Article

Decrypting Brazil’s Labor Environment

10 November 2016

With a mixture of emerging and booming economies, political uncertainty and extreme contrasts in business customs, the Americas can never be categorized as one homogeneous whole.

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The Brazilian business environment is complex and requires companies to have a clear understanding of the local rules and regulations. Here we take a look at how HR & Payroll works in Brazil.

Social Security System

  • Companies are required to pay 20% of employees’ gross salaries to finance the Brazilian Social Security System (INSS)

  • Other social security charges are levied on employers, depending on the company’s activities, up to a maximum of 8.8% of payroll.

  • Employees also pay 8%-11% of their monthly salaries towards social security, which is withheld by the employer.

Hiring/Retrenchment Issues         

  • Employment contracts in Brazil may be verbal or written. The contract must state the remuneration of the employee.

  • Every employee must have a Work Booklet (CTPS), which contains terms of the employment contract.

  • An employer who dismisses an employee without cause must give the employee prior notice of a minimum of 30 days and provide:

    • balance of wages;
    • 13th salary (additional month’s salary paid at the end of the year);
    • Government Severance Indemnity Fund for Employees (FTGS) deposits with a 50% fine on the accumulated amount;
    • and unused earned vacations as well as additional vacations.

Foreign Personnel & Work Permits

  • Brazilian companies with more than three employees are required by law to employ at least two Brazilians for each expatriate employee.

  • Foreign workers must hold a valid work permit (temporary or permanent) to live and work in Brazil. They must also have a local ID card (RNE Card), a tax ID (CPF), and a CTPS.

  • Employers must apply to the Ministry of Labour to obtain work permits for their foreign employees. The different types of work permits are:

  • Temporary Visa V, Without a Labour Contract: for workers of foreign companies engaged in a service contract with a Brazilian company
  • Temporary Visa V, With a Labour Contract: for workers employed by a Brazilian company
  • Permanent Visa: for workers employed by a Brazilian company in management positions (directors, managers).Compliance with additional requirements set by the National Immigration Council is required.
  • Business visas for short-term visitors are valid for up to five years, permit multiple re-entries, and limit individual stays to 90 days and total stay in a year to 180 days.

Payroll Cycles

  • Salaries are payable at least once a month.

  • Compensation for overtime is payable at a minimum of 50% above the compensation for normal working hours and is paid on a monthly basis.

  • Bonuses and profit sharing are generally paid annually, in cash.

  • The minimum monthly wage specified by the government is BRL 880


HR Legislation & Worker Benefits

  • Labour relations in Brazil are governed by the Brazilian Labour Code (CLT).

  • Another body that enforces labor regulations in Brazil is The Ministry of Labour and Employment (MTE).

  • Employers contribute 8% of employees’ gross salaries to the Government Severance Indemnity Fund for Employees (FTGS). Upon termination of employment, an employee is entitled to the funds accumulated in it.

  • Men and women can retire at any age after contributing to the social security system for 35 and 30 years, respectively, to receive a full pension or for 15 years to receive a partial pension. The retirement rules are currently under discussion by the government.

  • Employees are entitled to 15 sick days; payment of additional days is made by INSS.

  • Employees are entitled to 30 days of paid vacation, following 12 months of work, which can be availed in the subsequent year.

  • Employees are entitled to a 13th salary, an additional month’s salary, paid at the end of the year, generally in two installments.

  • Female employees are entitled to 180 days of maternity leave; men are provided with 5 days of paternity leave. The rules regarding paternity leave is currently under discussion by the government.


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Note: This is only a short summary. We highly recommend to check any information in detail based upon the individual case.

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