Brazil is the eighth largest economy in the world (in terms of GDP), with experts predicting further growth in years to come. Although employment costs in Brazil are fairly high, the country is a popular destination for international companies intending to hire foreign employees to join their global teams.
One of the reasons is that the country offers international recruiters a large pool of potential candidates. Its workforce is known for being young, dynamic and highly skilled, especially when it comes to software development. What’s more, the country is an ideal point of entrance for companies who want to expand their business activity in South America.
Although Brazilian labour law does not specifically request employment contracts to be in writing – technically speaking even oral agreements are legally valid – it is best practice to put a written employment contract in place which should outline the basic terms of employment such as:
- Identification of both parties
- Date of commencement (and employment duration for temporary contracts)
- Place(s) of work
- Job description as well as duties and responsibilities
- Base salary as well as other compensation or benefits
- Working hours and overtime
- Total number of holidays
- Notice periods for employment termination
- Probation period
- Company policies regarding issues such as IT practices
- Travel and transfer options
- Reference to collective bargaining agreements
While employment contracts in Brazil are generally considered to be indefinite, fixed-term contracts are possible under certain circumstances. However, their duration must not exceed two years. All employment contracts in Brazil should be in Portuguese and use the local currency.
Employees and employers may agree on a probationary period which must be included in the employment contract. Probation periods in Brazil must not exceed 90 days.
Working Hours and Breaks
In Brazil, a standard working week comprises 44 hours, with a normal working day being limited to eight hours – not counting overtime work. On Saturdays, employees usually work for only four hours.
A rest break of one to two hours must be granted to employees who work for more than six hours a day. For shifts between four and six hours, employees should receive at least a 15-minute break.
The rest period between two working days must not be shorter than eleven hours. Weekly rest periods cannot be shorter than 24 hours – preferably on Sundays – and should be paid.
Any work performed beyond eight hours per day is considered overtime and is to be remunerated at a rate of 150% of an employee’s normal wages. However, overtime work cannot exceed two hours per day, taking daily working time to a maximum of ten hours.
Employees in Brazil are either paid once or twice a month, with paydays usually being the 15th and 30th of each month.
As of 2021, the minimum wage in Brazil is set at BRL 1,100 per month. Some states have their own regional minimum wage which might be higher than the national one.
During the first 15 days of sickness-related absence from work, employees are paid by their employer at the normal rate – that is if they provide a medical certificate in due time. In case of sick leave exceeding 15 days, the employee receives sick pay from Social Security at fixed rates.
It is compulsory to pay employees in Brazil the equivalent of a 13th salary, usually in form of a Christmas bonus at the end of the year.
Taxes and Social Security Contribution
Employees and employers in Brazil are subject to the following tax and social security contribution rates:
15% corporate tax rate
VAT system with multiple rates depending on federal, state and municipal level as well as on type of goods: Merchandise and Services Circulation Tax ranging from 4% to 25%
individual income tax rates (on monthly income):
0% (up to BRL 1,903.98), 7.5% (up to BRL 2,826.65), 15% (up to BRL 3,751.05), 22.5% (up to BRL 4,664.68), 27.5% (above BRL 4,664.68)
around 30% of employee’s salary including:
20% – 22.5% flat rate for general social security (INSS), 8% to Guarantee Fund for Length of Service (FGTS)
further contributions may apply
up to 14% of employee’s salary with rates being as follows::
7.5% (up to BRL 1,039.00), 9% (up to BRL 2,089.60, 13% (up to BRL 3,134.40), 14% (up to BRL 6,101.06, capped at BRL 713.08)
After having completed one year of service with the employer, an employee is entitled to 30 days of paid annual leave which can be taken in either one, two or three blocks. As a holiday bonus, employees can claim one third of what they would usually earn during a 30 days’ period.
Not included in the 30 days are the country’s national holidays. Brazil observes thirteen public holidays on the national level plus a few extra public holidays which are only relevant for certain regions. On these days, employees are generally forbidden to work unless the employer requests special permission from the Ministry of Labour and Employment.
Maternity Leave and Paternity Leave
Maternity leave in Brazil is 120 days during which the employee receives her normal wages – paid by the employer who then gets reimbursed by Social Security. Under certain conditions, employers can grant an extra 60 days of maternity leave which can equally be covered through social security benefits.
Fathers of new-born children can claim up to five days of paid paternity leave which can be extended by another 15 days, depending on the employer. Adoptive parents have the same rights as natural parents.
Other than maternity and paternity leave, Brazilian labour law does not provide for any further parental leave.
Additional Leave and Benefits
Parents who have to take their child to a medical appointment can claim one additional day off per year in order to fulfill their duties as a carer – applicable only if the child is under six years of age. Further leave entitlements related to family emergencies are subject to collective agreements.
It is common practice for employers in Brazil to provide their employees with meal and transport vouchers.
In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, the employment may be terminated due to one of the following reasons (non-exhaustive list):
- staff reduction and redundancy
- in case of liquidation
- breach of employment agreement, labour law or other
- summary dismissal due to gross misconduct
- underperformance and incapability
Employees who resign from their job and employers who are planning to dismiss an employee for a reason other than misconduct or breach of employment contract have to respect a minimum notice period of 30 days, plus three additional days for each year of service. Payment in lieu of notice is possible.
In all cases, except for dismissal due to misconduct, employers are obligated to provide severance pay including:
- salaries which are still due
- payment for unused holidays
- prorated yearly bonus
- accrued FGTS deposit + 40% of existing FGTS balance as a penalty (only in case of dismissal, not in case of resignation) – please note that an additional 10% is to be paid to the government as a penalty
- any other payments as detailed in the employment contract or in any collective bargaining agreement applying to the employee’s situation
Employees who are dismissed for gross misconduct are only entitled to the balance of their wages and payment for untaken annual leave.
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