Employers of Record (EORs) in Brazil help you hire and pay employees in the country without the need for a local entity. The Employer of Record (EOR) acts as the employer for your Brazilian talent, and takes on the responsibility of compliance risks. This includes managing payroll, taxes, statutory benefits, employment contracts, and other related matters. With all administrative burden taken care of, and manual efforts in hiring and paying across borders removed, employers can easily manage the employee’s day-to-day activities. 

Employers use a Brazil EOR or PEO to: 1) hire and pay employees in the country 2) hire talent without opening a local entity. Employers of Record (EOR) in Brazil provide a quick and effective way to tap into the country's pool of talent. 

Although employers can hire from Brazil by setting up their own infrastructure and payroll processes, an EOR can help you do this in a safe, compliant, and cost-effective manner. This is because of the following reasons:

1. Setting up an entity to hire talent costs you $11,400. EORs enable you to hire talent without the need to incorporate your business
2. Employment laws in Brazil have a few distinctive features. For example, employers are mandated by law to pay a 13th month salary (a bonus), usually paid in two installments: one-half at the end of November and the other half by December 20th. Another unique feature is a contribution employers must make to a government-managed fund called the "Fundo de Garantia do Tempo de Serviço" (FGTS. Employers can pay for an employee’s termination when it happens without cause. 
3. Employers also need to be aware of collective bargaining agreements that may affect minimum wages, parental leaves, etc.

Gloroots’ Brazil EOR, can eliminate any complexities around compliance, and payroll processing. Gloroots offers a single platform that enables you to seamlessly onboard, pay, and manage your employees in Brazil. Moreover, you can offer customized benefits to your employees in Brazil, thanks to Gloroots' local specialists, who carefully select the most suitable insurance options for your company.

Read More: Types of Permanent Establishments in 2024

The cost of Brazil EOR/PEO services may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Brazil EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers

Brazil's workforce is known for its youthfulness, energy, and high level of expertise, particularly in fields like software development. This abundant pool of talented individuals allows international recruiters to access the necessary skills and knowledge required for their operations.

Refer to the table below to understand Brazil’s talent competitiveness.

Source: The Global Talent Competitiveness Index 2023

Through the Gloroots’ Recrew platform, you can discover amazing talent in Brazil.

The term "misclassification of employees" refers to the inaccurate classification of workers by their employers. Misclassification occurs when an employer categorizes a worker as an independent contractor or exempts them from certain employment laws and benefits, even if the worker should be classified as an employee and entitled to legal protections, benefits, and rights. Utilizing a PEO/EOR in Brazil helps mitigate the risks associated with misclassification by ensuring compliance with labour laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. This enables businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals.

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Brazil's labor laws are primarily governed by the Consolidation of Labor Laws (CLT - "Consolidação das Leis do Trabalho"), instituted in 1943. The 1988 Brazilian Constitution also has several labor provisions. The CLT and the Constitution together define workers' rights in Brazil.

Employment Contract

Brazilian labor law does not strictly require employment contracts to be in writing., Even oral agreements are legally legitimate. However, it is best practice to put in place a written employment contract. The contract should define the following:

• The name and address of both parties
• Date of beginning employment (and length of work for temporary contracts, if applicable).
• Location(s) of employment
• The job description, in addition to the obligations and obligations,
• In addition to the base wage, supplementary compensation or perks provided.
• Time on the job and additional hours worked
• The total amount of days off each year
• Terms of employment that require prior notification before termination
• Probation period
• Policies of the company pertaining to topics such as information technology practices.
• Reference to collective bargaining agreements

Although employment contracts in Brazil are typically permanent in terms of duration, it is possible to negotiate a contract with a set length in specific situations. However, their length cannot be longer than two years at the most. Employment contracts in Brazil should always be written in Portuguese. Salaries defined in the contract must be specified in Brazilian Real.

This might sound overwhelming—but it doesn’t have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots’ Employer of Record offering, hiring and managing employees globally is a piece of cake.

