Hire in Brazil

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Last updated at July 22, 2022
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Currency

Brazilian Real (BRL)

Capital

Brasília

Time Zone

GMT-3

Key Country Facts

Introduction

Brazil, officially known as Federative Republic of Brazil (República Federativa do Brasil), is the world’s fifth largest country by area. It is a federal republic with a president, who serves as both head of state and government. São Paulo and Rio de Janeiro are the major urban centres. The country’s total population is estimated at around 210 million people. Brazil is considered an advanced emerging economy, hosting some of the world’s most abundant renewable and non-renewable resources.

Area

Brazil accounts for over half of the landmass of the continent of South America, spanning an area of over 8.5 million square kilometers. It shares land borders with Uruguay to the south, Argentina and Paraguay to the southwest, Bolivia and Peru to the west and Colombia to the northwest. Brazil borders Venezuela, Guyana, Suriname and French Guiana to the north.

Climate

Due to its vast size, Brazil experiences many differing climates. In general it has a humid tropical and subtropical climate, except for the drier, semi-arid areas in the Northeast.

Culture

Modern Brazilian life is marked by various cultures coming together. The predominant influence is Portuguese, due to the historical connection to the Portuguese empire. Brazilian culture is also shaped by indigenous Indian and African cultures, along with more recent European and North American influences.

Religion

Approximately two-thirds of Brazilian people adhere to Roman Catholicism, just under one quarter adhere to Protestantism and less than one in ten express no religious affiliation.

Official Language

Portuguese is the official language of Brazil. English and Spanish are commonly taught as second languages. Many different minority languages are spoken by Brazil’s indigenous population, especially in more remote areas.

Brazil HR at a Glance

Employment Law

The main source of labor law in Brazil is the Consolidation of Labor Laws 1943 (Consolidação das Leis do Trabalho, CLT), which is also known as the Labor Code. Its extensive 2017 reforms, known collectively as the Labor Reform, implemented changes to many articles and was intended to modernize the Labor Code, simplify procedures, better recognize collective negotiations and formalize workforce regulation.

In Brazil, labor laws are a matter of federal law rather than state and municipality legislation. Therefore, labor laws are generally standardized.

Employment relationships are also governed by the provisions outlined in Collective Bargaining Agreements (CBAs).

Employment Contract

A written employment contract is not required in Brazil. However, it is strongly recommended to furnish a written contract to include agreement on certain conditions and details. These include:

  • Salary and benefits
  • Job role
  • Working hours
  • Place of work
  • Agreement on overtime pay and the offset of extra working hours
  • Probation periods
  • Fixed terms (if applicable)
  • Employee’s duties of confidentiality, non-disclosure agreements and non-competition clauses
  • Company policies and standard operating practices, such as IT-related practices and expense reimbursement
  • The conditions of travel and transfers 

Any provisions concerning the above may not be considered valid and enforceable if a written contract is not executed. In that case, the employment relationship would be subject to  the Labor Code and interpreted similarly by any court. 

The employment contract should additionally observe the following minimum conditions:

  • The legal minimum wage or a minimum wage negotiated by CBA
  • Holiday entitlement of 30 days, with payment of additional holiday pay at one-third of the regular salary
  • Maximum working hours (normally eight hours per day and 44 hours per week)
  • Payment of one extra month’s salary (13th month salary)
  • Brazilian Severance Indemnity Fund (FGTS)

Contract Terms

Employment agreements in Brazil are usually set for an indefinite term. Fixed-term employment agreements are only allowed: 

  • for up to two years when either the temporary nature of the service justifies a pre-established term or the business activities have a temporary nature; 
  • during an initial 90-day probation employment period, after which the employment agreement will become for an indefinite term. 

The fixed-term agreement will automatically become an indefinite term employment agreement if the agreement: 

  • is intended for a fixed term, but the reason to justify it is not one of the reasons permitted by law; 
  • does not include a clause confirming the duration of the term and the legal justification for having a fixed-term; 
  • is extended more than once; 
  • the maximum term of the fixed-term agreement is exceeded; 
  • any renewal is not agreed upon by both parties in writing;
  • if successive fixed-term employment agreements are used without observing the legally mandated 6-month break.

Pre-Employment Checks

Brazilian law restricts what type of information can be asked from employees by employers and checked during the recruitment process.

