Recruitment Guide for the Brazil
PurposeThis guide aims to ensure that the company goes through the correct recruitment process, ensuring that the company will understand all the things to consider when hiring in Brazil. This will also serve as a how-to guide for the recruitment procedure in Brazil.
What You Should Know Before Hiring in BrazilBrazil, the largest and most populated country in South America, and the world’s eighth-largest economy, is an appealing location for enterprises wishing to develop globally. Brazil does provide some problems for multinational businesses because it has robust employment rules that favor employees. Establishing and running a business there might be a difficult process. If you want to expand your business into Brazil or simply hire a few remote employees, you need to understand hiring methods in Brazil and the regulations you’ll need to meet. If you can successfully navigate the process, you will have a great experience bringing new talent to your company. Some features of Brazilian employment legislation should be understood by enterprises from other nations before beginning the hiring process in Brazil.
1. Employee-Friendly Regulations
To begin, it’s important to recognize that Brazilian labor regulations favor employees. Employees in Brazil may be entitled to additional rights and perks than you are accustomed to in your native country. This puts some businesses at risk of noncompliance if they do not thoroughly research local employment regulations or consult with a lawyer. Working with an Employer of Record (EOR) allows you to shift the burden of legal compliance to them.
It’s also vital to understand that firing an employee in Brazil will almost always result in a lawsuit. Of course, this implies you must exercise caution when making firing decisions, but it also means you must do your best to hire the right individuals for the job in order to prevent these instances. A written employment contract is also recommended, even if they are not legally necessary in Brazil. This paper will make your expectations for staff more transparent.
A. Fixed-term agreementsThe validity of a fixed-term contract is determined by the completion of work or the delivery of a service. Fixed-term contracts in Brazil are classified into three types: normal contracts, experience contracts, and apprenticeship contracts. The duration of a basic contract cannot exceed two years, and all CLT rights must be offered to employees. The second sort of fixed-term contract, the experience contract, is intended to provide employees with experience and cannot last longer than 90 days. Finally, the apprenticeship contract (a contract for recruiting young people between the ages of 14 and 24) cannot be more than two years.
B. Contracts with Indefinite TermsContracts with an indefinite length are the most commonly registered type of contract. This sort of contract has no defined expiry date, and employees are entitled to all of the rights given by Brazilian labor law. Employees also have rights if their employer chooses to cancel their contract.
C. Intermittent ContractsThe intermittent employment contract was developed as part of the 2017 Brazilian labor law change. This sort of contract governs work commitments that are valid for a set amount of time. Employers require and call for employee services only at specific times under these contracts, which means that employees have periods of inactivity when they are not required by the employer.
4. Working Hours and Compensation
5. Vacation Leave and Sick Leave
In comparison to other countries, Brazil has favorable annual leave regulations. Employees are entitled to 30 days of vacation leave after one year of work. Employees should use their leave all at once or in huge chunks rather than taking a day here and there. Employees can divide their vacation time into three periods of at least 14 days each, followed by two periods of at least five days each.
Furthermore, employees have the opportunity to “cash-in,” or sell, up to ten vacation days back to the corporation if they so like. These days are paid, and companies are required to provide a vacation bonus equal to one-third of the employee’s monthly wage. Vacation time is in addition to the 11 paid holidays that Brazilian employees receive.
Among the paid holidays are:
Leave for MaternityEmployees who are female are eligible for 120 days of paid maternity leave. Employers may extend this period by up to 60 days.
6. Required Benefits
The Federal Constitution and the CLT establish a set of minimal benefits that must be provided by all businesses in Brazil.
Minimum wage by worker classification
Maximum hours – eight hours each day/44 hours per week
13th month or Christmas bonus — one more wage payment every year This payment is made in two payments, one between February and November and the other before December 20. The incentive is based on the employee’s total remuneration, not simply the basic income.
Profit sharing — agreed between the company and the employee’s labor representative.
