Brazil Employer of Record (EOR) Services
Capital
Brasilia
Official Language
Portuguese
Currency
Brazilian Real
Payroll cycle
Bi-monthly
Quick facts about Brazil
The sixth largest country in the world by population, Brazil is home to the most species of plants and animals in the world. As one of the world’s most diverse countries, Brazil is a hub for talented workers from all backgrounds. Known as a melting pot, the country has some of the largest Italian, Arab, and Japanese communities in the world.
What is an EOR vs. PEO in Brazil?
What is an EOR in Brazil?
An employer of record (EOR) in Brazil allows companies without a local entity to hire full-time workers in minutes. An EOR acts as the legal employer on paper and helps businesses manage payroll, statutory benefits, employment contracts, taxes, and other HR processes.
EORs
Manage payroll, employment contracts, and statutory benefits such as healthcare and pension plans
Navigate payroll taxes and other HR processes
Support full-time workers across the entire employee lifecycle, from onboarding to offboarding
Sponsor work visas & permits
Save thousands of dollars and countless hours of valuable time
Employer-of-record (EOR) vs. PEO services
Sometimes, employer-of-record services are confused with PEOs. Many businesses use the terms interchangeably, but in Brazil there is a key legal difference.
PEOs act as a co-employment relationship which means:
Your hires are still your employees
You still need a legal entity in Brazil
You still have legal responsibilities in case of compliance issues
Think about it like this: a PEO is a partner to which you outsource part of your administrative HR processes, while an EOR is a partner that handles all of the HR process and takes care of your legal and compliance obligations when hiring abroad in Brazil.
A wide range of industries want to hire foreigners and expats based in Brazil. However, the country has complex tax labor laws that make it difficult to hire candidates without either 1) having an entity or 2) first-hand knowledge of the country’s HR processes. Further, misclassifying independent contractors in Brazil comes with legal liabilities and fines.
When trying to build a small but strategic team in Brazil, using an EOR service expedites the process. Via allows you to hire and onboard employees in Brazil in a few days, instead of having to wait the necessary 90 days for establishing a legal entity.
For corporations looking to build out small teams, small startups, and SMBs, partnering with an EOR makes sense.
Brazil at a glance: Key facts about Brazil
Key facts about Brazil
Capital city: Brasilia
Largest city by population: São Paulo
Currency: Real (R$, BRL)
Population: 212.6 million
Languages: Portuguese
Brazil GDP: 1.445 trillion
Payroll frequency: Bi-Monthly
Federal Minimum wage: 1,100 (BRL) per month, paid 13 times a year.
Paid and unpaid leave in Brazil
Paid and unpaid leave in Colombia
Employees are entitled to 9 national holidays off, with the other 4 holidays being optional days off. After being employed for 1 year, full-time employees receive 30 days of paid vacation per year. They can take all of their vacation in one 30-day chunk, or they can split their vacation into one 20-day period and one 10-day period. Further, employees must also be paid 1/3rd of a month’s salary as additional vacation pay.
In Brazil, the 13 federal holidays are:
New Years Day
Carnival
Ash Wednesday
Good Friday
Easter Sunday
Tiradentes’ Day
Labor Day
Corpus Christi
Independence Day
Our Lady Aparecida
All Souls Day
Republic Proclamation Day
Christmas Day
13th-month pay
Like workers in Mexico and Colombia, employees in Brazil are also paid 13th-month salaries. This month of salary is normally split into two payments, the first in November and the second in December.
If an employee is terminated, their holiday pay and holiday bonus are prorated based on how many months they’ve worked in one calendar year.
Sick leave
Employees can take sick leave, but they must provide a medical note from a doctor stating their illness and how long they need off, within 48 hours of their first day of sickness. Employers pay for the first 15 days of the employee's sick leave. After 15 days, the employee’s social security kicks in and social security pays the remaining sick days.
Maternity/paternity leave
In Brazil, employers are required to allow new mothers to take 120 days of time off paid at their full salary. This is true for both pregnancy and adoption.
New fathers, on the other hand, only receive 5 days of paid time off at their full salary in the case of pregnancy or adoption. Both of these leaves can be extended by the employer through a petition to the Social Security Department.
Breastfeeding break
For the first six months after a child is born or adopted, biological and adoptive moms are entitled to two paid breastfeeding breaks a day of 30 minutes each. Beyond that, companies can choose to combine the two breaks and reduce the employee’s daily working hours by one hour or give them an additional 15 days of paid time off, which is equivalent to the daily breaks for that time.
Bereavement leave
In the case of the death of a family member, employees can take 2 paid days off.
Marriage leave
Employees are entitled to 3 consecutive days of paid time off for their marriage.
Other leave
Election days, which are paid holidays that usually fall on Sundays
Medical leave of one day per year to attend medical appointments for themselves or their children
Expecting fathers receive two days of paid time off to attend medical appointments when their wife is pregnant
One day of blood donation in a 12-month period
Employment compliance in Brazil
Employment contracts
Almost all employers in Brazil draft employment contracts to protect both parties and set the tone of the working environment. The employer must draft the contract in Portuguese, so knowing the language is a necessity for any company wishing to hire within the country. Each contract should spell out the stipulations of the employee's base salary, and if 13th-month pay is included in their base salary. The contract should also include information about benefits, including dental, performance bonus, and private healthcare.
Employees in Brazil are entitled to a wide range of benefits through the country's social security, but having added benefits like dental and private healthcare make your company appealing to top employees.
