Guide to hiring employees in Brazil

Everything you need to know when expanding your workforce in Brazil

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Overview

Brazil is the largest country in South America, both geographically and demographically. With more than 8.5 million square kilometers, Brazil occupies almost 50% of South American territory and has an extensive coast, with more than 9,200 kilometers.

The country is extremely diverse, with different regionalisations within states and its people. Although the primary language spoken is Portuguese, the new generation of Brazilian English speakers is growing by the minute. According to a British Council study, the percentage of English speakers in the Brazilian market between 18-24 years old is double the country’s average.

The main strengths of Brazil are its agriculture, construction, hospitality, and tech sectors. As an emerging market, Brazil has a Human Development Index (HDI) of 0,754 (87th in the world) and a Gross Domestic Product (GDP) of USD$1.445 trillion as of 2020. With a large employee population of almost 80 million workers, Brazil is seen worldwide and by foreign companies as a country with great potential to grow and develop.

Capital Brasília
Languages spoken Portuguese
Population size 212 million
Payroll frequency Monthly
Currency Brazilian Real (R$)
VAT VAT on Sales and Services are PIS/COFINS – at 9.25%, & Municipal Service Tax (ISS) with rates varying from 2 to 5% depending on the Municipality in which the company is located.

Payroll and taxes in Brazil

Brazil is known for having a lot of different taxes and employment laws. In order to stay compliant, companies must make several contributions based on the employees’’ total remuneration, number of contractors, full-time employees and more.

Employer contributions in Brazil

Social Insurance (INSS)

Instituto Nacional do Seguro Social (INSS) is the Brazilian Social Security System. Employers must withhold a part of the workers salary and also make a contribution themselves based on the employees total compensation each month (this includes other benefits such as 13th salary, vacation leaves and other bonuses). The rate is either 20% of INSS, 3,30% for SEBRAE, SESC, SENAC & INCRA, 2,5% for Education Salary, depending on the industry. This tax is paid to fund employee’s pension, compensation, disability retirement, sick pay, unemployment insurance, maternity pay and other allowances.

Pension (FGTS)

Another mandatory contribution is the Fundo de Garantia do Tempo de Serviço (FGTS). The rate is 8% of the employee’s total monthly salary (bonuses, overtime, 13th salary, vacation pay included) each month. FGTS is a fund to cover the severance indemnity that an employee is entitled to after termination without cause. After the end of contract, the contribution ceases and the amounts are retained with the government, until the person is able to withdraw the money due to specific situations such as retirement, sickness or using the money through the state bank to purchase real estate.

Work Accident Insurance (RAT)

RAT is the Risco Ambiental do Trabalho, that corresponds to a tax that varies from 1% to 3% of the total amount received by the employee each month according to the risk taken by workers at their jobs. Most tech companies have a fixed rate of 2% on this tax.

Employee contributions

The workforce is also subject to taxes in Brazil. These rates are collected at the time of payment and go straight to the government.

Personal income tax

The first thing about personal income tax in Brazil depends on whether the employees is a resident or non-resident. The main difference for both categories is that residents/brazilian employees are taxed on their worldwide income while non-residents are only required to pay taxes on income earned within Brazil.

In order to be considered a resident taxpayer, a person has to fit in one of these categories:

  • The Individual resides in the country permanently
  • The individual is a Foreigner that is naturalised
  • The expat employee has a temporary or permanent visa with a local contract
  • The expat employee has a temporary visa but no local contract for a 183 days (consecutives or not) in the country within a 12-month period

Other than paying taxes, Brazilian taxpayers have a lot of requirements to fulfil such as submitting tax returns, advanced income tax payment and more.

Taxable income

Wages, salaries, bonuses, commissions, and dividends are all classified as taxable income in Brazil. Allowances that are connected with employment such as housing and education also fall in the same category.

Income Tax Withholding

Resident taxpayers are subject to withholding tax for all remuneration earned or paid from local sources (legal entities). This is called Imposto de Renda Retido na Fonte (IRRF). Companies are responsible for the withholding of a percentage of the income of each employee, according to the rate defined previously by Brazilian Law.

Taxes withheld are treated as an in-advance payment and credited against a taxpayer´s final annual tax liability. Sometimes workers are entitled to a tax return after the final income calculations.

See below for the progressive rates along with the deductible portion according to each monthly tax basis.

Table of deductible portion rates based in monthly tax basis

In addition to the above deductible portion, for each legal dependent the employee has, the amount of BRL 189.59 is deducted from Income Tax calculation base.