It is acceptable for employers to conduct a background check on the employee’s identity, education and professional history. However, an employer is not permitted to run a criminal or financial check on a prospective candidate. Doing so is considered discriminatory behavior.

An applicant is obligated to submit to a medical examination. Depending on the employee’s line of work, there can be other mandatory test requirements. If the test results are not satisfactory, the employer has the right to prevent future labor claims. This means they can terminate the recruitment process following the test. However, companies must have justifiable reasons in order to prevent being sued for discrimination.

Probation Period / Trial Period

A trial period may be established as a provision of the employment contract. The trial period can last for a period of up to 90 days. This period may also be split into two periods, adding up to 90 days. The probation period may be renewed once if the limit of 90 days is observed (e.g. at 45 days renewable for 45 days or 30 days renewable for 60 days).

Working Hours

The regular working period cannot exceed eight hours per day and 44 hours per week. Employees who work more than six hours a day are entitled to at least one-hour break. There must be a minimum rest period of 11 hours between the completion of a working day and the beginning of another. Employees are entitled to a paid rest period each week, preferably on Sundays. Some specific categories allow for a different work shift.

Employees who work outside the employer’s workplace (remotely) and those who serve in a management position are exempt from working time limitations.

Overtime

Overtime, in general, should be limited to no more than two hours per day. Compensation for overtime work must be offered at a rate at least 50% higher than the compensation for regular work. If overtime work is performed on Sundays or a holiday period, the additional rate of pay is 100% over the standard rate.

Employees and employers may agree to bank hours to offset any overtime worked instead of taking payment. In this case, the overtime worked in one day may be compensated by the exact reduction of the work shift in another day or days. This must be taken within a period of six months.

The following categories of employees are not entitled to receive overtime payments and are not subject to the established limits on working hours under the Labor Code: 

  • employees who perform activities outside of the company’s established facilities without defined working hours
  • high-level employees (such as managers) who occupy trust positions
  • employees who work remotely

Health and Safety in the Workplace

Employers are liable for protecting the health and safety of their workforce. Thus, they must ensure a healthy and safe workplace for employees and comply with all mandatory regulations regarding healthy and safety matters. These regulations cover mandatory periodical medical examinations, medical examinations upon admission and termination, medical records, provision of specific task related training, maintenance of an Internal Commission for Accident Prevention (CIPA) as well as other requirements.

Bonus

Most employees are entitled to receive a statutory Christmas bonus each year, equivalent to one monthly salary. Typically, 50% of the Christmas bonus must be paid by November 30 and the remaining 50% on or before December 20. 

It is common practice in Brazil to reward employees through bonus payments, which may be contractual or discretionary. All bonuses must be provided on an equal opportunity basis to all employees at similar levels.

Bonus terms and conditions are generally agreed upon at will between the employer and the employee. However, employers should note that if a bonus is paid regularly it might be considered as part of the employment contract. In this case, it becomes subject to regulations. For example, after establishing the regular payment of a bonus, it may not be altered to the detriment of the employee. 

To ensure the bonus received by the employee is not considered part of his or her contractual remuneration, the following considerations must be met: 

  • The bonus payment must be offered at the employer’s discretion.
  • The bonus payment must not be paid out on a regular basis.
  • The bonus payment must be related to the employee’s performance being “above the usual expected.”

Termination

Grounds

Under Brazil’s labor legislation, there are five distinct types of termination.

  1. Termination without cause: the employer is not required to disclose the reason
  2. Resignation by the employee
  3. Indirect termination: this type of termination is characterized by a serious misconduct the employer commits against the employee
  4. Termination by mutual consent: both parties mutually agree to terminate employment
  5. Termination for cause: must be grounded in one of the situations:
  • an act of dishonesty
  • intemperance of conduct (related to inappropriate sexual behavior) or misconduct
  • habitual trading on the employee’s own account without permission from the employer or when such an act constitutes as competition to the employer or is harmful to the business;
  • criminal conviction of the employee (if there has been no suspension of the sentence)
  • negligent performance of duties
  • habitual drunkenness in the workplace
  • breach of company secrets
  • an act of indiscipline or insubordination
  • abandonment of employment
  • physical violence or acts against someone’s honor or name during work (except in the case of self-defense or defense of third parties)
  • customary practice of gambling in the workplace

Notice Period

By Employer

Notice of termination must be offered by the employer prior to dismissal in the event of a termination without cause. This must be done at the employer’s initiative. For an indefinite term, the prior notice period is at least 30 days with three days added per year of work. This is limited to 90 days in total. The employer may opt to provide a pay in lieu of notice and release the employee from working during the period. Dismissal without notice is allowed in terminations for cause. In this case, the communication of the termination is immediate and no payment in lieu is due.

