Hiring employees in Brazil is straightforward once you understand the local employment rules and set up the right processes from the start.
Brazilian employment relationships are mainly governed by the CLT (Consolidação das Leis do Trabalho), which sets rules on employment contracts, working hours, vacation, termination and other employee rights. Employers must also register employees and report employment information through eSocial, the government’s digital system for labour, social security and tax obligations.
For foreign companies, the main challenge is not finding employees. It is getting the employment structure, payroll, benefits and compliance right from day one.
This guide covers the main things companies need to know when hiring employees in Brazil — from employment contracts and employer costs to payroll, working hours and termination.
Understanding Employment in Brazil
Employment in Brazil is governed by a clear set of labour rules. The main framework is the CLT (Consolidação das Leis do Trabalho), which covers employment contracts, working hours, salaries, vacation, termination and other employment rights.
The CLT also sets mandatory conditions for employment relationships. Employers cannot simply agree on terms that conflict with these rules. Collective agreements can also apply additional conditions to specific sectors or categories of employees.
Brazilian employment law recognizes several types of employment arrangements. These include indefinite-term contracts, fixed-term contracts, probationary contracts and temporary employment. Each has its own rules and requirements.
Understanding which type of employment relationship applies is the first step when hiring an employee in Brazil.
Employment Contracts
The indefinite-term employment contract is the standard contract for permanent employment. It has no predetermined end date and continues until the employment relationship is terminated.
Brazilian law also provides for several other types of contracts.
Probationary contracts
A contrato de experiência allows an employer and employee to assess the employment relationship before continuing on a permanent basis. It is a fixed-term contract and can last for a maximum of 90 days. It can be extended once, provided the total period does not exceed 90 days.
Fixed-term contracts
A fixed-term contract has a defined end date and can be used in situations permitted by Brazilian labour law. The contract can generally last for up to two years, subject to the specific rules applicable to this type of employment.
Temporary employment
Temporary employment is used for specific situations, such as replacing an employee temporarily or meeting additional demand. It is governed by separate legislation and normally involves a temporary work agency.
Regardless of the contract type, the employment relationship must comply with Brazilian labour legislation and any applicable collective agreement. Employment terms such as the position, salary, working hours and other conditions should be clearly documented.
Employee Costs: More Than Just Salary
The cost of hiring an employee in Brazil goes beyond the monthly salary. Employers also have to account for social security contributions, severance funds, vacation pay, the 13th salary and other statutory costs and benefits.
INSS contributions
Employers contribute to Brazil’s social security system through INSS. The employer contribution is calculated on the employee’s remuneration and forms part of the company’s payroll costs.
FGTS
Employers must also deposit FGTS (Fundo de Garantia do Tempo de Serviço) for their employees. The standard monthly deposit is 8% of the employee’s remuneration. The money is held in an individual FGTS account and can be accessed by the employee in circumstances defined by law, including certain types of termination.
13th salary
Employees are entitled to an annual 13th salary, essentially an additional month’s salary paid in instalments. The first instalment is normally paid by the end of November and the second by December 20.
Vacation pay
Employees are entitled to annual paid vacation after completing the required employment period. Vacation pay includes the employee’s regular remuneration plus an additional one-third of the salary, known as the terço constitucional de férias.
These costs should be included when calculating the total cost of an employee. The difference between an employee’s gross salary and the company’s total employment cost can be significant.
Working Hours, Overtime and Leave
Brazilian labour law sets rules for working hours, rest periods, overtime and paid leave. The standard working schedule is generally 8 hours per day and 44 hours per week, although different arrangements can apply depending on the position and collective agreement.
Overtime
Hours worked beyond the regular schedule are generally treated as overtime and must be compensated at a higher rate. The standard overtime premium is at least 50% above the employee’s normal hourly rate, although collective agreements can establish different conditions.
Rest periods
Employees are entitled to daily and weekly rest periods. The rules depend on the working schedule and the nature of the work.
