Employer of Record in Brazil

Employment agreements in Brazil

In Brazil, an employment agreement or contract is not required. However, it is strongly recommended to have a written employment contract for the employer and employee to agree on certain conditions such as:

• Remuneration
• Job description
• Working hours
• Place of work
• Probationary period
• Fixed-term or indefinite-term contract
• Company policies
• The possibility and conditions of travel and transfers

Without a written employment contract, the above provisions may not be considered legally valid and enforceable.

Certain terms are automatically acknowledged and do not need to be written in an employment contract such as:

• The minimum wage
• Annual leave entitlement and vacation bonus
• 13th-month salary
• The Brazilian Government Severance Indemnity Fund Law
• A remunerated weekly day off of work
• Social Security payment requirements
• Benefits provided by collective bargaining agreements

Probationary periods in Brazil

Brazil has a maximum probationary period of 90 days. The probation can be split into two periods that add up to 90 days and can only be extended once.

Average working hours in Brazil

Brazil’s federal constitution directs working hours to be eight hours per day and 44 hours per week.

How an employer of record helps you hire in Brazil

An employer of record (EOR) allows you to hire in Brazil without the headache of setting up a legal entity in Brazil. Because most companies don’t have the resources or extensive knowledge to compliantly hire in international markets, an EOR helps you engage top talent from anywhere and support them based on their local needs. 

As an industry-leading EOR in Brazil, Velocity Global is a trusted partner in hiring in Brazil. By acting as the legal employer, we hire your new team members through local, compliant employment contracts—and you get back the time and flexibility to focus on your growing business.

Payroll cycles in Brazil

The payroll cycle in Brazil is generally biweekly or monthly.

Wages in Brazil

As of May 1, 2023, Luiz Inácio Lula da Silva (Lula) issued Provisional Measure 1172/23 readjusts the minimum wage to R$1,320 as of May 1, 2023. The daily value will correspond to R$44, and the hourly rate to R$6. Some states have a regional minimum wage in Brazil. The regional wage must be observed if it is higher than the national wage.

Bonus payments in Brazil

A 13th-month salary is prescribed by Brazilian labor law. The 13th-month salary is equivalent to one-twelfth of the monthly salary, multiplied by the number of months worked in a calendar year, which is paid in two installments: one payment by November 30 and the other by December 20. Additionally, a vacation bonus of one-third of a month’s salary is required.

Overtime in Brazil

Brazilian labor law describes any hours worked more than eight hours a day as overtime hours.

Overtime is paid at the rate of adding at least 50% of an employee’s regular hourly compensation. The percentage may be higher, according to a collective bargaining agreement. Additionally, if overtime is completed on Sundays or holidays, the additional payment is 100% of the employee’s regular rate.

Some positions are exempt from overtime. These include positions of trust, such as managers and executives, and employees who usually work outside the office, such as working from home or in the field.

How an EOR helps you run payroll in Brazil

An employer of record (EOR) in Brazil helps you compliantly manage your global team payroll, ensuring consistent and accurate pay and tax withholdings for employees living in Brazil. Think of an EOR as your international HR team that understands the complex labor laws and payroll regulations of different markets. 

Partnering with a trusted EOR partner like Velocity Global for global payroll administration in Brazil offers numerous benefits, like access to a centralized platform for payroll data and reporting, secure data privacy and protection, and time and cost savings.

Tax due dates in Brazil

Brazil’s tax year is the calendar year, and individual taxes are due by May 31.

Tax thresholds in Brazil

Individuals are considered Brazilian tax residents if they have completed 184 days of work in Brazil, consecutively or not, within a tax year.

Brazilian tax residents are taxed on their worldwide income. Non-tax residents are taxed only on Brazil-sourced income.

As of 2023, the Brazilian income tax brackets are:

• BRL2,112.01: 7.5% minus BRL158.40
• BRL2,112.01 – BRL2,826.65: 15% minus BRL370.40
• BRL3,751.06 – BRL4,664.68: 22.5% minus BRL651.73
• Above BRL4,664.68: 27.5% minus BRL884.96

The corporate income tax rate in Brazil is 15%.

In 2023, Social Security rates are the following:

• On income up to BRL1,320.00: 7.5%
• On income from BRL1.320.01 to BRL2,571.29: 9%
• On income from BRL2,571.30  to BRL3,856.94: 12%
• On income from BRL3,856.95 to BRL7,507.29: 14%

The National Social Security contribution limit per year for employees is BRL7,507.49.

The employer pays National Social Security contributions on its full payroll at rates that vary from 26.8% to 28.8%, depending on the company’s business.

Health insurance in Brazil

Brazil introduced its public healthcare system, the Sistema Único de Saúde (SUS), in 1988 under a new constitution. Since 1990, Brazil has expanded its public health system to offer free, universal medical care to anyone legally living in the country. Brazil’s public and private healthcare sectors are independent of each other. The public hospitals provide free medical care but struggle with overcrowdedness and long wait times. The conditions in private hospitals are higher than those in public hospitals, which creates a preference for additional private health insurance to access private facilities.

Pension in Brazil

Employees in Brazil are subject to different eligibility requirements for the old-age retirement pension depending on their gender and age. The requirements are as follows:

• If they are women, employees must be at least 62 years old with a minimum of 180 months of social security contributions.
• If they are men, employees must be at least 65 years old with a minimum of 240 months of social security contributions.

The old-age retirement pension is equal to 70% of the employee’s salary plus 1% of the salary for every 12 months of contributions, up to a maximum of 100%.

How an EOR helps you calculate taxes in Brazil

Payroll taxes are taxes imposed on employers and employees. They vary between countries, making compliance a hurdle for businesses that may not have the expertise or resources to navigate payroll taxes in Brazil. 

