Employer of Record in Brazil

Expanding into Brazil presents your business with significant opportunities and challenges. Partnering with Velocity Global’s Employer of Record helps you maximize the speed, efficiency, and value of your business expansion. By allowing us to manage the necessities for compliance and risk mitigation, you can focus entirely on ensuring your business thrives in Brazil.

Whether you are setting up a small team for a short-term project or you are growing a long-term team, we have the expertise to help you meet your goals with our Employer of Record solution in Brazil.

Benefits of hiring in Brazil

• As the largest economy in Latin America and the ninth-largest economy worldwide, Brazil’s size and diverse market creates a tremendous opportunity for foreign businesses.
• Brazil is a world giant of mining, agriculture, and manufacturing, with a powerful and quickly growing service industry.
• Brazil affords companies various strategic trading and commercial networks. Brazil is a founding member of the Southern Common Market (MERCOSUR), allowing direct access to Argentina, Paraguay, Uruguay, as well as seven other associate members in Latin America through this multilateral trade agreement. BRICS is another trade group, including Brazil, Russia, India, China, and South Africa, with an alliance of emerging regional powers that offer access to other markets and trade cooperation initiatives.
• Brazil has advanced infrastructure and transportation facilities, which creates a key trading hub for the region. Brazil has one of the largest highway systems in the world, various railway systems, and 175 maritime ports. The country is established as an extensive network for nationally and internationally transporting goods.

Challenges of hiring in Brazil

• Brazil’s tax system is broadly discerned as one of the most excessively complex in the world. The country’s tax load is much higher than the average for developing countries. However, the government says that it is committed to decreasing its tax burden as a share of its gross domestic product. Using an employer of record in Brazil helps with navigating this complex tax system.
• The high cost of doing business in Brazil requires thorough knowledge of the government and its policies, including the commonly referred to in Portuguese as the “Custo Brasil” or “Brazilian Cost.”
• The Brazilian government favors domestic partners due to local requirements and high levels of corruption. While the government remains the largest buyer of goods and services, understanding the government procurement process proves difficult when international businesses are not prepared with the appropriate guidance.

Cultural nuances and must-knows of doing business in Brazil

• With a population of over 200 million people in 26 different states, Brazil has a diverse heritage. Becoming familiar with the culture in whichever state you’re doing business will ensure a smooth expansion.
• Greet and leave colleagues with a handshake. When attending a meeting, be sure to address all colleagues individually when saying hello and goodbye.
• Brazilians tend to have an expressive and emotive communication style, where they often speak their minds and physical touch during conversation is common.
• Brazilians often take a relaxed approach to timekeeping, where meetings may not start or end on time and the meeting’s agenda can be unstructured.
• Brazilian colleagues take their time in negotiating business deals as they deeply value interpersonal connections and relationships.
• When doing business in Brazil it’s essential to remember that titles are important as they establish hierarchy, where decisions are made by the highest-ranking colleagues.

Minimum wage and salaries in Brazil

• As of January 1, 2022, President Jair Bolsonaro issued Provisional Measure number 1091, defining the minimum wage in Brazil. As stated in the measure, the wage is set to BRL1,212 per month (USD230.35), BRL40.40 per day, or BRL5.51 per hour. Some states have a regional minimum wage in Brazil. The regional wage must be observed if it is higher than the national wage.

Probation period in Brazil

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

Bonus payment 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.

Onboarding 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
  • Probation 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 bonus
  • The Brazilian Government Severance Indemnity Fund Law
  • A remunerated weekly day off of work
  • Social security payment requirements
  • Benefits provided by collective bargaining agreements

Termination and notice period 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 both the employer and employee.
• 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.

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 and maternity 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.

• 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 it’s 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.

• Individuals are considered Brazilian tax residents if they have completed 184 days of work in Brazil, consecutively or not, within a tax year.
• Brazil’s tax year is the calendar year.
• Brazilian tax residents are taxed on their worldwide income. Non-tax residents are taxed only on Brazil-source income.

Tax thresholds in Brazil

• As of 2022, the Brazilian income tax brackets are:
  • BRL1,903.99 – BRL2,826.65: 7.5% minus BRL142.80
  • BRL2,826.66 – BRL3,751.05: 15% minus BRL354.80
  • BRL3,751.06 – BRL4,664.68: 22.5% minus BRL936.13
  • Above BRL4,664.68: 27.5% minus BRL869.36
• The corporate income tax rate in Brazil is 15%.
• Social security payments due on employees’ monthly salaries are withheld by the employer. Social security rates are the following:
  • On income up to BRL1,100.00: 7.5%
  • On income from BRL1,100.01 to BRL2,203.48: 9%
  • On income from BRL2,203.49 to BRL3,305.22: 12%
  • On income from BRL3,305.23 to BRL6,433.57: 14%
• The National Social Security contribution limit per year for employees is BRL6,433.57.
• 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 state’s 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%.

• An employer of record in Brazil handles payroll for your company, allowing you to focus on other areas of your business.

Tax due dates in Brazil

• In Brazil, the tax year is the calendar year. The filing deadline for tax returns is the last business day of April.

Payroll cycle in Brazil

• The payroll cycle in Brazil is generally biweekly or monthly.

Average working hours in Brazil

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

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