Another tax withheld is for INSS. The Social Security System demands a payment according to monthly pay, the higher the salary, the greater the contribution up to 14%.. See the rates below:

Table of rates withheld according to gross salary in R$

Minimum Wage in Brazil

Minimum Wage in Brazil is currently R$1,212 monthly, approximately U$D228,30 or U$D2,693 in annual salary . The amount is revised every year. In 2021, the rate went up by 10.18% which has been the average in the last few years. For 2023, the Trading Economics projection evaluates that this rate will continue in the same range, and the minimum wage will fall between R$1,300 and R$1,400.


Working Hours in Brazil

All Brazilian labor regulations and employment laws are in the Consolidação das Leis Trabalhistas (CLT). According to this system, a standard working day in Brazil is eight hours long, with a two hours per day limit of overtime. In total, the number comes down to 44 hours a week. Brazillian employees are also entitled to one unpaid hour per day for their lunch break.

Overtime in Brazil

After reaching the amount of hours agreed within their contract for the week, the regulation triggers the overtime hourly rate, which is 1.5 times the regular pay. According to Brazilian law, overtime hours cannot exceed two hours a day.

It’s important to highlight that overtime pay doesn’t apply to a few categories including:

  • external employees;
  • employees working from home
  • employees in positions of trust, such as managers and directors

Employee Benefits in Brazil

13th-month salary

In Brazil, employers are entitled to an additional salary payment at the end of the year. Employees that have worked the whole 12 month period get the full extra payment. If someone has been admitted after the year has started, they’re 13th-month earnings will be proportional to the time worked. For example, if someone starts at the company on April 1st, by the end of year, they will receive three quarters of a full 13th-month salary.

This extra payment is made in two parts: the first one in November, with 50% of the amount and without INSS deductions or taxation. The second in December, with the full deductions and taxation.

Brazilians working at an office

Vacation Bonus

There’s a mandatory cash bonus equal to a third of a month-salary to be paid in addition to the regular pay during the vacation leave. All these bonuses plus the salary have to be paid at least two days before the vacation starts.

 

Types of leave available in Brazil

There are a few types of leave available in Brazil, and they differ from each other.

Annual Leave

After a whole year of service, workers get 30 days of paid time off. It can be divided into shorter periods of time, with at least one of the vacation periods 15 days long, and two at least 5 days long.

Sick Leave

Upon getting sick or injured, workers are entitled to a totol of 15 days regular paid sick leave. This time off is prescribed by a medical professional and afterwards employees need to present a verified note to their company stating the time and reason they were unable to work. Employers are obligated to pay 100% of the salary for a maximum of 15 days. If the employee requires additional time off beyond the 15 days, the Social Security (INSS) will pay for the leave. It's important to mention that the INSS will pay for this time only if the employee is working at the company for at least a full year. If an employee receives sick pay from the INSS, they cannot be fired for up to one year after returning to work.

Maternity Leave


Pregnant employees who have been working in the same company for more than three months are eligible for paid maternity leave. This time consists of 120 days of maternity leave from the day the child is born (or 28 days prior child's birth) or adopted. The allowance is equal to the employee's salary, with no reduction on the amount whatsoever.

During pregnancy, workers can take days off for doctor visits, medical exams or other related appointments. It's important to mention that employees on maternity leave cannot be fired or dismissed without a cause for whole leave and during the first five months after birth.

In recent news, the Brazilian government has created an optional program to give an additional 60 days on top of the 120 from maternity leave that can be paid or financed with the company's tax deductions and contributions.

Paternity Leave

Fathers are entitled to guaranteed five days paternity leave after the birth of each child. Depending on the state, new fathers may have up to 15 days total.

Bereavement Leave

Employees are entitled to two days off in case of death of family members.

Public Holidays in Brazil

Besides all the types of leave, there are also the National Holidays listed below. Theres a few extra public holidays depending on the state your organisation is in.

  • New Year's Day - 1 January
  • Carnival (2 days) - 47 days before Easter
  • Good Friday * - Last Friday before Easter
  • Tiradentes Day - 21 April
  • Labour Day - 1 May
  • Corpus Christi * Exactly 60 days after Easter
  • Independence Day - 7 September
  • Our Lady of Aparecida - 12 October
  • All Souls' Day - 2 November
  • Republic Day - 15 November
  • Christmas Day - 25 December

The dates marked with an asterisk are Ponto Facultativos which means that they are optional holidays, with the employer making the decision whether to respect the holiday or not.

