • The worker is a natural person who works on a regular basis.
  • The worker works for payment.
  • Subordination is present and the work is undertaken personally. Subordination is present if the worker integrates into the company’s organisational structure, is subject to direction in his or her work, and has limited or no autonomy.

The new Labour Law, passed on 11 November 2017 (Law 13467/17) created a “more sufficient” category of employee, applicable to those who earn up to twice the amount of the social security maximum benefit and have a higher education. For these employees it will be possible to:

  • Negotiate directly with the employer about their working conditions, which will prevail over the law.
  • Submit their labour issues to arbitration. However, because this is a new law, it has not been tested in the Labour courts.

Employees can be:

  • Farm or urban works.
  • Domestic or company employees (including common employees, temporary workers, domestic workers, officers, apprentices, or part-time workers, among others).

Labour rights are largely the same for all these kinds of employees. However, there are certain specific laws, including Law 5889/1973 (farm employees), the Consolidation of Labour Laws (CLT) (urban employees), Law 5859/1972 and complimentary Law 150/2015 (domestic workers), the CLT and Law 6019/1974 (temporary workers), and the CLT and Law 10097/2000 (apprentices).

Independent contractors. These workers provide independent and autonomous services.

Directors, statutory officers and companies’ legal representatives. These act according to the powers conferred in the company’s bye-laws or articles of association/incorporation.

Interns. These are trainees who attend university courses and are not employees but are subject to Law 11788/2008.

Apprentices. These are young people from 14 to 24 years of age who, through their work in the company, develop technical and professional training, combined with technical training courses.

Brazil Employment Contract

Necessity of written employment contract

A written employment contract is not required, if the employment relationship is governed by the Federal Constitution, the Consolidation of Labour Laws, the Brazilian Social Security Law, the Brazilian Government Severance Indemnity Fund Law or other special legislation and rules issued by the Ministry of Labour and Employment, or collective bargaining agreements. A tacit or oral contract is acceptable. However, it is strongly recommended to execute a written contract, in Portuguese, to agree certain conditions, such as:

  • Salary and benefits.
  • Function.
  • Working hours.
  • Remuneration.
  • Place of work.
  • Procedure to offset extra working hours.
  • Probation periods.
  • Fixed terms.
  • Employee’s duties (that is, confidentiality, non-disclosure and non-competition obligations, compensation duties for damages caused to the employer).
  • Company policies and standard practices, such as IT-related practices and reimbursement of expenses.
  • The possibility and conditions of travel and transfers.

Without a written contract, provisions concerning the above may not be considered valid and enforceable.

Brazil working hours

As a general rule, the Federal Constitution restricts working hours to eight hours a day and 44 hours a week.

Employees who work outside the employer’s establishment (remotely) and those who occupy a management position are not subject to working time limitations.

Rest breaks

Employees who work more than six hours a day are entitled to one to two hours’ break. Employees who work from four to six hours are entitled to at least a 15-minute break.

Some special rules and collective agreements provide for special rest breaks for certain professional categories.

There must be a minimum rest period of 11 hours between the end of a working day and the beginning of another.

Employees are entitled to 24 hours paid weekly rest, preferably on Sundays.

Vacation leave in Brazil

Employees are entitled to a minimum holiday period after a period of 12 months’ employment, which depends on how many days’ leave the employee has taken, as follows:

  • 30 days’ holiday when no more than five days’ leave have been taken during the year.
  • 24 days’ holiday when between six and 14 days’ leave have been taken during the year.
  • 18 days’ holiday when between 15 and 23 days’ leave have been taken during the year.
  • 12 days’ holiday when between 24 and 32 days’ leave have been taken during the year.

Brazil Maternity Leave

A pregnant employee is entitled to 120 days of paid maternity leave. This payment is made by the employer and reimbursed by the National Social Security.

An employer can grant an additional 60 days of paid maternity leave and recover that payment from tax benefits granted by the federal government.

The pregnant employee also has job stability (that is, they cannot be made redundant) from confirmation of pregnancy up to five months after the delivery.

Brazilian Severance Laws

Notice periods

In case of resignation or dismissal without cause, employees and employers respectively should provide the other with 30 days’ notice. Employees are entitled to an additional three days’ notice for every year worked for the company (the employer can pay in lieu of notice).

Severance payments

Termination without cause or constructive dismissal. Employees are entitled to receive:

  • The balance of their wages.
  • A proportional payment for untaken holidays, plus one-third of the holiday remuneration.
  • A proportional 13th month salary (Christmas bonus).
  • Access to the funds deposited in a severance fund called the Brazilian Government Severance Indemnity Fund Law (FGTS). The FGTS contains monthly deposits of 8% of an employee’s gross compensation. Deposits are made by the employer into an escrow account with a governmental bank, in the name of the employee. The employer must also pay a 40% penalty on the balance in the account.
  • Any payments due under collective agreements.
  • Any other benefit provided under the employer’s policies or the employment contract.

Termination with cause. Employees are only entitled to receive the balance of their wages, an unused holiday payment and a proportional 13th month salary.

Resignation. Employees are entitled to all funds that are due in the case of a termination without cause (see above), except for the FGTS penalty and the indemnification for not having received the advance notice period.

Procedural requirements for dismissal

Termination without cause. Employees can be dismissed without cause at any time, subject to notice periods and severance pay.