Given all the information that needs to be included in these labor contracts, partnering with in-country specialists makes sense. When using an EOR service like Via, we take the stress off of you by ensuring that your team’s needs are met and that your business practices remain compliant with standard Brazilian practice.
An EOR or PEO service like Via ensures that your contracts are compliant with GDPR and other data regulations. We also make sure to include IP/intellectual property clauses that protect your business’s international trade secrets.
Employee rights and protections
Employees are strongly protected against discrimination based sex, national origin, marital status, family situation, disability, and age. Employers have to abide by these rules, even during the hiring and interviewing process.
Common employee rights and protections in Brazil include:
Pay slips to ensure fair wages
Health and safety protections set forth by the Ministry of Labour and Employment (MTE)
Unemployment
Severance payments
13th-month pay
Protection in case of business transfer
Transportation vouchers for employees who commute
Lei Geral de Proteção de Dados Pessoais (LGPD) protects how and why employees personal data is now used in Brazil
Misclassification penalties
Penalties for misclassifying employees and contractors in Brazil can be severe. They normally result in fines of $400,000 BRL per employee ($76512 USD or $1449062 MXN), retroactive social security contributions, and vacation with an interest of 75%-225%.
Probation periods
Employers are allowed to give new employees a 90-day probation period to make sure that the company is a good fit.
Work weeks
The working week can range from either five 8-hour days, or 5 8-hour days with 4 hours of work on Saturday. Working hours must be clearly outlined in the employee’s hiring contract. Working hours are typically 8:00 am-5:00 pm or 9:00am-6:00pm, with 1 hour of an unpaid break for lunch.
Employees who work between 10pm and 5am are considered night employees and are entitled to a 20% bump in their salary, compared to those who work during the day.
Employees normally spend 40 hours per week in the office or working remotely, but they may need to login 4 hours on Saturdays, depending on the stipulations of their employment contract. Anything beyond 44 hours per week would be considered overtime and needs to be paid at 1.5 times the employees base salary.
Sunday is normally a day off. If an employee works on a Sunday or a public holiday, they are entitled to double their salary for overtime.
Mandatory breaks
Employees are entitled to a paid 15-minute break if they work more than 4 hours but less than 6. For anything over 6 hours, they are entitled to a 1-hour lunch break. Further, employees should always receive 11 hours between each of their shifts to recuperate, as well as 1 full day off weekly.
Overtime pay
Employees in Brazil are only allowed 2 hours of overtime per day. Instead of being paid overtime, employees can also be paid overtime with extended time off outside of their guaranteed 30 days of paid time off.
Executive pay
Managers/executives in Brazil can opt out of being paid in the normal working hour system and instead can be paid as if they were a salaried employee.
Severance/Termination
In Brazil, either party (employer or worker) can terminate the employment relationship. However, because employment contracts are crucial for establishing boundaries in Brazil, there are a wide range of stipulations that control what employees are entitled to upon termination. Termination without cause can lead to litigation by the employee, so the employers and employees need to clearly agree to the termination.
If an employee resigns without giving notice, their severance must be settled within 3 days of their last day of employment. However, if the employee is terminated due to their own misconduct, their severance must be settled on the last day of their employment.
For notice, employees are required to give their employers 30 days of notice before terminating their employment, which is much longer than a 2-week notice in the United States.
Employers must give 30 days of notice for termination during the employee’s first year of employment. For every year of service after the first year, the employee’s notice period increases by 3 days, with a maximum notice capping out at 90 days.
Severance pay varies depending on the notice given by the employer/employee. Typically, employees are entitled to 1 month of severance pay for every year they’ve worked for their employer.
Employers contribute 8% of each employee’s salary to a government run severance fund. This fund covers employee severance payments so employers don’t have to. When an employer terminates an employee, they must pay 40% of the employees severance fund balance as a termination fine. However, if both parties agree to end employment on amicable terms, the employer may only have to pay 20% of the severance fund fine.
Payroll taxes in Brazil
Brazil requires that employers pay a significant amount in payroll taxes–around 35% of the employee’s base pay. Employees pay anywhere from 8-11% of their monthly salary into their social security.
Brazilian employer deductions
Here’s a list of important payroll deductions.
20% Public Pension Fund (INSS)
8% Severance Fund
5.8% for additional contributions
1-3% for accident insurance
13th-month salary
These totals all need to be clearly stated in the employee’s employment contract upon hiring. By writing this out in the contract, employers of record can avoid any confusions/liabilities if an employee is terminated.
Onboarding employees in-house HR vs third-party PEO or EOR service
From small startups to large enterprises, companies want to hire talent in Brazil. However, the process can be quite difficult without using a third-party EOR service like Via.
Becoming an employer in Brazil is challenging. Your business will need to establish a physical entity in the company. Further, the process can be quite lengthy, since you will need to follow a number of laws and regulations to maintain compliance. Most importantly, you will need to build out a local human resources team that are experts in Brazilian labor law.
For companies who plan to hire a large number of employees in a foreign country, opening an entity with a strong HR and legal team might make sense. Most of the time, however, using a third-party EOR service like Via is the most strategic business move.
Why Companies Partner with Via as their Brazilian employer-of-record (EOR)
Companies of all sizes want to hire within Brazil, but many do not have the necessary knowledge to follow local labor laws. Via makes hiring Brazilian talent and building your global team seamless. Via helps you manage local HR processes for direct employment such as work visas & work permits, benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity in Brazil, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors in Brazil with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.
