An Employer of Record (EOR) in Brazil is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
Discover the key considerations and essential details you should be aware of before you hire your remote team in Brazil.
On this page: Employment Contracts | Employment Laws | Social Security | Personal Income Tax | Employee Benefits | Employment Visas
Employment Contracts in Brazil
What is an employment contract?
An employment contract is a pre-established agreement between a company and an employee, either formally or informally. It establishes an employment relationship between an individual and a legal entity or between two legal entities.
What does the law say about the employment contract?
According to Art. 442 of the CLT, an "individual employment contract is the tacit or express agreement, corresponding to the employment relationship." This document is prepared to ensure that labor standards and internal company rules are followed.
The regulation of the employment contract is also established through the first paragraph of Article 7 of the Federal Constitution.
What are the main types of employment contracts?
- Fixed-term contract: This type establishes the exact time during which the contractor will provide services to the establishment. The maximum duration is two years.
- Contract for an indefinite period: The standard type in Brazilian legislation, offering various benefits to workers.
- Occasional employment contract: Used when companies need services that do not require hiring a professional on a regular basis.
- Internship contract: Common for developing professionals, offering a learning opportunity without constituting an employment relationship.
- Experience contract: Falls into the category of specific contracts, often used for a trial period of up to 90 days.
- Teleworking contract: A category of distance work, signed for an indefinite or fixed period, regulated through Labor Reform in 2017.
- Intermittent contract: A new category of work, created in the Labor Reform in 2017, allowing non-continuous service provision.
- Self-employment contract: Similar to an occasional employment contract, involving a service provision contract without an employment relationship.
Which contracts generate an employment relationship?
For an employment contract to generate an employment relationship, the employee must be considered a subordinate worker of the contracting company, following specific requirements.
- Internship: Can be considered an employment contract if signed between the company and the student, fulfilling a specific workload.
- Effective CLT contract: The standard contracting model for an indefinite period, teleworking, intermittent, or temporary, considered an employment relationship.
Which contracts add labor rights to the employee?
Only open-ended, teleworking, and intermittent contracts provide workers with labor rights. Temporary and fixed-term contracts also guarantee rights but with limitations.
Rights guaranteed by the employment relationship include salary, vacation, 13th salary, overtime pay, at least one paid day off per week, early warning, FGTS, INSS, and unemployment insurance.
Contracts governed by the CLT
The CLT governs three types of employment contracts, each with or most of the labor rights guaranteed.
- Employment contract for an indefinite period: Guarantees several rights to workers and specific compensations in case of termination without just cause.
- Fixed-term employment contract: Three types: standard, experience, and apprenticeship. Each has specific rules and durations.
- Intermittent employment contract: Guarantees labor rights during the period of activity.
Ensure legally sound employment contracts tailored to local laws. Benefit from expert guidance, crafting clear terms and compliance through the assistance of an Employer of Record (EOR) in Brazil.
Employment Laws in Brazil
For foreign companies expanding into Brazil and considering hiring a remote team, it's essential to grasp key employment laws. This includes insights into minimum wages, payroll cycles, probation and notice periods, working hours, overtime pay, and the 13th-month salary.
Minimum Wages
As of January 2024, Brazil's minimum wage is 1,412 BRL per month. This is an all-time high for the country.
Payroll Cycle
In Brazil, the payroll cycle is either monthly or bi-weekly. The monthly cycle is more common. Employees are usually paid on the 15th and 30th of each month.
Probation Period
The probationary period in Brazil, governed by Article 445 of the CLT, holds significance in assessing the compatibility between employers and new hires. While the law allows for a maximum probation period of 90 days, the duration can be tailored to specific needs. Common models include a 30-day probation, extendable for an additional 60 days, or a 45-day probation, extendable for another 45 days.
During this initial phase, employers evaluate the performance and suitability of the employee for the role. However, practical considerations suggest that the 90-day period, inclusive of extensions, might sometimes prove insufficient for a comprehensive assessment.
Notably, there is no statutory minimum notice period required for termination in Brazil. In case of termination initiated by the employer during the probation period, the departing employee is entitled to various components, including the salary balance, proportional Christmas bonus, proportional paid time off, vacation bonus, withdrawal of FGTS with a 40% fine, and compensation for the early termination. The latter constitutes 50% of the salary the employee would have received if the contract had run its full course (as per Article 479 of the CLT).
Conversely, if an employee decides to resign before completing the probationary period, entitlements encompass the salary balance, proportional Christmas bonus, proportional paid time off, vacation bonus, and FGTS without the right to withdraw. Additionally, the employee owes the company indemnity equivalent to half of the remaining days until the end of the contract (per Article 480 of the CLT).
