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Brazil PEO & Employer of Record
At WeHireGlobally, we provide an International PEO and Global Employer of Record (Global EOR) service tailored to support companies entering the Brazilian market or hiring local employees.
Rather than going through the traditional route of establishing local subsidiaries, our streamlined solution allows you to swiftly initiate and conduct business operations in Brazil while saving time and resources. With WeHG, we take care of the hiring process on your behalf, ensuring full compliance with local regulations while granting you complete operational control. Our hired employees work directly for you, while we handle all legal obligations and payroll management.
Brazil Quick Facts
Population: 212,688,125 (2022 Estimate)
Land area: 8,515,767 km²
Local currency: Real (BRL)
Brazil, officially known as the Federative Republic of Brazil, is the largest country in South and Latin America. Spanning over 8.5 million square kilometers (3,300,000 sq mi), it is home to a population of over 211 million people. Brasilia serves as the capital, while São Paulo stands as its most populous city. Brazil is composed of 26 states and the Federal District, and it is renowned for its linguistic and ethnic diversity, shaped by a significant history of immigration from various parts of the world. The country shares borders with all South American countries and territories, except Ecuador and Chile.
Considered an emerging power, Brazil boasts the twelfth-highest nominal GDP globally and the eighth-largest PPP GDP in Latin America. It is classified as an upper-middle-income economy, making it an attractive destination for business expansion.
Navigating Employment in Brazil
To hire an employee in Brazil, the employer must follow certain procedures:
- Record the contract in the Work and Social Security Card (CTPS): The employer must include information on the job position, salary, and admission date in the employee’s CTPS. This document is owned by the employee and must be returned to them once the employer completes the necessary data.
- Fill in the employee’s records book: Employers are required to maintain an employee’s records book, which serves as an employer’s file containing all relevant information related to employment contracts. This book must be available for auditing authorities.
- Inform the government through the General Register of Employed and Unemployed: Employers must register the hiring of employees through the General Register of Employed and Unemployed (Cadastro Geral de Empregados e Desempregados). This register provides information to governmental institutions.
- Subscribe the employee to the Social Integrated Program: Employers are responsible for enrolling employees in the Social Integrated Program (Programa de Integração Social), which provides benefits and assistance to workers.
- Provide monthly information on remuneration: Employers must report monthly information on the employee’s remuneration through the Guia de Recolhimento do Fundo de Garantia por Tempo de Serviço e Informações à Previdência Social system. This guide serves as a means of government control for the Brazilian Government Severance Indemnity Fund Law and social security contributions.
- Submit annual information to the Annual Social Information Register: Employers must annually provide information to the Annual Social Information Register (Relação Anual de Informações Sociais). This register offers details on employment contracts to governmental institutions.
By adhering to these procedures, employers ensure compliance with Brazilian employment regulations and contribute to a smooth and legally sound employment process.
Different Forms of Engagement: Employment, Contracting, and Work with a Private Entrepreneur
In Brazil, workers can be classified into various categories based on their engagement. Here are the different forms of engagement commonly seen in the country:
Employees: To be considered an employee in Brazil, certain elements must be present:
- A worker is a natural person who works on a regular basis.
- The worker receives payment for their work.
- There is a relationship of subordination, where the worker integrates into the company’s organizational structure, follows directions in their work, and has limited or no autonomy.
Under the new Labour Law passed on November 11, 2017 (Law 13467/17), a category of “more sufficient” employees was created. This category applies to those who earn up to twice the amount of the social security maximum benefit and have a higher education. For these employees, it is possible to:
- Negotiate directly with the employer regarding working conditions, which will prevail over the law.
- Submit labor issues to arbitration. However, as this is a relatively new law, its application in Labour courts has not been extensively tested yet.
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).
Employees can have various roles, including farm or urban workers, domestic or company employees (such as common employees, temporary workers, domestic workers, officers, apprentices, or part-time workers), among others. While labor rights are generally similar for these types of employees, specific laws and regulations exist for each category, such as the Farm Employees Law (Law 5889/1973), the Consolidation of Labour Laws (CLT) for urban employees, and additional legislation for domestic workers (Law 5859/1972 and complementary Law 150/2015), temporary workers (CLT and Law 6019/1974), and apprentices (CLT and Law 10097/2000).