As an employer of record (EOR) with a tenured global footprint, Velocity Global is knowledgeable in handling all aspects of payroll for you, including calculating and filing payroll taxes, withholding and remitting taxes, and issuing tax forms in Brazil.

Annual leave in Brazil

Brazilian labor law guarantees employees annual paid leave of 30 days if they have worked at least one year and if they have not been unjustifiably absent. If unjustifiably absent, employees will progressively lose days of leave, as follows:

• With up to five unjustifiable days of absence in a year, an employee receives 30 days of paid leave for the following year
• With six to 14 unjustifiable days of absence in a year, an employee receives 24 days of paid leave for the following year
• With 15 to 23 unjustifiable days of absence in a year, an employee receives 18 days of paid leave for the following year
• With 24 to 32 unjustifiable days of absence in a year, an employee receives 12 days of paid leave for the following year

An employee’s annual leave must be remunerated with payment of the employee’s usual monthly compensation plus a one-third vacation bonus in addition to the remuneration. The payment must be made two days before the leave takes place.

Parental leave in Brazil

Pregnant employees are entitled to 120 days of paid maternity leave in Brazil. The employer directly pays the employee, but employers are reimbursed by Brazil’s Social Security system. Employers can extend the leave to 180 days and be reimbursed by tax benefits granted by Brazil’s federal government.

Employees are entitled to five days of paternity leave, fully paid by the employer. Employers can grant an extension of 15 days and be reimbursed by tax benefits granted by Brazil’s federal government.

Sick leave in Brazil

The Brazilian labor code designates up to 15 consecutive days for sick leave, based on a medical report confirmation. Employers directly pay employees for the first 15 days of sick leave at their full salary. Any more sick days are paid by Brazil’s National Institute of Social Security (INSS).

Regional and national holidays in Brazil

Brazil’s federal, state, and municipal legislation set regional and national holidays, which are not included in the minimum paid leave entitlement but are taken in addition to annual leave. The following are national holidays in Brazil:

• New Year’s Day (January 1)
• Martyr’s Day (April 21)
• Labor Day (May 1)
• Independence Day (September 7)
• Patron’s Day (October 12)
• All Souls’ Day (November 2)
• Proclamation of the Republic Day (November 15)
• Christmas Day (December 25)

In addition, there are other holidays that are movable and not observed by all regions in the country, such as Carnival, Good Friday, and Corpus Christi.

How an EOR helps you manage leave and PTO in Brazil

An employer of record (EOR) supports companies by managing annual leave, paid time off (PTO), and even local holidays all over the world—including Brazil. When it comes to handling a company's annual leave requirements, an EOR ensures compliance with local labor laws in Brazil at every step. 

Some EOR partners, like Velocity Global, provide a platform that helps you oversee employee time off in Brazil. By outsourcing leave and time-off management to Velocity Global, you can ensure accurate tracking, compliance, and seamless administration, freeing up valuable time and resources for other business priorities.

Federal benefits in Brazil

Brazil’s government benefits programs are administered by the National Institute for Social Security/Instituto Nacional do Seguro Social (INSS). The INSS was founded in 1990 and is responsible for providing social security services to Brazilian society. The INSS collects contributions from employers and employees to maintain the Brazilian Social Security regime, which maintains old-age retirement pensions, pensions due to death, illness and injury benefits, disability benefits, and parental leave.

Supplemental benefits in Brazil 

Supplemental benefits are additional benefits an employer provides to boost their workers' benefits package. Examples include:

• Health insurance
• Life insurance
• Retirement contributions

While Brazil's public health system, Sistema Único de Saúde (SUS), is free for citizens and foreign workers living in Brazil, some employers offer private insurance so their employees may access higher-quality healthcare. Some Brazilian employers provide retirement plans or pensions on top of the pension provided by social security. A common scheme is for employees to contribute up to 5% of their earnings to a retirement plan, with a 100% employer match. Other common extra benefits in Brazil are group life insurance, profit sharing, food vouchers and free meals, wellness benefits, flexible schedules, and home office allowances.

How an EOR helps you administer benefits in Brazil

As the legal employer for your employees living in Brazil, an employer of record (EOR) administers statutory benefits and ensures they are enrolled and contributing to the appropriate government benefits. Additionally, an EOR partner manages the administration of supplemental benefits, including ensuring employees in Brazil receive tailored, expert-vetted, and competitive supplemental benefits packages. 

Velocity Global makes understanding foreign statutory and supplemental benefits easy and offers your workforce competitive benefits packages tailored specifically to Brazil and beyond.

Notice periods in Brazil

Only in the event of a termination without cause, must an employer give an employee a notice of termination prior to dismissal.

Notice periods for dismissals in Brazil must be at least 30 days, with three days added per year of service, limited to 90 days in total. The employer may choose to provide pay in lieu of notice and release the employee from working.

Notice periods for resignations in Brazil are 30 days.

Notice periods are cut in half when there is termination by mutual consent from the employer and employee.

Severance pay in Brazil

If an employee is dismissed without cause, the employer must make a payment of 40% of the accumulated balance inside the employee’s Unemployment Compensation Fund. Additionally, 10% must be paid on behalf of the government as a tax.

How an EOR helps you process terminations in Brazil

An employer of record (EOR) is responsible for processing terminations in the event you need to terminate an employee in  Brazil. This may include adhering to local labor laws and regulations regarding termination procedures, including notice periods, severance pay, and any other statutory requirements. 

As an EOR with experience in terminations, Velocity Global helps businesses minimize the risk of legal disputes or liabilities in Brazil.