In Brazil, employer of record (EOR) products and services play a crucial role in complying with the country’s complex employment regulations. AI-powered EOR services cover everything from legal employment contracts to managing payroll taxes. By tapping into the expertise of a Brazilian employer of record, companies can confidently navigate diverse regulatory requirements.
An EOR support reduces the risk of non-compliance while enabling businesses to focus on their core activities, freeing them from the complexities of local legal and tax requirements.
Hiring in Brazil
Companies must be familiar with Brazil's specific legal and tax obligations. Brazil's labor laws, consolidated in the Consolidação das Leis do Trabalho (CLT), heavily protects employees while presenting complex challenges for businesses. When negotiating terms with a candidate, the gross salary must be agreed upon and paid in Brazilian Reais (BRL). Key considerations include:
-
Positions of trust (cargo de confiança): Employees in senior strategic or managerial roles can be classified as exempt from overtime tracking. To qualify, their role must involve significant authority, and they must receive a higher salary, with a function gratification at least 40% above their subordinates, ensuring compliance with Brazilian employment laws.
-
Time control and overtime: Employees in non-trust positions are legally entitled to overtime pay for any hours worked beyond the standard limits. Accurate time tracking is mandatory and a common source of labor disputes.
-
Mandatory salary increases: Salaries are subject to annual adjustments based on inflation, as stipulated by Collective Bargaining Agreements (CBAs) negotiated by unions for specific industries. The effective date of these adjustments, known as the data-base, varies by union and is not fixed to a single month.
-
Equal pay: Brazil enforces a strict equal pay for equal work principle. Furthermore, Law No. 14,611/2023 mandates salary transparency and enhanced compliance measures to ensure gender pay equity, requiring companies with 100 or more employees to submit biannual reports.
Employment contracts in Brazil
Best practice is to implement a strong, written employment contract in Portuguese, detailing all terms of employment, including compensation, benefits, and termination requirements.
An offer letter and employment contract should always state the salary and any compensation amounts in BRL. This ensures compliance with Brazilian legal requirements. Employers must formally register the employment relationship in Brazil's eSocial system, which populates the employee's digital labor card (Carteira de Trabalho e Previdência Social - CTPS Digital). This registration includes key details such as hire date, position, salary, and contract duration.
Probation period in Brazil
A probationary period can be set for a maximum of 90 days, often structured as an initial 45-day period with a 45-day extension. At the end of the probationary period, the contract can be terminated with reduced severance costs.
Brazil non-compete agreements
While not explicitly regulated by labor law, non-compete clauses are enforceable if they meet court-established criteria: a limited timeframe (typically up to two years), a geographic scope limited to Brazil, a scope strictly related to the employee's activities, and, most importantly, financial compensation to the employee for the entire non-compete period, separate from their regular salary.
Working hours in Brazil
The standard workweek in Brazil is up to 44 hours, typically structured as an 8-hour day with a mandatory lunch break of at least 1 hour, which is not counted as part of the workday. Adhering to these limits is critical to avoid overtime claims.
Leave and holidays in Brazil
Brazil public holidays
Brazil observes numerous public holidays at the federal, state, and municipal levels. National public holidays include:
-
New Year's Day (January 1)
-
Good Friday
-
Tiradentes' Day (April 21)
-
Labor Day (May 1)
-
Independence Day (September 7)
-
Our Lady of Aparecida (October 12)
-
All Souls' Day (November 2)
-
Republic Proclamation Day (November 15)
-
Christmas Day (December 25)
While not official federal holidays, Carnival and Corpus Christi are widely observed and typically treated as non-working days.
Annual leave (vacation)
Companies must be careful to comply with local labor laws regarding vacation time. After 12 months of service, employees are entitled to 30 calendar days of paid vacation. This vacation can be taken in a single period or split into up to 3 periods, with one period being at least 14 days and the others at least 5 days each. Employees must also receive a vacation bonus equivalent to 1/3 of their monthly salary.
Sick leave
If an employee provides a valid medical certificate, the employer is responsible for paying their salary for the first 15 days of absence. For absences exceeding 15 days due to the same illness, the employee receives sickness benefits directly from the National Institute of Social Security (INSS) for the duration of the medically certified incapacity.
Maternity and paternity leave
-
Maternity leave: Pregnant employees are entitled to 120 days of paid maternity leave and have job stability from the confirmation of pregnancy until 5 months after childbirth. The leave is paid by the INSS.
-
Paternity leave: Non-birthing parents are entitled to 5 days of paid leave.
-
Extended leave (Empresa Cidadã): Companies enrolled in the government's Empresa Cidadã program can offer extended maternity leave of 180 days and paternity leave of 20 days. This is a highly expected benefit in the professional market.
Compensation and benefits in Brazil
13th-month salary
In Brazil a 13th-month salary is a mandatory annual bonus equivalent to one month's pay. It is typically paid in two installments: the first by November 30 and the second by December 20. It is crucial to clarify during negotiations whether a salary offer is inclusive or exclusive of this bonus.
Mandatory and common benefits in Brazil
Navigating Brazil’s employee benefits requires distinguishing between what is legally required, mandated by a CBA, or considered a market standard. An EOR ensures compliance with all applicable requirements.
-
Transportation voucher (Vale-Transporte): Legally required for all employees who use public transportation for their commute. The employee co-pays a portion, which the employer can deduct up to 6% of their base salary.
-
Meal vouchers (Vale-Refeição/Alimentação): While not a federal mandate, meal vouchers are required by most CBAs and are a standard market expectation.
-
Health insurance: Brazil has a public healthcare system (SUS), but private health insurance is a highly valued and common supplementary benefit offered by employers to attract top talent.
-
Life insurance: Often required by industry-specific CBAs.
Payroll and taxes in Brazil
Brazil social security contributions
Payroll in Brazil includes several mandatory contributions:
-
INSS (National Institute of Social Security): Both employers and employees contribute to the INSS, which funds pensions, sick leave, maternity leave, and other social benefits. Employee contribution rates are progressive and deducted from their salary.
-
FGTS (Severance Guarantee Fund): Employers must contribute 8% of an employee's gross monthly compensation into a dedicated FGTS account. This is a severance fund, not a pension, which the employee can access under specific circumstances, most notably termination without cause.
Termination and severance in Brazil
Terminating an employment contract in Brazil is complex and must follow strict procedures. For a termination without cause, the employer must provide a notice period (aviso prévio) of 30 days. This notice period increases by 3 days for each year of service, up to a maximum of 90 days total. Only 30 days can be worked; any additional days must be paid as indemnity.
The final severance payment for a termination without cause includes:
-
Salary balance
-
Payment for the notice period (if not worked)
-
Prorated 13th-month salary
-
Prorated vacation pay plus the 1/3 vacation bonus
-
A penalty of 40% of the total balance in the employee's FGTS account, paid by the employer.
Employee transfers in Brazil
Under the principle of 'succession of employers', employment contracts are automatically preserved during a merger or acquisition. However, transferring an employee from one unaffiliated company to another is not permitted and requires a formal termination and re-hire.
An EOR simplifies workforce management, as the employment relationship remains with G-P, allowing for seamless support of your company's evolving needs without altering the legal employment status.
Why G-P?
G-P EOR is the award-winning, AI-powered SaaS platform that empowers ambitious companies to build global teams. Onboard, manage, and pay top talent in over 180 countries in minutes, bypassing the typical time, cost, and complexity of local entity setup. G-P EOR is the preferred partner for leading HCM, PEO, and payroll platforms. Bring your workforce data together in one place to maintain existing workflows while guaranteeing consistent and accurate data across your integrated systems.
Request a proposal today to learn more.