Independent Contractors: Independent contractors in Brazil provide services independently and autonomously. They are not considered employees and operate based on their own contractual agreements with clients.
Directors, Statutory Officers, and Legal Representatives: These individuals act according to the powers conferred upon them by the company’s bye-laws or articles of association/incorporation. They hold positions of authority within the company.
Interns: Interns in Brazil are trainees who attend university courses and undergo practical training in companies. They are not considered employees but are subject to the regulations outlined in Law 11788/2008.
Apprentices: Apprenticeships in Brazil are designed for young people aged 14 to 24. Through their work in a company, they receive technical and professional training combined with technical training courses.
Brazil Employment Contract
The necessity of a written employment contract varies depending on the applicable laws and regulations governing the employment relationship. While a written contract is not always required, it is strongly recommended to have one, preferably in Portuguese, to establish clear agreements on important conditions such as:
- Salary and benefits
- Job function
- Working hours
- Place of work
- Procedures for compensating extra working hours
- Probation periods
- Fixed terms
- Employee’s duties, including confidentiality, non-disclosure, and non-competition obligations, as well as compensation for damages caused to the employer
- Company policies and standard practices, such as IT-related practices and reimbursement of expenses
- Possibility and conditions of travel and transfers
Without a written contract, the provisions regarding these aspects may not be considered valid and enforceable. Therefore, it is advisable to have a written employment contract to ensure clarity and protection for both the employer and the employee.
Brazil working hours
In Brazil, working hours are generally regulated by the Federal Constitution, which sets the limit of eight hours per day and 44 hours per week for employees.
However, there are exceptions to this rule. Employees who work outside of the employer’s establishment, such as remote workers, and those who hold managerial positions are not subject to the same working time limitations.
Employees who work more than six hours a day are entitled to a break of one to two hours. Employees working between four and six hours, they are entitled to at least a 15-minute break.
Certain professional categories may have special rest break provisions outlined in special rules or collective agreements.
There must be a minimum rest period of 11 hours between the end of one working day and the start of the next.
Additionally, employees are entitled to a weekly rest period of 24 hours, preferably taken on Sundays, which should be fully paid.
Vacation leave in Brazil
Employees in Brazil are entitled to a minimum period of vacation leave after completing 12 months of employment. The length of the vacation period depends on the number of days of leave the employee has already taken during the year. The entitlements are as follows:
- 30 days of vacation when the employee has taken no more than five days of leave during the year.
- 24 days of vacation when the employee has taken between six and 14 days of leave during the year.
- 18 days of vacation when the employee has taken between 15 and 23 days of leave during the year.
- 12 days of vacation when the employee has taken between 24 and 32 days of leave during the year.
Brazil Maternity Leave
Pregnant employees in Brazil are entitled to 120 days of paid maternity leave. The employer is responsible for making the payment, and they can seek reimbursement from the National Social Security.
In addition to the standard 120-day maternity leave, employers have the option to grant an additional 60 days of paid leave, with the corresponding payment being recoverable through tax benefits provided by the federal government.
During the period of pregnancy confirmation and up to five months after delivery, pregnant employees enjoy job stability, meaning they cannot be made redundant without just cause. This protection is in place to ensure the well-being of the pregnant employee and their child.
Brazilian Severance Laws
In Brazil, when it comes to resignation or dismissal without cause, both employees and employers are required to provide a 30-day notice period to the other party. Additionally, employees are entitled to an extra three days of notice for each year they have worked for the company. However, the employer has the option to pay the employee in lieu of the notice period.
In cases of termination without cause or constructive dismissal, employees are entitled to the following severance payments:
- The balance of their wages.
- A proportional payment for any unused vacation days, along with one-third of the holiday remuneration.
- A proportional 13th-month salary, also known as the Christmas bonus.
