- Overview: Brazil
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Brazil
If you hire an international workforce, or plan to hire, then Hiring and Firing Workforce in Brazil Guide below will help you understand the nuances of labor legislation in the country.
When the company is planning to enter a new foreign market of Brazil and has a need to employ a local national there, the first question to answer is how it is going to make local hires.
We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.
This solution helps you employ your global sales force in Brazil as well as in other 180+ countries of the world, and provide pay and benefits to your employees, as well as administer any business expenses with our help.
Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.
So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we admin your global HR. In addition, you don’t need to open your own entities in the foreign countries and can leverage our infrastructure in Brazil instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.
Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.
Global Employer of Record solution is 100% compliant solution that guarantees you and your employees fully compliance with local legislation in Brazil .
We are experts in global workforce employment in Brazil, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Brazil.
See Hiring and Firing Workforce in Brazil Guide below for a general overview of labor rules and regulations in the country. Or contact us if you need to employ workers in Brazil or would like to get more details.
Hiring and Firing Workforce in Brazil Guide
Collective Bargaining Agreements are the result of negotiations carried on by Unions representing employees and Unions representing employers; or by a single employer and the Union representing its employees, to implement specific labor conditions in addition to those provided for in the Brazilian labor legislation. Collective Bargaining Agreements have the same status as the Brazilian Labour Law and, consequently, the employer must comply with all its provisions, under penalty of levying of contractual and administrative fines, being the companies also subject to a claim that can be filed by the Union or the employees.
Permanent employment contracts
The fixed-term agreement will become an indefinite term employment agreement if the agreement:
- Is for a fixed term, but the reason to justify it is not one of the reasons allowed by law.
- Does not have a clause mentioning the term and the legal justification for such term.
- Is extended more than once.
- The maximum term is not observed.
- The renewal is not agreed by the parties in writing or
- If successive fixed-term employment agreements are used without observing the 6-month break.
It is strongly recommended to execute a written contract, in Portuguese, to agree certain conditions, such as:
- Salary and benefits.
- Working hours.
- 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.
Fixed-term employment is only allowed in special circumstances, as follows:
- Where the nature of the services justifies the fixed-term employment.
- Where the business activities are of a transitory character and
- For employees in a probationary period.
As per the Labor Code, fixed-term employment agreements are only allowed for up to 2 years when the temporary nature of the service justifies a pre-established term, or the business activities have a temporary nature.
A seasonal employment contract is a specific type of temporary contract with the following main characteristics:
- It must be justified. Seasonal work is typically justified by an increase in the company’s demand during certain periods of the year.
- It must have a maximum duration of two years.
# Employment Termination and Severance Pay (Dismissal)
In the event of termination without cause at the end of an open-ended employment agreement (i.e., expiry of the term), the employer must pay:
- The balance of salary and other compensation or incentive, pro-rated as appropriate.
- An indemnity in lieu of notice, as applicable.
- The pro-rated ‘13th month salary’.
- Pro-rated annual leave pay.
- Applicable withholding taxes and Social Security fees.
- Other amounts stipulated in the employment agreement or relevant collective agreement.
Termination without cause is legally permissible at the employer’s will, unless the employee has special protection against dismissal of some description (i.e., ‘stability’). Termination for cause is permissible even if the employee has stability. However, the company cannot terminate suspended employment, for example, employees on medical leave. In practice, only a serious breach of the employee’s duties will give cause for termination. In general terms, a serious breach will be any serious violation of legal or contractual duties or recurrent misconduct despite escalation of disciplinary action.
#It is prohibited to dismiss
The types of legal ‘stability’, or special protection against dismissal, are:
- Pregnancy or maternity (from the beginning of pregnancy until five months after the child’s birth).
- Union representation (from the moment the employee enters his or her candidature to be a union representative and, if elected, until one year after the end of the mandate).
- Employee representation before the Internal Commission for the Prevention of Accidents (from the moment the employee enters his or her candidature and, if elected, until one year after the end of the mandate).
- Employment accident resulting in the employee receiving social security benefits (until one year after the end of the social security benefit).
- Members of the employees’ committee incorporated under law.
Some collective bargaining agreements provide additional types of stability. For example, there is pre-retirement stability for employees who have served more than a certain period of time of service for an employer and who are near retirement.
