Employer of Record in Brazil

General Information

• Currency: Brazilian Real (BRL)
• Employer Taxes: 36.58% to 41.08%
• Payroll Frequency: Bi-Weekly
• Employee Costs: 14%
• Capital: Brasilia
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: The national minimum wage is 1,412 Brazilian reals monthly.

Payroll

Payroll Cycle: There are two payroll cycle options: monthly and bi-weekly.

For the monthly cycle, payroll payments must be made in the local currency within the first five business days of each month.

For the bi-weekly cycle, employees receive 40% of their monthly compensation between the 15th and 20th of each month. The remaining balance, after mandatory deductions, is typically paid between the last day of the month and the fifth business day of the following month.

Regardless of the cycle, pay dates must comply with collective bargaining agreements and be paid by the fifth business day of the following month. If employees work on Saturdays, these days must be considered as business days by the employer.

Here’s an example for clarity:

• If the payment is on the 5th, the advance should be paid on the 20th.
• If the payment is on the 30th, the advance should be paid on the 15th.

The monthly cycle is generally more commonly used.

13th Salary

In Brazil, employees are entitled to a mandatory 13th-month salary payment at the end of the year, commonly known as the Christmas bonus. Full payment is awarded to employees who have worked the entire 12 months, while those who have worked only part of the year receive a proportionate payment based on their period of employment.

This 13th-month salary is typically paid in two installments. The first installment, covering the first six months of the year, is due by November 30th and is exempt from mandatory deductions.

The second installment, due by December 20th, is subject to INSS contributions and withholding tax.

If an employer opts to make the 13th-month payment in a single installment, it must be paid by November 30th. Collective bargaining agreements take precedence over individual employment contracts..

Working Hours

General: In Brazil, the standard working hours are 44 hours per week, typically spread over 8-hour days. This can be organized either as 5 working days from Monday to Friday or as 6 working days with 8-hour shifts from Monday to Friday and 4-hour shifts on Saturdays.

Employers are required to provide a 15-minute meal break for shifts lasting between 4 to 6 hours, and a 1-hour break for shifts exceeding 6 hours.

Maximum weekly and daily working hours may vary according to employment contracts or collective bargaining agreements.

Overtime: All work exceeding the standard 44 hours per week is considered overtime and is regulated by the employment contract or collective agreements. Generally, the maximum limit for overtime is 2 hours per day, and it is paid at 150% of the regular salary rate.

Work performed on holidays is compensated at up to 200% of the regular pay rate. Night work, between 10:00 PM and 5:00 AM, is paid at a minimum rate of 120%, with each hour of night work calculated as lasting 52.5 minutes. Managers are not eligible for overtime pay.

Leave

Annual Leave (Vacation):

In Brazil, paid vacation is specified in the employment contract. Employees are entitled to a minimum of 30 calendar days of paid leave per year after completing one year of service. In addition to public holidays, employees accrue 2.5 working days of vacation per month.

Vacation pay consists of one monthly salary plus an additional bonus of one-third of the monthly salary. This payment is made two business days before the start of the leave.

The Labor Reform allows for the division of the paid leave period. Employees can take their vacation in up to three separate periods, with one period being no less than 14 days and the remaining periods no less than five days each.

Vacations cannot begin within two days before a public holiday. Employees must be given at least 30 days’ notice before the start of their vacation.

Once an employee becomes eligible for annual leave, which occurs after 12 months of employment, they must use it within the following 11 months before reaching their second work anniversary. Vacation days cannot be combined with the next year’s leave.

It is essential for the company to review the collective bargaining agreement to ensure it aligns with the employee’s vacation request.

Public Holidays

In Brazil, local holidays are observed in addition to the national holidays listed below. Employers have the option to grant these local holidays as time off to their employees and can choose whether to designate them as paid or unpaid leave. Public holidays that fall on weekends are typically not observed.

Sick Days

All employees are entitled to paid sick leave and must provide a medical certificate within 48 hours of the first day of illness.

For the first 15 days of sick leave, the employer pays the employee at the full salary rate. After this period, sick leave payments are covered by Social Security (INSS). However, the INSS payment does not match the actual salary but is calculated based on contributions and capped at approximately 6,100.00 BRL. During the sick leave period, the employer remains responsible for paying social security contributions.

Maternity Leave

All female employees, including those adopting a child, are entitled to maternity benefits. The INSS (Social Security Agency) provides these benefits for 120 days, during which the employee’s job is protected and cannot be terminated. The employer must pay the employee’s salary, which will be reimbursed by the INSS at a later date.

If the employer participates in the government program (Empresa Cidada), the maternity leave period can be extended to 180 days. During this leave, the employer will continue to make social contributions on behalf of the employee. Additionally, the employee will accrue annual leave, receive the 13th salary, and enjoy job security.

Maternity leave can start as early as the 8th month of pregnancy. CLT employees must submit a request and a doctor’s note to the HR department, which is responsible for notifying the INSS about the request.

Paternity Leave

Fathers are entitled to a mandatory paid paternity leave of 5 consecutive days following the birth or adoption of a child. If the employer participates in the government program (Empresa Cidada) and meets the program’s requirements, this paternity leave can be extended to 20 consecutive days.

Parental Leave

There is no additional parental leave in Brazil.

Other Leave

Bereavement Leave: Employees are entitled to up to 2 consecutive days of paid leave following the death of a direct family member (spouse, parent, child, or sibling). A death certificate or other supporting documentation must be provided.

Marriage Leave: Employees are entitled to up to 3 consecutive days of paid leave for their marriage. It is customary for employees to notify the HR department at least 30 days in advance.

Blood Donation Leave: Employees who donate blood voluntarily are entitled to one day of paid leave every 12 months. A medical or facility certificate must be provided.

Electoral Service Leave (Mesário): Employees summoned to work on election days (usually Sundays) are entitled to 2 days of paid leave, which can be consecutive or not. The summons letter must be presented to the HR department.

Court Hearings (Júri Popular): Employees required to attend jury trials focused on specific crimes against life are entitled to paid leave without salary deductions. A summons letter must be provided to the HR department.

Care Leave: Employees are entitled to 30 days of paid leave per year for urgent and essential care of a family member under 12 years old, and 15 days for a family member older than 12 years.

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