If your business is looking to expand into Brazil’s market, there are several factors you should take into account when hiring employees in South America’s largest and most populous country. Whether you’re looking to establish an office in Brazil, hire remote employees, or work with international contractors, the following guide explains your options, the risks involved, and how to compliantly expand your global workforce.
Can I Hire Employees in Brazil From Another Country?
Yes, you can hire employees in Brazil from another country. Hiring employees in a foreign market may seem like an overwhelming and unfamiliar process, but it can also be beneficial if you acknowledge and stay in compliance with local laws. As with any foreign market, Brazil’s labor laws vary from other countries, so it’s important to understand the local regulations before starting the hiring process.
How Do I Hire and Pay Employees in Brazil?
There are several ways to hire employees compliantly in Brazil. How you do so depends on many factors, including the number of employees you plan to hire, time, cost, and overall global expansion goals.
1. Set Up a Legal Entity
Setting up a legal entity in Brazil allows you to establish a local branch or subsidiary and hire employees directly. This is a savvy option if you plan to hire a large team or would like to establish a long-term presence in Brazil because you can handle employee logistics internally and cut down employment costs in the long run.
However, establishing an entity requires a large commitment in both time and budget. Your team will need extensive knowledge of Brazil’s labor laws and will be tasked with managing complicated HR processes and payroll. If done incorrectly, your business will risk non-compliance. Consider a different route if you only plan to hire a small number of employees in Brazil.
2. Use an Employer of Record
Partnering with a global employer of record (EoR) allows you to quickly hire employees in Brazil without having to go through the complex process of establishing a foreign entity. An EoR handles all risk mitigation and taxes to ensure local compliance with Brazil’s employment laws. An EoR partner also manages all hiring, payroll, benefits, and support for your distributed workforce so you can focus on your business operations and growth.
Can I Hire a Contractor in Brazil From Another Country?
Instead of setting up an entity or partnering with a global EoR, another way to target Brazilian talent is to engage them as international contractors. This method allows more flexibility to test out the Brazilian market and work with talent for short-term or specialized projects. And because you don’t have to onboard and pay a full-time employee, engaging and paying a contractor in Brazil also saves you time and money.
How Do I Pay a Contractor in Brazil?
1. Work With a Contractor Management Partner
A resourceful way to pay contractors in Brazil quickly and accurately is through a contractor management partner. A contractor management partner engages international contractors on your behalf, helps you avoid misclassification risks, makes invoice submittals and approvals seamless, and uses locally compliant contracts to adhere to Brazil’s employment regulations.
2. Use a Contractor Payments Solution
A contractor payments solution is an automated payment platform that allows you to pay your Brazilian contractors quickly and accurately. A contractor payments solution integrates foreign exchange fees, seamlessly transfers funds, and provides compliant contract templates to help you stay on top of contractor payments.
Compliance Risks When Hiring Employees and Contractors in Brazil
While hiring employees and contractors in Brazil can be beneficial for your long-term global expansion goals, there are still compliance risks when hiring talent in an unfamiliar market. Because employment laws and regulations differ in each country, it’s important to understand the risks involved and how to avoid them.
Misclassification
Misclassification is a possible risk when engaging international contractors. If misclassified, even if unintentionally, a contractor could claim they are entitled to employee benefits and your company could face fines, legal issues, and employee entitlement back pay obligations.
Unfamiliar Employment Laws in Brazil
Even though Brazil’s employment laws may seem unfamiliar to companies based in another country, they should still be regarded with the utmost importance. Some of Brazil’s employee entitlements are very generous and may exceed the benefits that your business is used to providing.
Employees also receive 30 days of paid vacation after every 12 months of employment, 15 days of sick leave, and 120 days of paid maternity leave. Terminating an employee requires 30 days’ notice for the first year of employment, and three days extra for each additional year up to 90 days.
Incorrect Payroll Contributions and Payments
All employees enroll in Brazil’s social security system, and contributions and tax withholdings are factored into payroll. Employer contribution rates depend on the industry and are based on an employee’s monthly salary.
One employer requirement in Brazil that may be unfamiliar is 13th-month pay. In Brazil, this mandatory payment is paid to the employee in two installments–one payment by November 30 and the other by December 20. The amount is typically equivalent to one month’s pay or 1/12th of the employee’s annual salary.
Your business should verify accurate employer payroll contributions when hiring and paying Brazilian employees, otherwise, you could face fines and penalties. Partnering with a global employer of record ensures that you accurately calculate payroll contributions for your Brazilian employees.
Immigration and Visa Requirements
You may encounter a scenario where you need to hire or engage talent in Brazil, but they are not residents or citizens of the country. It’s important to know which visa or permit your talent needs to ensure they are correctly employed.
For remote teams, it’s worth noting Brazil’s digital nomad visa, which allows foreign workers to live, travel, and work in Brazil. Anyone who can prove they are able to work remotely can apply, and the visa is valid for one year with the possibility of extending for another.
Permanent Establishment
A company triggers permanent establishment when it has a fixed location and generates revenue in Brazil. When you have a permanent establishment, your business is liable for Brazil’s corporate taxes. Failure to uphold those obligations results in legal issues such as interest fees, penalties, and employer liabilities.
Hire in Brazil With a Leading Workforce Partner
Hiring employees or contractors in Brazil can feel like an unfamiliar and foreign process, but when done compliantly, it can lead to promising opportunities on your path to global expansion. A knowledgeable and experienced partner can help you get there successfully.
As your global Employer of Record, Velocity Global handles all risk mitigation, payroll, and compliance so you can focus on running your business. Additionally, Velocity Global offers a full suite of solutions that expedite the entire employer and talent experience, from Multi-Country Payroll to Contractor Management and Contractor Payments.
Contact us today to learn which solution is best for you.