Notice Period
In Brazil, when ending an employment contract, there's a trial period to consider. Once this trial period concludes, termination is possible with proper notice. Here's how notice periods work:
- Up to one year of service: At least one month's notice, ending at the month's conclusion.
- Second to ninth year of service: Two months' notice, concluding at the end of the month.
- Tenth year of service and beyond: Three months' notice, ending at the month's conclusion.
Your company might have its notice policy, but it can't be less than one month. Termination requires formal communication via registered mail. The notice must reach the employer or employee by the last working day of the month to be effective for that month. This structured process ensures a clear and agreed-upon exit.
Working Hours and Overtime Pay
In the Brazilian work landscape, standard working hours in the industry are set at eight hours per day and forty-four hours per week. Typically, employees enjoy one day off each week, commonly falling on Sundays.
If extra work hours are needed, employees can be asked to work a maximum of two overtime hours per day. Here, it's important to note that these overtime hours come with additional compensation – at least a 50% premium on the regular pay. For those burning the midnight oil with night shifts, an extra 20% premium is in play.
While the norm is two extra hours, exceptions can be made in emergencies. However, for any overtime beyond the initial two hours, a special agreement must be officially registered with the Ministry of Labor and Social Security. This ensures a clear and documented understanding for all parties involved.
13th Month Salary
In Brazil, a special year-end perk awaits employees in the form of the Christmas bonus, often referred to as the 13th month salary. This annual reward signifies an additional month's pay, acting as a festive financial boost.
For each completed 12 months of the calendar year within a company, employees become eligible for this bonus. The payout typically occurs in two installments, with half delivered in November and the remaining portion in December. This seasonal bonus not only adds an extra layer of joy to the holiday season but also serves as a valuable recognition of an employee's dedication and service throughout the year.
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Personal Income Tax in Brazil
Personal income tax rates in Brazil are progressive, meaning that the tax rate you pay increases as your income increases. For the 2023 tax year (which you would file in 2024), the rates are as follows:
- 0% on income up to R$22,847.72
- 7.5% on income from R$22,847.73 to R$33,923.75
- 15% on income from R$33,923.76 to R$45,011.56
- 22.5% on income from R$45,011.57 to R$55,976.16
- 27.5% on income exceeding R$55,976.16
In addition to the federal income tax, there are also state and municipal taxes that may apply to your income. However, the rates for these taxes are much lower than the federal income tax rates.
Here are some additional things to keep in mind about personal income taxes in Brazil:
- Employees are considered a resident of Brazil if you spend more than 183 days in the country in a given calendar year.
- Employees must file a tax return if your income exceeds R$28,559.70 in the 2023 tax year.
- The deadline for filing your tax return is April 30th of the following year.
Receive assistance with personal income tax deductions. Access expert advice to meet obligations while optimizing financial situations, facilitated by reliable local expertise from an Employer of Record (EOR) in Brazil.
Employee Benefits in Brazil
Employee benefits in Brazil are quite comprehensive and cover a wide range, including mandatory government-regulated benefits and additional company-offered perks. Here's a breakdown:
Mandatory Benefits:
- Brazilian minimum wage: Guaranteed minimum income set by the government.
- Overtime: Overtime work is compensated at higher rates than regular hours.
- Brazilian social security and pensions: Both employees and employers contribute to a national social security system that provides pensions, unemployment benefits, and healthcare.
- Severance fund: Employers contribute to a fund that provides employees with a financial cushion if they are laid off.
- Christmas bonus: One-month's salary bonus paid in December.
- Vacation bonus: One-third of an employee's monthly salary paid before vacation.
- Paid time off: Employees are entitled to 30 days of paid vacation per year, with additional days for maternity/paternity leave, sick leave, and bereavement leave.
- Medical & dental care: Most employers provide access to private healthcare plans or contribute to public healthcare costs.
- Lump sum death benefits: Paid to the family of a deceased employee.
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Employment Visas to Relocate Foreign Employees to Australia
Relocating employees to Brazil involves navigating different employment visa types to suit their specific roles and the duration of their stay. Here's a breakdown of the main options:
Temporary Residence Visas:
VITEM V (Temporary Work Visa): This is the most common visa for foreign professionals working in Brazil. It's valid for up to two years and renewable for the same period. It requires approval from the Ministry of Labor and Employment, and is typically issued for individuals with specialized skills or expertise not readily available in the Brazilian workforce.
