Employing in Brazil
Home to bossa nova, a passionate football fanbase, carnivals and caipirinhas, the emerging economy of Brazil is becoming a popular destination for businesses seeking global expansion.
Brazil is the second-largest economy in the Americas and the ninth-largest in the world. The country is considered one of the ‘BRICS nations’ — an association of major emerging national economies including India, China and South Africa — meaning future investment is likely to pick up quickly.
In addition to being one of the most multicultural and ethnically diverse nations on the planet, Brazil is also the only Portuguese-speaking country in the Americas and the largest Portuguese-speaking country in the world.
Each year, Brazil is becoming more and more urbanised; thus, there’s high potential for its industrial sectors. Most multinational companies with operations in Brazil are based in São Paulo — a popular choice for foreign companies — but there are also plenty of opportunities in Rio de Janeiro, Brasília (the capital) and Macaé.
An Overview of Employing in Brazil
The salary pay date should be determined in the contract of employment or union agreement. Compensation is typically paid monthly, on the last day of the month (no later than the fifth working day of the following month) or bi-weekly (on the 15th and last working day of the month).
At TopSource Worldwide, our employees are paid on the 30th of each month (or the last working day of the month, should this fall on a holiday or weekend).
Wages are generally increased annually. However, the law doesn’t provide for mandatory salary increases.
There’s a mandatory ‘Christmas Bonus’ (known as the 13th Salary — 13° Salario), equal to one month’s salary and paid out in two instalments in November and December.
INSS (Instituto Nacional do Seguro Social)
Both employers and employees pay social security contributions which are used to fund government pensions paid to retired citizens.
Employer contributions usually range from 26.8% to 28.8% (20% is allocated to the National Social Security Institute, or INSS, and up to 8.8% to other social security taxes).
There’s no cap to the employer’s contribution.
Brazil’s public healthcare system is the Sistema Único de Saúde (SUS). The system is open to Brazilians and foreign residents of the country.
*Federal Severance Pay Fund (FGTS)
Employers are required to make contributions to the FGTS corresponding to 8% of an employee’s monthly compensation. This must be deposited into an account registered in the employee’s name at the Brazilian Bank Caixa Econômica Federal.
Mandatory payments: employer to employee
Vacation allowance and 13° Salario: payable in months 13 and 14.
An Overview of the Main Statutory Benefits
Private pensions are optional. Employees can subscribe to a private pension via an employer-sponsored plan or a separate authorised financial institution.
Employees via TopSource Worldwide will be given the option to subscribe to an employer-sponsored plan with AMIL as part of their employment offer.
Employees are granted full sick pay for the first 15 days of a documented illness to be paid by the employer. After the 15th day of absence due to sickness, social security (INSS) will pay sick leave benefit to the employee.
Female employees are entitled to four months of mandatory maternity leave paid by the social security agency. Employers may optionally offer an additional two months of maternity leave. This amount can then be deducted from the company’s corporate income tax.
A transport subsidy for workers is a mandatory entitlement for all employees who live further than 1km from their place of work. Employers must provide their employees with transport to and from work or subsidise their public transport expenses by paying all such costs exceeding 6% of an employee’s gross salary.
Employees are entitled to food vouchers for every working day of the month (up to 22 per month).
A medical must be carried out within 48 hours of the start date. This’ll be organised as part of the onboarding process.
All employees must be registered 48 hours before their start date.
The probation period of any employee may be established for a period up to 90 days. This can be renewed once, providing the 90 days is observed (e.g., 45 days renewable for 45 days or 30 days renewable for 60 days).
One-hour break for rest and meal is mandatory for employees that work more than six hours per day. Employees are also entitled to a paid weekly rest period (24 hours), preferably on Sundays.
The working day in Brazil typically run from 8 am to 6 pm, Monday to Friday, with an hour’s unpaid break. Employees average 40 hours per week; by law they must not exceed 44 hours.
By law, vacations in Brazil are remunerated: employees must receive the wage corresponding to that period. Employees are also given an additional one-third of their monthly salary as a vacation bonus. This is payable no later than two working days before the employee’s annual leave begins.
Any hours that exceed the contracted workday must be paid with an additional 50% (100% on Sundays or public holidays). This rate can be increased under the collective labour agreements. Brazilian law prohibits any shifts longer than 10 hours per day, so only two overtime hours are permitted on a regular working day.
This triggers the payment of salary balance, proportional 13th salary, accrued vacation (plus one-third bonus) and proportional vacation (plus one-third bonus).
Characterised by a serious misconduct that the employer commits with the employee.
- Triggers payment of salary balance, prior notice, accrued vacation (plus one-third bonus), proportional vacation (plus one-third bonus), proportional 13th salary, 50% severance fund (FGTS) fine over the balance of the employee’s individual account.
Whereby both parties agree to terminate employment.
- Triggers the payment, by half, of the prior notice and the FGTS fine (employee’s part) and, in full, other labour allowances due in a termination without cause.
- In this type of termination, the employee will be able to withdraw up to 80% of the FGTS balance and won’t be entitled to receive the unemployment insurance.
An employee is entitled to 30 days of paid annual leave once they have completed 12 months of work for the employer. This waiting time cannot be waived; an employee must complete a full year of work in accordance with Brazilian Labor Law.
Holiday accrual begins from the first day of employment. Annual leave must be taken within 10 months after it accrues. Holiday entitlement must, therefore, not be carried forward to the following year. Pro-rata holiday can be calculated as proportional to 30 days per 12 months.
In addition to nationally observed public holidays, there are some regional holidays and ‘pontos facultativos’ which are observed by the public sector. Private sector employers may choose to observe these holidays, if they wish. Should a public holiday fall on a non-working day, the date is fixed and the employee won’t be entitled to any additional days of leave.
Public holidays 2021
Keen to engage a EOR in Brazil?
At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey
To find out how we can help your business with our employment solutions, contact us today.