Annual vacation
Employees are generally entitled to 30 days of paid vacation after completing 12 months of employment, subject to the applicable rules. Vacation pay includes the additional one-third payment mentioned above.
Public holidays and leave
Brazil has national public holidays, as well as state and municipal holidays. Employees can also be entitled to paid leave for specific circumstances, such as marriage, the birth of a child or the death of a close family member.
The exact rules can vary depending on the employee’s circumstances and any applicable collective agreement.
Payroll and Employment Registration
Once an employee is hired, the employment relationship must be registered and included in the company’s payroll processes.
Brazil uses eSocial, the government’s digital system for reporting employment, social security and tax information. Employers use eSocial to submit employee and employment data, including hiring, remuneration and changes to the employment relationship. The information also feeds the employee’s Digital Employment Card (CTPS Digital).
Employee registration
The employer must register the employee before the employee starts working. Under the current eSocial rules, the employee registration must be submitted by the day before the start of employment.
The employee’s CPF is used as the main identification number in the digital employment system. Brazilian and foreign employees with a CPF have access to the Digital Employment Card, so the old paper work booklet is no longer required for standard private-sector employment.
Payroll
Payroll covers the employee’s salary, statutory contributions, FGTS, income tax withholding where applicable and other payments and deductions.
Payroll information is reported through eSocial, which connects employment, social security and tax reporting. This makes accurate and timely payroll processing an important part of employment compliance.
Collective Agreements and Unions
Employment conditions in Brazil can also be affected by collective bargaining agreements.
Collective agreements (Acordos Coletivos de Trabalho) are negotiated between a company and a workers’ union. Collective conventions (Convenções Coletivas de Trabalho) are negotiated between workers’ unions and employers’ unions. Both can establish employment conditions for the employees covered by them.
These agreements can cover matters such as:
- Salary adjustments
- Benefits and allowances
- Working hours
- Overtime
- Additional leave
- Other sector-specific employment conditions
The applicable agreement depends on factors such as the employee’s occupation, sector and location. Registered collective agreements can be searched through the Ministry of Labour’s Mediador system.
For this reason, checking the applicable collective agreement should be part of the hiring process, especially when establishing salary and benefits.
Hiring Foreign Employees in Brazil
Foreign nationals can work in Brazil, but they need the appropriate immigration status and work authorization. In most cases, this means obtaining residence authorization for employment purposes before starting work. The exact requirements depend on the employee’s situation and the type of work.
Work authorization and residence
For employees coming to Brazil from abroad, the process generally involves an application for prior residence authorization, followed by the appropriate visa process. Once in Brazil, the employee must complete the required registration with the Federal Police and receives a RNM number and CRNM residence card.
The employee must also have the documentation required for employment registration and payroll, including a CPF.
The immigration process should therefore be completed alongside the employment process rather than treating it as a separate issue.
Terminating an Employee
Ending an employment relationship in Brazil involves specific rules and payments. The amount owed depends on how the employment ends and whether the employee or employer initiated the termination.
Dismissal without cause
An employer can terminate an employee without alleging misconduct. In this situation, the employee is generally entitled to outstanding salary, proportional 13th salary, accrued and proportional vacation plus one-third, notice pay where applicable, and the applicable FGTS termination payment. The employee can also have the right to withdraw their FGTS balance and receive unemployment insurance.
For an employer-initiated dismissal without cause, the FGTS termination payment is generally 40% of the deposits made into the employee’s FGTS account during the employment relationship.
Dismissal for cause
A dismissal for cause (justa causa) applies when the employee commits a serious breach recognized by Brazilian labour law. Examples include serious misconduct, insubordination, abandonment of employment and breach of confidentiality.
The financial consequences are different from a dismissal without cause.
Resignation
An employee can also end the employment relationship by resigning. The employee remains entitled to payments such as salary owed, proportional 13th salary and applicable vacation payments, while other termination rights differ from those available following dismissal without cause.
