Its diversified economy, large customer base, and strategic location (Brazil borders ten other countries in the region) are just some of the reasons why businesses are expanding into Brazil. In this post, we provide information on employing a worker in Brazil.
Capital GES created this postcard series to help businesses that are considering expansion and hiring global staff. In this postcard series, we provide helpful tips on international employment. In our latest post, we answer questions in relation to employment law in Brazil.
Brazil Overview
For businesses and investors looking to expand into Latin America, Brazil should be considered. As one of the largest economies in the world, Brazil offers great potential for companies looking to grow their presence in Latin America. Its diversified economy, large customer base, and strategic location (Brazil borders ten other countries in the region) make it an attractive country to expand into. Over the last decade, the country has undergone several changes to build its economic growth, including introducing labour reform, lowering barriers to foreign investment, and investing in new industries. Additionally, Brazil’s diverse market offers plenty of expansion opportunities for businesses in sectors such as finance, oil, gas, automobile, technology, and telecommunications.
Employing a worker in Brazil – Employment Laws to know
Expanding into Brazil and employing a worker can be complex, so it is best to seek the right advice before choosing to do so. Below, we look at the most common questions asked by clients regarding employment law in Brazil.
1. Contracts
“Can I have a worker on a fixed-term contract as I am not sure whether it will work out long term?”
Fixed-term contracts are only applicable when the nature of services to be provided or the activities of the company are considered as a transitory nature. Furthermore, fixed-term contracts can only be extended once and may not exceed two years in total duration.
2. Termination Rules and Costs
What do I need to know about termination and severance pay in Brazil?
Terminations in Brazil are often complex and should be considered with local experts before any notice is issued. Contracts may be terminated by mutual agreement or unilaterally and a notice period must be considered. This notice can be paid in lieu or worked, and it increases according to the length of service of the employee.
Termination Costs and rules
Severance payment depends on the length of employment and notice period given. A 30-day (plus) notice must be given in writing in the event an employee is dismissed without cause or upon resignation by the employee. The employer must also pay out the accrued severance fund, 13th salary, and vacations plus vacation bonus.
Severance indemnification equals 40% penalty on the balance in the employee’s FGTS (federal severance fund savings) account deposited throughout the contract.
3. Statutory Employee Benefits
What are the statutory employee benefits in Brazil?
Statutory Paid Holiday
In Brazil, employees are entitled to 30 days of holiday leave after one year of employment. This does not include public holidays. Furthermore, in Brazil employers are required to pay a holiday leave bonus which is equal to 1/3 of the vacations.
Maternity and Paternity Leave
Maternity leave in Brazil corresponds to 120 days. During maternity leave, employees receive an allowance equal to 100% of the salaries funded by the state. Fathers are entitled to five paid days leave funded by the employer.
Probation Periods
Probationary period for all employees is for up to 90 days.
Sick Pay
In Brazil, sick pay related to non-work illness or injury shall be paid by the employer for the first 15 days of absence, and after that is covered by the Social Security System.
Christmas Bonus
In Brazil, the Christmas bonus (or 13th salary) is a mandatory benefit to all employees, and the amount is equivalent to one month’s wage. Payments are made annually in two installments—the first is paid up to the 30th of November and the second is paid up to the 20th of December. The Christmas bonus is prorated if the worker has worked less than a full year.
How Capital GES Can Help You Expand and Employ Workers in Brazil
Capital GES provides many employment services such as managing the worker’s onboarding, HR, payroll, and taxes.
If you are a business that is looking to expand internationally and want to employ workers in Brazil or any other country in Latin America, Capital GES can help. To establish what services you require, contact sales@capital-ges.com or phone +55 31 3194 8150.
