How To Hire And Pay Employees In Brazil

Emerald Technology's guide to hiring employees in Brazil.

CURRENCY

Brazilian Real (BRL) is the official currency of Brazil. Its currency symbol is R$.

CAPITAL CITY

Brasília, city, federal capital of Brazil. It is located in the Federal District (Distrito Federal)

LANGUAGE

Portuguese is the official and national language of Brazil and is widely spoken by most of the population.

POPULATION The current population of Brazil is 215,839,289 based on Worldometer elaboration.
PAYROLL FREQUENCY The payroll cycle in Brazil is generally either bi-weekly or monthly and employees are paid on the 15th and 30th of each month
PUBLIC HOLIDAYS Brazil has 8 public holidays per year, whose dates vary.

GROW YOUR TEAM IN BRAZIL

NO ENTITY, NO PROBLEM

To start growing your team in Brazil, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN BRAZIL

Brazil is the largest and most populous country in South America with the eighth-largest economy in the world. It is known for its large talent pool of experienced and highly skilled technology workers, which makes Brazil at great choice for businesses.

However, Brazil is known to have strong employment laws in place that favour employees. For example, some of Brazil's employee entitlements may exceed the benefits that your business currently provides. Establishing and operating a business there can be a complex process.

WHY BRAZIL IS GOOD FOR REMOTE WORKERS

Remote working known as trabalho a distancia (working away from the office) has been growing consistently in Brazil in recent years.

The Brazilian Labour Reform recognised remote working as a legitimised path of working in 2018, but has made even better progress in 2022. Brazil has all the characteristics of a remote workers hub which attracts remote workers for its decent cost of living, safety, digital nomad and entrepreneurial community and good wifi.

Brazil is home to lots of international startups, freelancers and entrepreneurs so remote working is a natural fit. 

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN BRAZIL

The standard working week is 44 hours. Each workday lasts 8 hours, Monday - Friday and 4 hours on Saturdays. However, employer-employee contracts and collective bargaining agreements usually set the workday hours at 9 hours per day and two full days off.

Also, any overtime is paid at twice the normal base salary rate. Sundays and holidays are usually paid at +100% and nights at +20%. For any overtime going beyond 9 hours per week, employees must be paid at triple their normal base salary rate.

ANNUAL LEAVE AND BRAZIL'S PUBLIC HOLIDAYS

Full-time employees are entitled to 30 days of paid leave each year after completing their first year. They are also entitled to a vacation bonus of one-third of their regular monthly salary. Brazil has 8 national holidays, and around 50 state holidays. First thing to remember is that state holidays differ from one state to another. 
January 1st: New Year's Day 
April 21st: Tiradentes' Day
May 1st:  Labour Day 
September 1st: Independent Day 
October 12th: Our Lady of Apercida
November 2nd: All Souls' Day
November 15th: Republic Proclamation 
December 25th: Christmas

TRIAL PERIOD IN BRAZIL

The law allows probationary periods to enable the employer to evaluate the employee’s competence. This period is also for the employee to assess whether the job suits them. The trial period must not exceed 90 days.

RESIGNATION AND DISMISSAL IN BRAZIL

The contract may be terminated either on the employer’s initiative or on the employee’s initiative.

Dismissal with cause: The employee will be entitled to the proportional salary for the days worked after last payment (including proportional 13th salary). Besides, there will be a pro-rata payment for accrued holiday entitlements and bonus. Although, no prior notice is required.

Dismissal without cause: The employee will benefit from 30 days of notice. In addition to the payment of accrued rights mentioned above, they will benefit from the provision of the guarantee fund (FGTS). Along with, it will be necessary to add a penalty corresponding to 40% of the accumulated value of this fund.

Resignation: The employee will be entitled to the proportional salary for the days worked after last payment (including proportional 13th salary) and pro-rata payment for accrued holiday entitlements.

READY TO HIRE YOUR EMPLOYEES IN BRAZIL?

BRAZIL'S MATERNITY AND PATERNITY LEAVE

Mothers in Brazil are legally entitled to four months of maternity leave. Also, they cannot be terminated during the entire pregnancy or within one year of their child’s birth date. Along with, they are entitled to full salary and benefits. Under certain circumstances, employers may extend the four-month period by 60 days and write off the payment as a tax deduction. Fathers may take up to five days of paid leave.

SICKNESS AND DISBAILITY LEAVE IN BRAZIL

Employees in Brazil are entitled to maximum compensation from their employer for the first 15 days of illness (upon presentation of a medical note). Thereafter, they may receive payments from a social program called INSS.

EXPENSES IN BRAZIL

Under Emerald Technology’s solution, your employee will only able to claim limited expenses. Expenses are granted by the authorities at the end of the tax year when a tax return is filed.
Employment of

FOREIGN NATIONALS IN BRAZIL

All foreign citizens require a work permit to work in Brazil. Brazil has different types of work visas, which you can discover more about here.
Salary Taxes

MINIMUM WAGE IN BRAZIL

Brazilian labour law specifies that any worker is entitled to a remuneration. This salary is usually paid monthly. Today, the minimum wage is currently BRL 1.100 (approximately $ 192,55 / € 171,00).

Another key point is that your employment contract should clearly states compensation details. As an employer in Brazil, Unions may also pressure you to increase wages periodically.

BONUSES IN BRAZIL

In Brazil, all companies provide their employee with a 13th-month salary at the end of the year equal to one month’s salary.

BRAZIL'S INCOME TAX

The Income Tax is an annual tax levied on the individuals and companies’ incomes by the Federal Government. The government requires workers and businesses to report their annual income to the Receita Federal. In that statement, the taxpayer needs to report all service income and expenses for the previous year. The period is usually from the beginning of March to the end of April.

SALARY PAYMENTS IN BRAZIL

In accordance with the requirements of Brazilian legislation, salary must be paid no less frequently than twice a month and paid in Brazilian reais.

SOCIAL SECURITY CONTRIBUTIONS IN BRAZIL

Social contributions in Brazil are paid by both the employer and the employee. Indeed, every company which hires in Brazil has to pay taxes and social security for their employees. Below we’ll discover some of the mandatory benefits for employers:

FGTS (Severance fund): the FGTS is a Brazilian tax that works as an assistance fund for workers in specific situations. For example, a worker dismissed without cause will benefit from the FGTS. The Tax Rate for FGTS is 8%.

INSS (Social Security): the INSS is another fund which manages the social security in Brazil but also the pension system. The Tax Rate for INSS is 20%.

RAT (Social tax): basically, the RAT tax is the working accident contribution the company needs to pay to cover work-related injuries.

The Tax Rate for RAT is 1%. Terceiros (Social tax): this tax is another contribution to governmental institutions related to employee’s fund for training. The Tax Rate for Terceiros is 6%. Employees also participate in the financing of social benefits by paying employee contributions that are deducted from their gross salary.

In Brazil, each employee is required to contribute to the following social security taxes:  -INSS (Social Security)

WORKER MISCLASSIFICATION IN BRAZIL

Similar to other countries, Brazil has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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