By Employee

When an employee initiates the termination of an indefinite term without cause, it is called a resignation. The employee must offer a prior notice to the employer of 30 days or request to be released from working during the prior notice period. 

In the event of a termination by mutual consent, the required prior notice period will be cut in half.

Severance Pay

Under the five distinct types of termination, severance pay guidelines are as follows:

  1. Termination without cause by the employer: payment of salary balance, accrued vacation plus one-third bonus, proportional vacation plus one-third bonus, proportional 13th month salary, 50% severance fund (FGTS) fine over the balance of the employee’s individual account. The employee is also entitled to withdraw the FGTS balance and receive unemployment insurance.
  2. Resignation by the employee: payment of salary balance, proportional 13th month salary, accrued vacation plus one-third bonus and proportional vacation plus one-third bonus.
  3. Indirect termination: same payments due as in a termination without cause. 
  4. Termination by mutual consent: half of the payment of the prior notice and the FGTS fine (employee’s part) and, in full, other labor allowances due in a termination without cause. In this type of termination, the employee will be able to withdraw up to 80%t of the FGTS balance and will not be entitled to receive unemployment insurance.
  5. Termination for cause: payment of salary balance and accrued vacation plus one-third.

Post-Termination Restraints / Restrictive Covenants

There is no specific regulation in Brazil regarding restrictive covenants or their enforceability following termination of employment agreements. However, the Brazilian Federal Constitution establishes an individual’s right and freedom to work.

Non-compete clauses

Based on case law, Brazilian labor courts tend to consider a non-compete agreement valid and enforceable after termination only when the following components are included in such an agreement:

  • Limitation in time: The period of restriction must be reasonable and, in all events, limited to 24 months maximum. 
  • Geographic limitation: A reasonable geographic limitation for the restriction must be established. It is possible to conclude the restriction applies on a worldwide basis or in a specific region.  
  • Limitation of object: The obligations set out by the non-compete must not exceed the limits of what is considered reasonable to protect the employer’s interests. 
  • Fair compensation: The parties may negotiate what is reasonable on a case-by-case basis based on the extension of the non-compete obligation, period and restrictions. For example, if the restriction is broad (e.g. the former employee cannot work for any company that is a competitor of the former employer) the general rule is that compensation, during the period of the non-compete obligation, should be equal to the amount the former employee would earn as his or her ordinary compensation if he or she remained employed for such period. As a rule of thumb, fair compensation corresponds to the last compensation multiplied by the number of months for the non-compete obligation. 

Customer & Employee non-solicit clause

Although there is no legislation in Brazil regarding non- solicitation provisions, it is common for employers to include this type of restriction in the employment agreements of employees at the management level. As there is also little history in case law on this matter, there are few conclusions about its enforceability. However, the current legal perspective generally understands that non-solicitation clauses are valid so long as the parties agree on: (a) limitations in time; (b) limitations of geography and (c) limitations of objective.

Trade Unions / Collective Agreements

Unions may negotiate on behalf of employers and employees and execute CBAs. The terms and conditions negotiated by the unions are mandatory, covering employers and employees within the specific category. An employer may also negotiate a specific CBA with the employees’ union, determining how it will apply to its employees. There are some matters that can only be implemented by means of a CBA, such as the offsetting of a working hours system or a profit sharing program.

Tax and Social Security

Personal Income Tax

Brazilian Resident Individuals are tax on a progressive basis

Income Brand Tax Rate %
BRL 0 – BRL 21,453.24 0
BRL 21,454,24 – BRL 32,151.48 7.5
BRL 32,152.48 – BRL 42,869.16 15
BRL 42,870.16 – BRL 53,565.72 22.5
Over BRL 53,566.72 27.5

Non-residents are taxed at a flat rate of 25%.