For indefinite term employment contracts, the minimum notice period is 30 days. If the employee has more than one year of service, the employee has a right to an additional three days for each new one-year period, up to a limit of 90 days, as follows:
|Length of service||Notice period|
|Up to 1 year||30|
|Between 1 and 2||33|
|Between 2 and 3||36|
|Between 3 and 4||39|
|Between 4 and 5||42|
|Between 5 and 6||45|
|Between 6 and 7||48|
|Between 7 and 8||51|
|Between 8 and 9||54|
|Between 9 and 10||57|
|Between 10 and 11||60|
|Between 11 and 12||63|
|Between 12 and 13||66|
|Between 13 and 14||69|
|Between 14 and 15||72|
|Between 15 and 16||75|
|Between 16 and 17||78|
|Between 17 and 18||81|
|Between 18 and 19||84|
|Between 19 and 20||87|
|20 years or more||90|
If adequate notice is not given, the employer must make a payment in lieu of notice. The employee is only required to serve a 30-day notice period. The company must indemnify the extra term. Note that longer notice periods might be specified in an applicable collective bargaining agreement or in the employment agreement, but only if they benefit the employee (i.e., notice by the company).
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).
- 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.
Employees are entitled to all funds that are due in the case of a termination without cause, except for the Severance Indemnity Fund Law (FGTS) penalty and the indemnification for not having received the advance notice period.
#Employee Benefits and Contributions
Mandatory benefits required by law to be provided by an employer
Labor relations are governed by the Federal Constitution, the CLT (Consolidated Labor Laws or Brazilian Labor Code) and numerous complementary laws and regulations. The Constitution guarantees the employees a large number of labor rights and benefits, among others:
- Approximately 30 days of paid vacation after one full year of employment.
- A mandatory “Christmas Bonus” (also known in Brazil as the Thirteenth Salary), calculated as the salary earned by the employee in December.
In Brazil, the benefits packages may be freely negotiated by employee and employer and depend on the specific circumstances. However, the standard benefits for employees typically include a health plan, a dental plan, meal or food voucher, transportation voucher and/or fuel voucher.
Non-mandatory benefits that are offered by an employer
It is common, however, for collective bargaining agreements to provide for meal vouchers, life insurance and health and dental plans. In Brazil, there is no obligation for the employer to contribute to private pension funds.
#Minimum statutory salary
There is a national minimum wage that applies to all employees, regardless of their age, industry, or experience, and this is increased on an annual basis. Some states have a regional minimum wage that must be observed if it is higher than the national minimum wage. Some collective agreements also establish minimum wages for certain professional categories and positions.
During the probationary period, the employment agreement is considered a contract for a fixed term. The maximum allowed probationary period is 90 days, but it can be split into two periods, for example, 30 and 60, 45 and 45 or 60 and 30 days. All of these arrangements are fixed-term agreements, but they cannot exceed the total limit of 90 days. The effect of splitting the probationary period is that it allows the employer to terminate the employee at the end of either period.
The limits on working hours may be increased by collective bargaining agreement by up to two hours per day through an ‘hour account’ (‘banco de horas’) whereby employees can take time off work instead of being paid for overtime. The collective bargaining agreement will provide a maximum period for calculating the balance in the hour account. The maximum period allowed is one year, but the period used is often three months. If at the end of that period there are still pending hours for which time off work has not been taken, the organization will be required to pay for them.
There is a daily limit of eight hours and a weekly limit of 44 hours on the number of hours an employee may work. Collective bargaining agreements may change these limits to six and 36 in rotating shifts, or under justifiable circumstances to 12 hours of consecutive work followed by a leave of 36 hours. There are no limits on how many hours can be worked at night, although night shift workers are paid more than day workers. Night shift workers are entitled to an additional pay 20% of the hourly rate and every 52 minutes and 30 seconds counts as one hour during night shifts (i.e., between 10 pm and 5 am). There are different rules for night workers doing agricultural work.
Employees are entitled to 30 calendar days’ leave a year. Leave must not be split into more than three periods, one of which must be at least 14 days, and none may be shorter than five. The employee may sell up to ten days of leave to the employer.
Many companies in Brazil prefer to grant collective vacation instead of arranging individual periods for each employee. The employer can concede two periods of collective vacation per year, and both must be of at least 10 days.
For the first 15 days of sickness, it is the employer’s responsibility to pay the salary of a sick employee. From the 16th day, the employee can claim a social security benefit. Employees are required to provide medical certification in order to take time off and claim sick pay. There is no limit on the amount of time an employee may take as sick leave provided the absence is supported by medical certification. Some employers put more generous entitlements in place.
Maternity leave is generally for a period of 120 days. Additional periods of 15 days before and 15 days after are permitted if necessary for health reasons.
A male employee is entitled up to 5 days paid parental leave. An employer can grant an additional 15 days paid paternity leave and recover the paid amount from tax benefits granted by the federal government. In cases of an adopted child, the employee remains entitled to paternity leave.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Brazil by providing you with an Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without you having to set up a legal entity there.