Hiring employees in Brazil is straightforward once you know the local employment rules and set up the right processes from the start.
Employment relationships are governed mainly by the CLT (Consolidação das Leis do Trabalho), which sets the rules on contracts, working hours, vacation, termination and other employee rights. Employers also have to register their employees and report employment information through eSocial, the government’s digital system for labour, social security and tax obligations.
For foreign companies, finding people is rarely the hard part. Getting the employment structure, payroll, benefits and compliance right from day one is. This guide covers what you need to know, from contracts and employer costs to payroll, working hours and termination.
Legal Framework
The CLT is the main framework. It covers employment contracts, working hours, salaries, vacation, termination and other rights, and it sets mandatory conditions. You can’t agree terms that conflict with them. Collective agreements can add further conditions for specific sectors or categories of employees.
Brazilian law recognises several types of employment: indefinite-term contracts, fixed-term contracts, probationary contracts and temporary employment. Each has its own rules, so working out which one applies is your first step.
Employment Contracts
The indefinite-term contract is the standard for permanent employment. It has no end date and continues until the relationship is terminated. Brazilian law also offers a few alternatives.
Probationary contracts. A contrato de experiência lets you and the employee test the relationship before going permanent. It’s a fixed-term contract of up to 90 days, and you can extend it once as long as the total stays within 90 days.
Fixed-term contracts. These have a defined end date and can only be used in situations permitted by Brazilian labour law. They can run for up to two years, subject to the specific rules for this type of employment.
Temporary employment. This covers specific situations, such as replacing an employee for a while or handling extra demand. It falls under separate legislation and usually involves a temporary work agency.
Whatever the contract type, it must comply with Brazilian labour law and any applicable collective agreement. Document the position, salary, working hours and other conditions clearly.
Employee Costs
An employee costs you a lot more than the monthly salary. On top of it you pay social security contributions, a severance fund, vacation pay, the 13th salary and other statutory costs and benefits. The gap between gross salary and total employment cost can be significant, so put all of it in your calculation.
INSS contributions. Employers contribute to Brazil’s social security system through INSS. The contribution is calculated on the employee’s remuneration and is part of your payroll costs.
FGTS. You deposit FGTS (Fundo de Garantia do Tempo de Serviço) for every employee. The standard monthly deposit is 8% of remuneration. The money sits in an individual FGTS account, and the employee can access it in circumstances defined by law, including certain types of termination.
13th salary. Employees get an annual 13th salary, essentially an extra month’s pay, paid in two instalments. The first is normally due by the end of November and the second by 20 December.
Vacation pay. After the required employment period, employees are entitled to paid annual vacation. Vacation pay is the regular remuneration plus an extra one-third of the salary, known as the terço constitucional de férias.
Working Hours, Overtime and Leave
Brazilian labour law regulates working hours, rest periods, overtime and paid leave. The standard schedule is 8 hours a day and 44 hours a week, although other arrangements can apply depending on the position and the collective agreement.
Hours beyond the regular schedule count as overtime and must be paid at a higher rate. The standard premium is at least 50% above the normal hourly rate, but collective agreements can set different conditions. Employees are entitled to daily and weekly rest periods, and the rules depend on the schedule and the nature of the work.
After 12 months of employment, employees are typically entitled to 30 days of paid vacation, including the extra one-third mentioned above. Brazil has national public holidays plus state and municipal ones, and employees can get paid leave for specific events such as marriage, the birth of a child or the death of a close family member. The exact rules depend on the employee’s circumstances and any collective agreement.
Payroll and Employment Registration
Once you hire someone, the employment has to be registered and included in your payroll. Brazil handles this through eSocial, where you submit employee and employment data: hiring, remuneration and every change to the relationship. The same information feeds the employee’s Digital Employment Card (CTPS Digital).
Register the employee before they start work. Under the current eSocial rules, the registration must be submitted by the day before the start of employment. The employee’s CPF is the main identification number in the system. Brazilian and foreign employees with a CPF have access to the digital card, so the old paper work booklet is no longer needed for standard private-sector employment.
Payroll covers salary, statutory contributions, FGTS, income tax withholding where it applies, and other payments and deductions. Because eSocial connects employment, social security and tax reporting, accurate and timely payroll processing is a core part of compliance.
Collective Agreements and Unions
Collective bargaining agreements can change the conditions you have to offer. There are two types. 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 set conditions for the employees they cover, such as salary adjustments, benefits and allowances, working hours, overtime, extra leave and other sector-specific terms.
Which agreement applies depends on the employee’s occupation, sector and location. You can search registered agreements in the Ministry of Labour’s Mediador system. Make this check part of your hiring process, especially before you set salary and benefits.