Residents of Brazil are taxed on their worldwide income. Non-residents are taxed exclusively on their Brazilian-sourced income.

Social Security

The social security contribution rates paid by employees vary depending on the individual’s salary level.

Income Band (monthly) Employee Contribution Rate (%) Portion to be deducted from the INSS (BRL)
Up to BRL 1,212.00 7.50
From BRL 1,212.01 – 2,427.35 9.00 18.18
From BRL 2,427.36 – 3,641.03 12.00 91.00
From BRL 3,641.04 – 7,087.22 14.00 163.82

The employer’s contribution is determined at a rate ranging from 20-28.8% percent of the total payroll, with no cap on earnings subject to contributions. The employer’s contributions are used to finance sickness, maternity benefits and family allowances. Employers are also subject to an 8% contribution to the Brazilian Indemnity Severance Fund (FGTS).

Type of Social Insurance Employer Contribution Rate (%)
INSS – Social Security Contribution 20.0%
EDUC – Social Development Activities (Primary Education) 2.5%
INCRA – Social Development Activities (Agriculture) 0.2%
SENAC – Social Development Activities (Trade education) 1.0%
SESC – Social Development Activities (Commerce) 1.5%
SEBRAE – Social Development Activities (Small enterprises) 0.6%
RAT/FAT – Work Accident Insurance 2.0%
TOTAL 27.8%

*The above table serves as a broad guideline. Actual rates charged by GoGlobal will differ.

Employees

Salary Payment

Salaries should be paid out monthly. It is important to note the Federal Constitution also specifically prohibits salary reductions, except in situations established by a CBA.

Payslip

A payslip must be provided to the employee at the time of salary payment. The payslip must include details of the pay period, the gross salary, the relevant deductions and the net salary.

Annual Leave

After a qualifying period of 12 months, employees are entitled to 30 calendar days of paid vacation. This should be taken within the subsequent period of 12 months, at times most convenient for the employer. The vacation period can be split into periods, provided the employee agrees to this. The vacation leave can be taken in up to three periods, one of which cannot be for less than 14 days. The other periods must not be less than five days each. Additionally, the employee may trade up to 10 days of their vacation period for the equivalent salary compensation. The vacation remuneration corresponds to the monthly salary plus one-third of the employee’s monthly salary. This is regarded as a vacation bonus. 

Carry over rules

If the vacation is not taken within the year, employers must pay double salary for the vacation period. In this case, employees retain the right to carry over the vacation to the next year.

Sick Leave

With the presentation of an appropriate medical certificate, an employer is responsible for an employee’s salary during the first fifteen days of sick leave. After the fifteenth day of absence due to sickness, the Social Security Agency (INSS) will pay a sick leave benefit to the employee. This benefit does not substitute the actual salary. It is based on INSS calculations of the last contributions and is capped at approximately BRL 6,100.00. The INSS-supported leave will last for as long as the employee needs to make a full recovery. This time is compensated without any legal limitation.

During medical leave, the employment contract is suspended. However, it may not be terminated.

Leave of absence

According to the Labor Code, an employee may be absent from work, without any adjustments to his or her salary, in the following situations accordingly:

  • marriage: three consecutive days
  • certified voluntary blood donation: one day each 12-month period
  • electoral enlistment: up to two days (consecutive or not)
  • military or any other public service: for the necessary period (the employer must continue paying the employee’s salary during the first 90 days)
  • university admission tests: on the exam dates 
  • participation in court proceedings: for the time period required by the authorities
  • union officers: for the time period necessary to meet the duties related to the mandate
  • accompanying a spouse or partner to medical appointments and follow-up examinations during their pregnancy: two days
  • accompanying a child of up to six years to a medical consultation: one day per year
  • certified cancer preventive exams: three days each 12-month period
  • legal abortion: two weeks

Companies must note that CBAs may also provide for other types of paid leave.

Compassionate & Bereavement Leave

Two consecutive days paid leave for death of a spouse, ascendant, descendant, sibling or a person who lives under the employee’s economic dependence (and is declared in his or her labor booklet).

Maternity & Parental Leave

All female employees are eligible for maternity benefits. The maternity benefit is subsidised by the INSS to the employee for 120 days. This period may commence up to 28 days before the expected birth date. The employer is responsible for paying this benefit. They can then deduct the relevant amount from the social security contributions due to the INSS. 

