Hire in Brazil

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Last updated at June 14, 2022
beautiful scenery in the country of brazil

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 fifth largest country in the world by area. It is a federal republic with a president who is both head of state and government. São Paulo and Rio de Janeiro are the major urban centres, and the total population is estimated at around 210 million. Brazil is considered as an advanced emerging economy with world’s most abundant renewable and non-renewable resources.

Area

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

Climate

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

Culture

Modern Brazilian life is formed by a coming together of various cultures; predominantly Portuguese (due to the historical connection to the Portuguese empire) and additionally indigenous Indian and African together 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/or Spanish are widely taught in schools as second languages. Many different minority languages are spoken by Brazils indigenous peoples in more remote areas.

Brazil HR at a Glance

Employment Law

The main sources of labour law in Brazil are the Consolidation of Labour Laws 1943 (Consolidação das Leis do Trabalho, CLT), also known as the Labour Code, and it’s extensive 2017 reforms known as Labour Reform which enacted changes to many articles and was intended to update the labour Code, simplify procedures, better recognize collective negotiations and formalize workforce regulation.

In Brazil, labour laws are a matter of Federal law rather than State and Municipality legislation and therefore generally standardized.

Employment relationships are also governed by rules provided by Collective Bargaining Agreements (CBA) which may be established by either union representation of employers and employees or directly between these parties.

Employment Contract

A written employment contract is not required, however, it is strongly recommended to execute a written contract, to include agreement on certain conditions, such as:

  • Salary and benefits
  • Job role
  • Working hours
  • Place of work
  • Agreement on Overtime/offset of extra working hours.
  • Probation periods
  • Fixed terms (if applicable)
  • Employee’s duties of confidentiality, non-disclosure and non-competition obligations
  • 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. The employment relationship would be governed by the Labour Laws and interpreted similarly by any court.

The employment contract should additionally observe the following minimum conditions:

  • Legal minimum wage or 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 8 hours per day and 44 hours per week)
  • Payment of one extra month’s salary (13th salary)
  • Brazilian Severance Indemnity Fund (FGTS)

Contract Terms

Employment agreements in Brazil are usually 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 for a fixed term, but the reason to justify it is not one of the reasons allowed by law;
  • does not include a clause confirming the term and the legal justification for that;
  • is extended more than one time;
  • the maximum term of the agreement is exceeded;
  • any renewal is not agreed by the parties in writing;
  • if successive fixed-term employment agreements are used without observing the legislated 6-month break.

Pre-Employment Checks

Brazilian law is restrictive on information that can be sought from employees and that can be checked during the recruitment process.

While it is acceptable for employers to undertake a background check on the employee’s identity, education and professional history, an employer cannot run a criminal/financial check on their potential candidates as it is considered discriminatory behaviour.

An applicant is obligated to submit to a medical examination and depending on the employee’s work activities, there could be other mandatory test requirements. If the test results are not satisfactory, the employer has the right to prevent future labour claims, e.g. by discontinuing the hiring process. However, companies must have justifiable reasons to prevent being sued for discrimination.

Probation Period / Trial Period

The trial period may be established within the terms of the Employment Contract. The trial period may be for a period up to 90 days. This period may also be split into two periods that together add up to 90 days and may be extended only once, at the discretion of the employer, to the total period.

Working Hours

The regular working period cannot exceed 8 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 end of a working day and the beginning of another. Employees are entitled to a paid weekly rest period preferably on Sundays. Some specific categories have a different work shift.

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

Overtime

In general overtime should be limited to two hours per day. Compensation for overtime work must be at least 50% greater than the compensation for regular work. If the overtime is performed on Sundays or holidays, the additional pay is 100 per cent of the standard rate.

Employees may negotiate with the employers and agreement may be made to bank hours to compensate any overtime worked instead of taking payment. In this sense, the overtime worked in one day may be compensated by the exact reduction of the work shift in another day or days, within a period of six months.

The following employees are not entitled to overtime payments and are not subject to the limits on working hours under the Labour Code:

  • employees who perform activities outside of the company’s facilities and wherein those activities as such, are not compatible with defined working hours;
  • employees (such as managers) who occupy trust positions; and
  • employees who work in a remote work system.

Health and Safety in the Workplace

Employers are responsible for the health and safety of their employees. They are obliged to ensure a healthy and safe workplace for employees and to 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) amongst others.

Bonus

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

It is quite common in Brazil to reward employees through the payment of bonuses. These may be contractual or discretionary, but they must be provided on an equal opportunity basis to all employees at similar levels.

Bonus term and conditions are generally agreed upon at will between the employer and employee. However, employers should note that if a bonus is paid regularly it could be considered as part of the employment contract therefore subject to its regulation and for example the regular payment of bonus established on not allowed to be altered to the detriment of the employee.

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

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

Termination

Grounds

Under Brazilian labour legislation, there are five distinct types of termination.

1. Termination without cause: the employer does not have the obligation to disclose the reason.

2. Resignation by the employee.

3. Indirect termination: a termination characterized by a serious misconduct that the employer commits against the employee.

4. Termination by mutual consent: whereby both parties mutually agree to terminate employment.

5. Termination for cause. this 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, or when it constitutes an act of -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’s secrecy;
  • 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; or
  • customary practice of gambling in the workplace.