Hiring Foreign Employees in Brazil
Foreign nationals can work in Brazil, but they need the right immigration status and work authorisation, in most cases residence authorisation for employment purposes before they start. The exact requirements depend on the person’s situation and the type of work.
For employees coming from abroad, the process usually starts with an application for prior residence authorisation, followed by the visa process. Once in Brazil, the employee registers with the Federal Police and receives an RNM number and a CRNM residence card. They also need a CPF and the other documents required for employment registration and payroll.
Run the immigration process alongside the employment process, not as a separate issue.
Terminating an Employee
Ending employment in Brazil comes with specific rules and payments. What you owe depends on how the employment ends and who initiates it.
Dismissal without cause. You can terminate an employee without alleging misconduct. The employee is then entitled to outstanding salary, proportional 13th salary, accrued and proportional vacation plus one-third, notice pay where applicable, and the FGTS termination payment. For an employer-initiated dismissal without cause, that payment is 40% of the deposits made into the employee’s FGTS account during the employment. The employee can also withdraw their FGTS balance and claim unemployment insurance.
Dismissal for cause. A dismissal for cause (justa causa) applies when the employee commits a serious breach recognised by Brazilian labour law, such as serious misconduct, insubordination, abandonment of employment or breach of confidentiality. The financial consequences differ from a dismissal without cause.
Resignation. When an employee resigns, they keep the right to salary owed, proportional 13th salary and applicable vacation payments. Other termination rights differ from those after a dismissal without cause.
Mutual termination. Brazilian law also lets you and the employee agree to end the relationship. This comes with its own rules for notice, FGTS and other termination payments.
However the employment ends, handle it through the correct payroll and registration procedures, and calculate and pay the termination amounts within the legal deadlines.
Hiring Through a Local Entity or Employer of Record
To employ people in Brazil, you need a structure that can legally employ them and handle local payroll and employment obligations. You can’t just put a Brazilian employee on your foreign payroll and skip the local employment and registration requirements. In practice you have two main routes: a Brazilian entity or an Employer of Record (EOR).
With a Brazilian entity, you set up a subsidiary, such as an LTDA, and employ staff directly through it. The Brazilian company becomes the employer and takes care of contracts, payroll, eSocial, FGTS, INSS and other local obligations. You get direct control over your team, and you build a local structure that can support the rest of your business in Brazil.
With an EOR, the EOR employs the worker locally on your behalf. It handles the local contract, payroll and statutory obligations, while the employee works for your business. This is a practical solution if you want to hire in Brazil before you have your own entity.
A third option is an independent Brazilian contractor, often called a PJ. That works for genuinely independent service arrangements, but calling someone a contractor doesn’t remove the risk of an employment relationship. Labour authorities and courts look at how the relationship works in practice. Personal service, regular work, payment and subordination can all point to employment, even when both sides signed a service agreement.
Practical Hiring Process
A typical hiring process in Brazil runs in this order. Start by defining the position: the role, responsibilities, salary, working hours and benefits. Then check which employment rules apply, choose the contract type and find out whether a collective agreement covers the role. Next, prepare the employment contract in line with Brazilian labour law.
Before the employee starts, register them and submit the employment information through eSocial. Set up payroll for salary, deductions, employer contributions, FGTS and other payments, and arrange the statutory benefits plus any extras in your package. Once registration and payroll are in place, the employee can start working under the agreed terms.
A well-organised process saves you trouble later. Get the contract, registration and payroll right before the first working day.
For Foreign Companies
Hiring in Brazil takes more than agreeing on a salary and signing a contract. Set up the employment structure, payroll and local compliance correctly from the start, and keep these points in mind:
- Calculate the total employment cost. Salary is one part. Employer contributions, FGTS, vacation pay, the 13th salary and other benefits all count.
- Check the collective agreement. Conditions vary by sector, occupation and location.
- Set up payroll correctly. Salaries, deductions, contributions and benefits must be processed and reported accurately.
- Register employees on time. The admission information goes through eSocial before employment starts.
- Know your termination costs. Dismissal can involve notice pay, vacation and 13th salary payments and FGTS-related costs.
- Choose the right structure. Hire through a Brazilian entity or an Employer of Record, depending on your business.
Good local payroll and employment administration makes all of this easier and lowers the risk of costly mistakes.
Conclusion
Hiring in Brazil doesn’t have to be complicated. Choose the right employment structure and get the contract, registration, payroll and compliance right from the start. Once those processes are in place, you can build your local team and manage employment within a clear and established framework.
Looking to hire employees in Brazil? Ipanema International helps international companies set up and run their operations in Brazil, including company formation, local representation and business operations support.