Male employees in Brazil are entitled to five days of paid paternity leave. 

Under certain circumstances, the maternity leave may be extended to 180 days. Paternity leave can be extended up to 20 days. In these cases, the requirements established by the government program must be observed. 

Adoptive parents are also entitled to the same 120 days for female employees and five days for male employees.

Public Holidays

Employees are entitled to paid leave from work on public holidays. Local (municipal or state) holidays may also apply, depending on where the company is based. If an employer requires an employee to work on a holiday, the remuneration paid must be at least double the regular compensation. Applicable CBAs may establish a higher rate for holiday remuneration.

Benefits to the Employee in Brazil

Statutory Benefits

The social security authority in Brazil provides different types of insurance programs to workers who have contributed to the system. Individual allowances are often dependent on the number of contributions made and on the amounts involved in each contribution. The main insurances provided by the social security authority are: 1) retirement allowance; 2) accident and illness allowance; 3) disability allowance and 4) maternity allowance.

Other Benefits

Typically, employees in senior roles are offered supplementary benefit packages. These may include:

  • Supplementary Private pension programs

  • Employers are not required to offer private healthcare to their employees, but it is very common

  • Collective bargaining agreements may establish additional benefits to employees and, therefore, employers must comply with the conditions set forth and grant such benefits to its employees

  • Meal vouchers

  • Transportation

Visas and Foreign Workers

General Information

To work in Brazil, a foreign national will be required to obtain a work visa. Applications are to be made to the Brazilian Ministry of Labor and Employment (MTE).

The most common types of visa are:

  • Temporary visa for employment contract: This is for foreign nationals who will work as an employee of a Brazilian company. It is valid for up to two years and may be extendable once for the same period. under certain qualifying terms, it may be converted into a permanent visa. The employer must submit a copy of the employment contract to the MTE and provide evidence the employee has sufficient qualifications and experience to occupy the position.
  • Permanent visa to represent a Brazilian company: This is for foreign nationals who will act as a director, manager or a managing administrator of a Brazilian company. This visa is either limited to the period in which the foreign national will hold the appointment. If that period is deemed indefinite, the visa is limited initially to a period of five years. This visa also requires a foreign investment of at least BRL600,000 into the company.
  • Temporary visa for technical and specialized services: This is for foreign nationals who will work as technicians or provide other specialized services in the name of the foreign company. Such visas can be valid for 30 days, 60 days or one year. For the visa application the company must provide the MTE with, along with other documentation, evidence of at least three years of relevant professional experience. 

The MTE usually requires between 30 and 45 days to process the documentation and information before confirming success or failure of the application. 

An employer-sponsored temporary work visa is personal and does not extend to third parties. Therefore, spouses and other family members of a foreign worker holding a temporary work visa must apply for their own work permit. However, these family members may seek a temporary work visa and are entitled to receive a family reunion visa. This type of visa allows them to exercise any activity in the country, including remunerated work activity, for the same period. 

The Brazilian Labor Code institutes a ‘two-thirds rule.’ This rule requires a company to hire two Brazilian employees for each foreign employee they may hire. This requirement is also reflected in relation to the ratio in the company payroll. Thi means two-thirds of the payroll must be absorbed by Brazilian employees.

Getting a Tax Number

In addition to the specific working visa, a foreign national must also obtain a: 

  • Brazilian ID card, (issued by the Brazilian Federal Police – it usually takes 60 to 180 days to obtain)
  • Work and social security card, (issued by the MTE – it usually takes seven to 10 days to obtain)

Both the work and social security cards are a requirement for obtaining employment. It is illegal for a Brazilian company to employ someone without these documents.

Brazil’s Public Holidays in 2022

S.No Occasion Date
1 New Year’s Day January 1st
2 Carnival February 28th
3 Carnival March 1st
4 Good Friday April 15th
5 Tiradentes Day April 21st
6 Labour Day May 1st
7 Corpus Christi June 16th
8 Independence Day September 7th
9 Our Lady Aparecida October 12th
10 All Souls Day November 2nd
11 Republic Proclamation Day November 15th
12 Christmas Day December 25th

Several other holidays are observed, either unofficially at a national level or by official local public observance.

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