Social Security benefits — both employees and employers must contribute to Social Security. Rates range from 8 to 11 percent of total employee salary. Employers must subtract the employee part and pay on
Profit sharing – agreed upon by the company and the employee’s labor representative.
Employees and employers are both required to contribute to Social Security. Rates range from 8 to 11 percent based on total employee salary. Employers must deduct the employee part and pay on behalf of the employee.
Summary of Social Security contributions deducted from employee paychecks:
|Social Security Contribution (INSS)
|Labour Accident Contribution (SAT)
|Third Parties Contribution
Additional Workers’ Benefits in Conformity with Brazilian Labor LegislationEmployees in Brazil are entitled to a variety of benefits under Brazilian labor law, including: Bonus Salary: In Brazil, employees are entitled to a bonus payment known as the 13th salary. This sum is equal to one month’s salary and is paid at the conclusion of the fiscal year. Vacations: After a year of service, an employee is entitled to 30 days of paid vacation, which can be taken consecutively or split. Vacation days, however, cannot be less than 10 days. Guarantee Fund for Length of Service (Fgts): An energy deposit of 8% of the employee’s gross salary that serves as a reserve for emergency situations. National Institute of Social Security (Inss): Employers must contribute between 8% and 26.7 percent of total salary. Transportation Voucher: A payment intended for employee transportation expenses. For this expense, the company may deduct up to 6% of the employee’s salary. Maternity Leave: Female employees are entitled to 120 days of paid leave following childbirth. This cost is initially borne by the employer, but it is later reimbursed by the National Social Security Administration.
Cost of Hiring an Employee in BrazilAside from wages and benefits, there are additional upfront expenditures connected with hiring personnel in Brazil that should be budgeted for. These expenses may include:
Because Brazil gives various rights to its employees, you will require legitimate assistance to ensure that your employment practices are legal. If you do not hire Brazilian lawyers early on, you may end up having to hire them later to represent you in a lawsuit.
There may be fees associated with incorporating your business in Brazil. Before you can begin employing people in the country, you must first officially create your firm.
Job advertisements might potentially increase your recruitment expenditures. You can advertise on various free job boards online. While around one-third of Brazilians do not use the internet, sites such as LinkedIn and Indeed are excellent tools for the other two-thirds who may be eligible candidates.
If you manage hiring internally rather than partnering with a hiring agency, you should add the time spent on recruitment by your hiring committee into your total hiring expenditures. This includes, among other things, writing job descriptions, reviewing applications, and interviewing individuals.
Unless one of your team members is fluent in Portuguese, you’ll need to employ a translator to help with your hiring process in Brazil. This is useful for talking with job seekers as well as understanding and completing government documents.
Background checks to verify a candidate’s credentials or right to work in Brazil might further increase your expenditures. Keep in mind that in Brazil, criminal background checks are only permissible in extreme circumstances, such as when hiring armed guards.
Employee termination is expensive in Brazil. Unjust dismissal requires the company to pay an additional 40% of the accrued balance in the employee’s severance fund and 10% to a government social fund. If both the employee and the employer are at fault, the additional proportion is decreased to 20%. This is in addition to any salary or vacation pay the employee is due. All employees who have worked for 12 months or fewer must provide a 30-day severance notice.
After 12 months, the notice period is extended by three days every year worked.Severance payments must be documented and signed in the presence of the employee’s labor representative.Employee acts that entitle employers to terminate with cause:
Company Requirements for Hiring an Employees in Brazil
Before you can begin hiring in Brazil, you must first legally leave your company and prepare to take on these new employees. You can open a branch of your business, but only with specific permission from the Brazilian Ministry of Development, Industry, and Foreign Trade. Most businesses prefer to establish a subsidiary, which can have one of nine different corporate structures. You must have the following in place to establish your subsidiary:
It is not easy to establish a branch or subsidiary of your company in Brazil. Brazil now ranks 124th in the ease of doing business index, which means that there are 123 nations where starting and maintaining a business is simpler. However, this does not preclude you from hiring personnel in Brazil.