Notice Period

By Employer

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

By Employee

In the case of a termination of employment agreement of an indefinite term, without cause and upon the employee’s initiative (resignation), the employee must provide 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 termination by mutual consent, the prior notice period will be reduced by half.

Severance Pay

Under the five distinct types of termination severance pay 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 salary, 50 per cent 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 the unemployment insurance.

2. Resignation by the employee: payment of salary balance, proportional 13th 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 the payment of the prior notice and the FGTS fine (employee’s part) and, in full, other labour allowances due in a termination without cause. In this type of termination, the employee will be able to withdraw up to 80 per cent of the FGTS balance and will not be entitled to receive the 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 on restrictive covenants or the enforceability thereof following termination of employment agreements. However, the Brazilian Federal Constitution establishes an individual’s right and freedom of work.

Non-compete clauses

Based on case law, Brazilian Labour Courts tend to consider a non-compete agreement valid and enforceable after termination only provided the following components are in such 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 include that the restriction applies on a worldwide basis or in a specific region;
  • Limitation of object – the obligation must not exceed the limits of what is considered reasonable to protect the former 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 (i.e., 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/ her ordinary compensation if he/she remained employed for such period. It is considered a fair compensation should correspond 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 Brazilian Labour Law regarding non- solicitation provisions it is common for employers to include this restriction in employment agreements of management level employees. As there is also little in case law on this matter there are few decisions about its enforceability. However, current general legal opinion understands that non-solicitation clauses are valid as long as the parties agree on: (a) limitation in time; (b) limitation of geography and (c) limitation of object.

Trade Unions / Collective Agreements

Unions can negotiate on behalf of the employers and employees and execute collective bargaining agreements. The terms and conditions negotiated by the unions are mandatory and cover the employers and employees of the category. An employer may also negotiate a specific collective bargaining agreement, applicable to its employees, directly with the employees ́ union. There are some matters that can only be implemented by means of a collective bargaining agreement such as an offsetting of a working hours system and profit/result 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, and non-residents are taxed exclusively at source 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 will differ.

Employees

Salary Payment

Salary should be paid monthly. It is important to note the Federal Constitution also specifically prohibits salary reduction, except where this is agreed by way of collective bargaining agreement.

Payslip

A payslip must be provided to the employee by the time of salary payment. The payslip must include details of the pay period, the gross salary for that period, 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, and at times that are most convenient to the employer. The vacation period may be split provided that the employee agrees. The vacation period can be taken in up to three periods, one of which cannot be less than 14 days and the others cannot be less than 5 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 1/3 of the employee’s monthly salary as vacation bonus.

Carry over rules

If the vacation it is not taken within the year, employers must pay double salary for the vacation period, as well as allowing the employee to carry over the right to take the vacation to the next year.

Sick Leave

In the event of sickness leave, and with the presentation of an appropriate medical certificate, the employer will be responsible for the employee’s salary during the first fifteen days. 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 but 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 the time necessary for the employee to make a full recovery from their sickness without any legal limitation.

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

Leave of absence

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

  • 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 salaries during the first 90 days);
  • university admission tests: on the dates of the exams;
  • participation in court proceedings: for the necessary period required by the authorities;
  • union officers: for the necessary period 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;

Collective bargaining agreements may also provide other types of paid leave that must be observed by the company.

Compassionate & Bereavement Leave

Two consecutive days paid leave for death of a spouse, ascendant, descendant, sibling or person who, declared in his or her labour booklet, lives under his or her economic dependence.

Maternity & Parental Leave

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

Male employees are entitled to 5 days of paid paternity leave.

Under certain circumstances the maternity leave may be extended to 180 days and the paternity leave to 20 days, provided some requirements established by the government program are observed.

Parents adopting 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 the employer demands the employee to work on a holiday, the remuneration paid with respect to the worked holiday must be at least double the regular compensation. Applicable collective bargaining agreements may establish a higher rate for the holiday remuneration.

Benefits to the Employee in Brazil

Statutory Benefits

The social security authority provides the following insurances to workers who have contributed to the system, individual allowances will depend 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/illness allowance; 3) disability allowance; and 4) maternity allowance.

Other Benefits

Typically, employees in senior roles are offered supplementary benefit packages, which typically 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 require a work visa. Applications are to be made to the Brazilian Ministry of Labour and Employment (MTE).

The most common types of visa are:

  • Temporary visa for employment contract. 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 or, under certain qualifying terms, may be converted into a permanent visa. The employer must submit a copy of the employment contract to the MTE and provide evidence that the employee has sufficient qualifications and experience to occupy the position.
  • Permanent visa to represent a Brazilian company. 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, or if that period is indefinite the visa is limited initially to a period of five years. This visa also requires foreign investment of at least BRL600,000 into the company.
  • Temporary visa for technical and specialized services. 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, amongst other documentation, evidence of relevant profession experience (minimum three years).

The MTE usually requires between 30 and 45 days to analyze the documentation and information before confirming approval or otherwise.

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, which allows them to exercise any activity in the country, including remunerated activity for the same period in which the residence permit was granted.

The Brazilian Labour Code institutes a ‘two-thirds rule’. This requires that a company must hire two Brazilian employees for each foreign employee they may hire. This requirement is also in reflected in relation to the ratio in the company payroll i.e., 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 7 to 10 days to obtain)

Both the work and social security cards are a requirement for obtaining employment, indeed it is illegal for a Brazilian company to employee persons without obtaining these.

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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