Working time

In Brazil, standard working hours are 44 hours per week, typically 8 hours per day over 5 or 6 days. Employers must provide 15-minute breaks for 4-6 hour shifts and 1-hour breaks for shifts exceeding 6 hours, per contracts or CBAs.

Overtime

Overtime in Brazil applies beyond 44 hours per week, limited to 2 hours daily, paid at 150% of regular wages. Holiday work earns 200% pay, night shifts (10 PM - 5 AM) 120%, with each night hour counted as 52.5 minutes. Managers aren’t eligible.

Public Holidays

The country observes 10 public holidays employees can take as paid days off.

Payroll cycle

Brazil offers monthly and bi-weekly payroll cycles. Monthly salaries must be paid within the first five business days of the month. In bi-weekly cycles, 40% is paid between the 15th-20th, with the balance due by the 5th business day of the following month. Collective agreements dictate final pay dates.

Minimum Wage

The national minimum wage in Brazil is BRL 1,518 per month.

Sick Pay

In Brazil, all employees are entitled to paid sick leave and must submit a medical certificate within 48 hours of the first sick day. The first 15 days are fully paid by the employer, after which Social Security (INSS) covers payments based on contributions, capped at BRL 7,786.02 (2024). During sick leave, employers must continue Social Security contributions.

Maternity leave

In Brazil, all female employees, including adoptive mothers, are entitled to 120 days of paid maternity leave, covered by INSS (Social Security). Employers pay wages upfront and are later reimbursed. Companies enrolled in Empresa Cidadã can extend leave to 180 days. During leave, employees retain job security, accrue annual leave, receive the 13th salary, and employers continue social contributions. Leave can begin in the 8th month of pregnancy, requiring a doctor’s note and HR notification to INSS.

Paternity leave

In Brazil, fathers are entitled to 5 consecutive days of paid paternity leave after the birth or adoption of a child. Employers enrolled in the Empresa Cidadã program, meeting specific requirements, can extend this leave to 20 consecutive days. Paternity leave is mandatory and fully paid, ensuring fathers can support their families during this period.

Employee Income Tax

OTHER TAX AND SOCIAL SECURITY CONTRIBUTION

Employer payroll contribution

Collective Bargaining Agreement

Employee payroll contribution 

Termination 

In Brazil, termination requires a notice period, unless the employer has just cause, such as misconduct or disobedience. If termination occurs without notice, it must be formally documented and reported to government authorities. Employers must comply with legal requirements to avoid disputes and ensure proper severance or dismissal procedures.

Severance

In Brazil, termination without cause entitles employees to severance, including 40% of the FGTS balance accrued during employment. Additional payments include one month’s salary if termination occurs within 30 days of a collective bargaining renewal, accrued vacation plus a 1/3 bonus, pro-rated 13th salary, and other contractual or CBA-required payments.

For termination with cause, employees receive unused vacation and applicable bonuses, but no FGTS payout or extra salary.

For mutual termination, the employer pays half of the notice period and 20% of the FGTS balance instead of 40%. Employees can withdraw 80% of the FGTS balance (instead of 100%) but are not eligible for unemployment benefits.

Notice period

For example, if an employee has worked for 2 years, the notice period for the employer to terminate the employment would be 33 days (30 days + 3 days for the additional year). If the employee has worked for 5 years or more, the notice period would be the maximum of 90 days.

It's important to note that these are the statutory notice periods, and individual employment contracts or collective bargaining agreements may provide for different notice periods. Additionally, in some cases, employers may be required to provide severance pay or other benefits upon termination, depending on the circumstances and applicable labor laws.

Probation period

In Brazil, the probation period for indefinite employees is 45 days, extendable up to 90 days. Employers may terminate employment at the end of this period, providing final compensation, including unused vacation pay and a pro-rated 13th salary. The probation terms must be outlined in the employment contract.

Gloroots in-house experts handle cross-border employment and payroll compliance, contract generation, on-time payments, and benefits, allowing you to focus on talent screening. We ensure a seamless global employment experience, making your Brazil expansion hassle-free. Contact us to start your global hiring campaign in Brazil today.

Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Brazil must have a local legal organization and use local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Brazil makes compliance with employment laws demanding.

With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.