- Access to the funds deposited in the Brazilian Government Severance Indemnity Fund Law (FGTS). The FGTS is a severance fund that contains monthly deposits of 8% of an employee’s gross compensation, made by the employer into an escrow account in the employee’s name. Upon termination, the employer must pay a 40% penalty on the balance in the account.
- Any payments owed under collective agreements.
- Any other benefits provided under the employer’s policies or the employment contract.
However, in cases of termination with cause, where the employee’s actions warrant immediate termination, the employee is only entitled to receive the balance of their wages, payment for any unused vacation days, and a proportional 13th-month salary.
Resigning employees are entitled to all the funds due in the case of termination without cause, except for the FGTS penalty and the indemnification for not receiving the advance notice period.
Procedural requirements for dismissal
Termination without cause: Employers have the right to dismiss employees without cause at any time, as long as they provide the required notice periods and severance payments.
Constructive dismissal: Employees have the right to resign based on constructive dismissal if certain conditions are met. These conditions include being assigned tasks outside the scope of the services they were hired for, facing immoral or disrespectful treatment from the employer, the employer not respecting their main employment rights, or suffering physical abuse or damage to their or their family members’ honor or reputation, among other circumstances.
Resignation: Employees have the freedom to resign at any time and for any reason, provided that they provide a 30-day notice period in advance.
Social Security Contributions
Employees in Brazil are required to pay contributions to social security based on their earnings. The monthly rates for social security contributions in 2018 are as follows:
- 8% on earnings up to BRL 1,693.72.
- 9% on earnings from BRL 1,693.73.95 to BRL 2,822.90.
- 11% on earnings from BRL 2,822.91 to BRL 5,645.80.
These contributions are withheld by the employer at the source, and there is a cap of BRL 621.04 per month (subject to yearly revisions).
Employers also have to make contributions to the National Social Security based on their entire payroll. The contribution rates for employers vary between 26.8% and 28.8%, depending on the company’s core business.
Personal Income Tax
Employees in Brazil are subject to personal income tax on their salaries. The income tax rates for the year 2018 are as follows:
- 7.5% minus BRL 142.80 on earnings from BRL 1,903.99 to BRL 2,826.65.
- 15% minus BRL 354.80 on earnings from BRL 2,826.66 to BRL 3,751.05.
- 22.5% minus BRL 636.13 on earnings from BRL 3,751.06 to BRL 4,664.68.
- 27.5% minus BRL 869.36 on earnings above BRL 4,664.68.
These rates are applied on a progressive scale, meaning that the percentage increases as the earnings go up.
It’s important to note that tax rates and thresholds may change over time, so it’s advisable to consult the latest official sources or seek professional advice for up-to-date information.
Health Insurance Benefits in Brazil
Entitlement to Paid Time Off:
- Employees are entitled to paid time off in the event of illness or injury.
- The employer is responsible for paying the employee’s salary during the first 15 days of time off.
- For any additional days off beyond the initial 15 days, the National Institute of Social Security (INSS) pays a fixed rate.
Entitlement to Unpaid Time Off:
- There is no specific entitlement to unpaid time off for health reasons in Brazil. In cases of illness or injury, employees are entitled to paid time off.
Recovery of Sick Pay from the State:
- If an employee requires more than 15 days of time off due to illness or injury, the INSS provides compensation at fixed rates.
- In cases where the INSS pension is lower than the employee’s last salary, some collective agreements may establish additional payments by the employer during the time off.
Additional Benefits in Brazil
Apart from health insurance benefits, employees in Brazil are entitled to various statutory benefits.
- These benefits include 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), and severance fund (FGTS) (8% of the monthly salary).
- Employment agreements, policies, handbooks, and collective bargaining agreements may provide additional benefits beyond the statutory requirements.
Brazil has both national and municipal holidays, which are fixed by public authorities.
On these holidays, work is generally prohibited without authorization from the Ministry of Labour and Employment.
Some of the recognized holidays in Brazil include New Year’s Day, Labour Day, Independence Day, Christmas Day, and others.
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
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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/
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
Independence Day (of Brazil)
Our Lady of Aparecida’s day
All Souls Day
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.