Mutual termination
Brazilian law also allows the employer and employee to agree to terminate the employment relationship. This has its own rules for notice, FGTS and other termination payments.
Termination should always be handled through the correct payroll and employment-registration procedures, with the applicable termination amounts calculated and paid within the legal deadlines.
Hiring Through a Local Entity or Employer of Record
A company hiring employees in Brazil needs a structure that can legally employ them and handle local payroll and employment obligations. In practice, there are two main routes: establishing a Brazilian entity or using an Employer of Record (EOR). A foreign company cannot simply place a Brazilian employee on its foreign payroll without addressing the local employment and registration requirements.
Hiring through a Brazilian entity
A company can establish a Brazilian subsidiary, such as an LTDA, and employ staff directly through that entity.
The Brazilian company becomes the employer and handles employment contracts, payroll, eSocial, FGTS, INSS and other local obligations. This gives the company direct control over its employees and creates a local structure that can support wider business operations.
Using an Employer of Record
An Employer of Record employs the worker locally on behalf of the foreign company. The EOR handles the local employment contract, payroll and statutory employment obligations, while the employee works for the foreign company’s business.
This can be a practical solution when a company wants to hire in Brazil without first establishing its own Brazilian entity.
What about contractors?
A third option is to work with an independent Brazilian contractor, often referred to as a PJ. This can be appropriate for genuine independent service arrangements, but simply calling someone a contractor does not remove the risk of an employment relationship.
Brazilian labour authorities and courts can look at how the relationship actually operates. Factors such as personal service, regular work, payment and subordination can point towards an employment relationship even when the parties have signed a service agreement.
Practical Hiring Process
A typical hiring process of a Brazilian employee looks like this:
1. Define the position
Set the role, responsibilities, salary, working hours and benefits.
2. Check the applicable employment rules
Determine the appropriate contract type and check whether a collective agreement applies.
3. Prepare the employment contract
Set out the agreed employment terms in accordance with Brazilian labour law.
4. Register the employee
Complete the required employee registration and submit the employment information through eSocial before the employee starts work.
5. Set up payroll
Calculate salary, deductions, employer contributions, FGTS and other payments.
6. Provide the required benefits
Set up statutory benefits and any additional benefits included in the employment package.
7. Start the employment relationship
Once registration and payroll are in place, the employee can start working under the agreed terms.
A well-organized hiring process avoids problems later. The key is to get the contract, registration and payroll right before the first working day.
Key Considerations for Foreign Companies
Hiring employees in Brazil requires more than agreeing on a salary and signing a contract. The employment structure, payroll and local compliance all need to be set up correctly from the start.
A few points deserve particular attention:
- Calculate the total employment cost. Salary is only one part of the cost. Employer contributions, FGTS, vacation pay, the 13th salary and other benefits also need to be included.
- Check the applicable collective agreement. Employment conditions can vary by sector, occupation and location.
- Set up payroll correctly. Salaries, deductions, contributions and employee benefits need to be processed and reported correctly.
- Register employees on time. Employment registration is handled through eSocial, with the employee’s admission information submitted before the start of employment.
- Understand termination costs. Dismissal can involve notice pay, vacation and 13th salary payments, as well as FGTS-related costs.
- Choose the right employment structure. Depending on the business, employees can be hired through a Brazilian entity or through an Employer of Record.
Good local payroll and employment administration makes the process much easier and reduces the risk of costly mistakes.
Conclusion
Hiring employees in Brazil does not have to be complicated. The key is to set up the right employment structure and get the contract, registration, payroll and compliance requirements right from the start.
Once these processes are in place, companies can build their local team and manage employment in Brazil within a clear and established framework.
Looking to hire employees in Brazil? Ipanema International helps international companies establish and manage their operations in Brazil, including company formation, local representation and business operations support.