Attracting talent in Brazil

Apart from offering attractive compensation packages, thoughtful benefits are crucial to hire and retain the best workers in the country. The company’s culture, environment and people are important, as well as compelling benefits for Brazilians, flexible work hours, and a clear career progression plan.

Compelling Benefits

The benefits are really what stands out in the beginning, especially on job description and the offer. There are a lot of different possible benefits but the most popular are gym pass, meal tickets with good value, post grad programs, scholarships for language courses, private pension funds and more. In fields where the salaries are similar, the difference can come in various ways. It is important to have some alternatives to aggregate on the final compensation when the goal is to hire and develop the best.

Flexible Work

In the last few years, flexible work has been growing to be one of the things that makes a lot of difference when attracting talent and keeping your employees happy. The fact that people have autonomy over their on their working hours and where they work and can organise their lives accordingly has made a powerful impact on how employees see work-life balance, In Brazil it ino different. Companies that make it a point to provide their employees with the freedom to determine their own schedules will stand a better chance at attracting and retaining Brazilian talent that prioritise flexibility.

Career Progression

Career progression is also something that has a lot of impact on candidates. Even the younger generations are highly motivated to grow their careers and develop through learning at work. According to a study from Workplace Intelligent in partnership with Amazon, 66% of the workforce is at least somewhat likely to change jobs within the next year because there aren’t enough opportunities for skill development or career advancement. This shows that having a plan for the employee's career can be a game changer. People like to know where they’re going in their careers and having a plan drawn up is great for that.

What are the best benefits for brazilian workers?

Termination of employment in Brazil

In Brazil, termination can be done at all times without the necessity of a cause. There’s a need for a notice period of 30 days to be given to the employee that can be either worked or paid upfront. All terminations must be written, signed and dated correctly. For each year an employee works, they are also granted by additional 3 days of paid notice upon completion of an assignment.

Upon termination without cause, employees are entitled to some benefits. Those consist of their salary for the unpaid time worked, unused and accrued vacation if there’s any and vacation bonus. It also takes into account the appropriate portion of the 13th month salary, FGTS, and an additional 40% on the balance of their FGTS fund. The FGTS and the penalty are not applicable if the termination is with a cause.

Airswift can be really useful in this time of termination for both your organisation and the workforce. We have the outplacement support to help throughout this process and the best career transition possible for your employees.

There’s a list of actions of an employee that could lead to a termination with cause and they all need to be legitimate and recognized with proof of misconduct.

  • Trade secret infringement
  • Indiscipline and/or insubordination towards policies previously agreed upon
  • Inappropriate behavior and/or harassment such as physical, sexual, sexism, racism and bullying
  • Misconducts such as theft, fake doctor’s note and fraud
  • Low productivity and negligence.
  • Drug or alcohol abuse (drug and alcoholism dependency don’t fit in this category)
  • Conflict of interest
  • Abandonment of the job
  • Criminal conviction
  • Being a part of an act against national security

What are my options for hiring in Brazil?

If you're interested in expanding your business into Brazil, Airswift can help!

We can help you meet local government regulations regarding hiring practices, legal advice, labor laws, tax compliance, working conditions, permits and many other needs.

We offer our clients the expertise they require to protect their business from unnecessary risks, freeing them up time and resources to concentrate on their companies' demands, prospects, and global expansion.

We have the expertise in Brazil; it’s cost-effective and has a fast go to market. Get familiar with everything we can do for your organisation about HR here.

Talent acquisition

talent-acquisition

Airswift can help your company in attracting the very best talent in Brazil. We have expertise across a wide range of industries in a way that we can find the most fitting talent even in urgent terms.

We are committed to finding workers that suit your needs in the best way possible. Count on us to speed up your hiring processes and retain your talent.

Employer of record

ICON-MISC-SignHandPen-GRADIENT

If your company wants to hire employees in Brazil without setting up a local entity, Airswift can do that for you!

We can act as an Employer of Record in Brazil to help you hire employees quickly and get your company up and running in a matter of days. We take care of everything, from permits and employee onboarding to tax management, benefits administration and much more.

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*Although the information provided has been produced from sources believed to be reliable, no warranty, express or implied, is made regarding the accuracy, adequacy, completeness, legality or reliability of any information. For the latest information and specific queries regarding particular cases, please contact our team.

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