VITEM I (Researchers, Scientists, Professors, Post-Docs): This visa is for researchers, scientists, professors, and post-doctoral fellows engaged in academic or scientific research in Brazil. It's valid for up to a year and renewable for the same period.
VITEM IV (Undergraduate or Postgraduate Students): This visa is for international students enrolled in undergraduate or postgraduate programs in Brazil. It's valid for the duration of the student's program and can be extended for additional semesters.
VITEM VII (Religious Activity): This visa is for foreign religious workers engaged in religious activities in Brazil. It's valid for up to three years and renewable for the same period.
VITEM VIII (Lay Volunteerism with Stay): This visa is for foreign volunteers engaged in non-profit or humanitarian work in Brazil. It's valid for up to one year and renewable for the same period.
Permanent Residence Visa:
Visto Permanente (Permanent Residence Visa): This visa allows the holder to live and work in Brazil permanently. It's typically granted to individuals who have resided in Brazil legally for at least two years on a temporary visa, or to investors who meet certain criteria.
Additional Visa Option:
Brazil Digital Nomad Visa: Launched in 2022, this visa allows remote workers and self-employed individuals from abroad to live and work in Brazil for up to one year, with the possibility of extension for another year. This visa caters to the growing trend of digital nomadism and offers a flexible option for foreign professionals who want to experience living and working in Brazil.
Choosing the Right Visa:
The best visa for your employee will depend on their specific circumstances, such as their job role, the duration of their stay, and whether they intend to eventually reside in Brazil permanently. It's recommended to consult with an immigration lawyer or specialist to determine the most suitable visa option for your employee.
Receive comprehensive support for work visa sponsorship. Navigate intricate procedures with ease, ensuring compliance through expert guidance and local support from an Employer of Record (EOR) in Brazil.
| Overview | |
| Continent | Americas |
| Country | Brazil |
| Time zone | UTC−05:00 (Brasília time −2) — Acre and Southwestern Amazonas |
| Total Time zones | 4 |
| Working hours per week | 44 |
| Working week | Monday–Friday |
| Typical hours worked | 8.5 |
| Personal Tax filing deadline | Last business day of April |
| Financial Year | 1st January to 31st December |
| Capital | Brasilia |
| Date format | dd/mm/yyyy |
| Currency | Brazilian Real (BRL) |
| VAT | the standard rate is 17% |
Selecting an Employer of Record (EOR) in Brazil is a strategic move for businesses eyeing international expansion. Entrusting responsibilities such as navigating local employment regulations, managing intricate payroll procedures, and ensuring compliance to the EOR facilitates the seamless establishment of a presence in Brazil without the complexities associated with setting up a legal entity. This collaborative partnership empowers businesses to concentrate on their fundamental objectives and growth strategies while guaranteeing that their workforce in Brazil operates in strict adherence to local laws. The EOR simplifies international employment processes and offers expert guidance to navigate the intricate landscape of Brazilian employment regulations.
Social Security in Brazil - Employer and Employee Social Security Contributions
Employer Payroll Contributions in Brazil
Employee Payroll Contributions in Brazil
Social Security Contribution Rates - 2023 Update
The Brazilian government has issued Ordinance No. 26 of 10 January 2023, which outlines the progressive social security contribution rates for 2023. The contribution rates are as follows:
The ordinance also establishes the minimum and maximum contribution bases for 2023, which cannot be lower than BRL 1,302.00 or higher than BRL 7,507.49.
INSS (Instituto Nacional do Seguro Social)
In Brazil, Social Security is managed by INSS (Instituto Nacional do Seguro Social), responsible for collecting contributions to sustain the country's Social Security system. These contributions cover retirements, pensions, disability benefits, and other legally mandated benefits.
Contributions:
FGTS (Fundo de Garantia do Tempo de Serviço)
In Brazil, the Severance Pay Fund, known as FGTS (Fundo de Garantia do Tempo de Serviço), plays a crucial role in ensuring financial security for employees. Here are key details about employer contributions to the FGTS:
Employer's Contribution:
Utilizing Accumulated Funds:
Accumulated funds can be withdrawn by the employee for designated purposes, providing financial flexibility.
Dismissal Without Just Cause:
Pensions:
Private pension plans in Brazil are optional, offering two types: PGBL (Plano Gerador de Benefício Livre), which complements national insurance with tax relief conditions, and VGBL (Vida Gerador de Benefício Livre), functioning as life insurance with no deductible payments.
Seamlessly manage social security contributions. Receive expert deductions and advice, ensuring compliance with local regulations through reliable support from an Employer of Record (EOR) in Brazil.