Constructive dismissal. Employees are entitled to resign on the basis of constructive dismissal if:

  • They are assigned to tasks outside the scope of the services for which they were hired or that are immoral or illegal.
  • They are treated immorally or without respect by the employer.
  • The employer does not respect their main employment rights.
  • They suffer physical abuse or damage to their (or their family members’) honour or reputation, among other circumstances.

Resignation. Employees can resign at any time and for any reason, by giving a 30-day notice period in advance.

Brazil Tax

Social Security contributions

For the year 2018, employees must pay contributions to social security at the following monthly rates:

  • 8% on earnings up to BRL1,693,72.
  • 9% on earnings from BRL1,693,73.95 to BRL2,822,90.
  • 11% on earnings from BRL2,822,91 to BRL5,645,80.
  • The employer withholds these contributions at source. There is a cap of BRL621,04 (reviewed on a yearly basis).

The employer must also pay contributions to the National Social Security on its entire payroll at rates that vary from 26.8% up to 28.8% depending on the company’s core business.

Personal Income Tax 

For the year 2018, employees must pay income tax on their salaries at the following monthly rates:

  • 7.5% minus BRL142,80 on earnings from BRL1,903.99 to BRL2,826.65.
  • 15% minus BRL354.80 on earnings from BRL2,826.66 to BRL3,751.05.
  • 22.5% minus BRL636.13 on earnings from BRL3,751.06 to BRL4,664.68.
  • 27.5% minus BRL869.36 on earnings above BRL4,664.68.

Health Insurance Benefits in Brazil

Entitlement to paid time off

Employees are entitled to paid time off in the event of illness or injury, provided that they present a medical certificate stating the number of days that they must be absent from work. The first 15 days of time off are paid by the employer, at the usual salary rate. Any further days off are paid through fixed rates by the National Institute of Social Security (INSS) (a governmental institution).

Entitlement to unpaid time off

There is no entitlement to unpaid time off, since in all cases of illness or injury, employees are entitled to paid time off.

Recovery of sick pay from the state

The first 15 days of time off are paid by the employer. Any further days off are paid through the INSS at fixed rates.

When the INSS pension is lower than the employee’s last salary, some collective agreements establish an additional payment by the employer during the time off.

If the illness or injury is caused by bad working conditions, the employer may be responsible for:

  • Paying an indemnification for moral and material damages to the employee (if ordered to do so by the court in a court judgment).
  • Reimbursing the INSS.

Additional Benefits in Brazil

Employees and executives engaged under an employment relationship are entitled to the following statutory benefits:

•     vacation (30 calendar days after 12 months of work);

•     vacation bonus (one-third of the monthly salary);

•     Christmas bonus or 13th salary (one monthly salary per year);

•     severance fund (FGTS) (8% of the monthly salary);

Employment agreements, policies, handbooks, and/or collective bargaining agreements may provide other benefits.

Brazilian Holidays

There are national and municipal holidays that are fixed by the public authorities. On these days, work is forbidden without the Ministry of Labour and Employment’s authorisation.

  • New Year’s Day
  • Universal Brotherhood Day
  • Shrove Tuesday
  • Good Friday
  • Easter Sunday
  • Tiradentes Day
  • Labour Day
  • Corpus Christi
  • Independence Day (of Brazil)
  • Our Lady of Aparecida’s day
  • All Souls Day
  • Republic Day
  • Christmas Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

 

FAQ Brazil

  • Working hours in Brazil

    As a general rule, the Federal Constitution restricts working hours to eight hours a day and 44 hours a week. Source: https://wehireglobally.com/brazil/

  • What are the main holidays in Brazil?

    There are national and municipal holidays that are fixed by the public authorities. On these days, work is forbidden without the Ministry of Labour and Employment’s authorization.

    New Year’s Day

    Universal Brotherhood Day

    Shrove Tuesday

    Good Friday

    Easter Sunday

    Tiradentes Day

    Labour Day

    Corpus Christi

    Independence Day (of Brazil)

    Our Lady of Aparecida’s day

    All Souls Day

    Republic Day

    Christmas Day

  • What are payroll taxes in Brazil?

    Social Security contributions For the year 2018, employees must pay contributions to social security at the following monthly rates:

    8% on earnings up to BRL1,693,72.
    9% on earnings from BRL1,693,73.95 to BRL2,822,90.
    11% on earnings from BRL2,822,91 to BRL5,645,80.
    The employer withholds these contributions at source. There is a cap of BRL621,04 (reviewed on a yearly basis).
    The employer must also pay contributions to the National Social Security on its entire payroll at rates that vary from 26.8% up to 28.8% depending on the company’s core business.

    Personal Income Tax  For the year 2018, employees must pay income tax on their salaries at the following monthly rates: 7.5% minus BRL142,80 on earnings from BRL1,903.99 to BRL2,826.65.
    15% minus BRL354.80 on earnings from BRL2,826.66 to BRL3,751.05.
    22.5% minus BRL636.13 on earnings from BRL3,751.06 to BRL4,664.68.
    27.5% minus BRL869.36 on earnings above BRL4,664.68.

  • Hannah Kohl
    Author:
    Hannah Kohl. Head of Customer Success. Has extensive experience in the HR and IT industries. Helped 100+ international clients to achieve their global goals.

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