OUTLINE
Employment laws in Brazil
Contract terms in Brazil
Contract extension in Brazil
Fixed-term contracts in Brazil
Working hours in Brazil
Remote work in Brazil
Tailored employment contracts in 100+ countries
Employment contracts in Brazil
When hiring in Brazil, it’s crucial to understand the regulations and policies surrounding employment contracts to remain compliant.
While it’s not mandatory to formalise employment relationships through a written contract, it is widely adopted as a standard practice in the country. The essential terms and employment conditions are typically documented within the employee’s Work and Social Security Card (Carteira de Trabalho e Previdência Social – CTPS) along with other compulsory documents at the time of hiring. This helps in clarifying the employment terms, such as the job role, duties, working hours, and other conditions, for both parties and helps in avoiding potential disputes.
In addition, the introduction of the eSocial system, a digital platform, has digitised the process of submitting employment-related documents. The eSocial system streamlines the management, submission, and storage of employee data and documents, resulting in improved compliance and efficiency in employment administrative processes.
Expat employment contract in Brazil
When preparing to onboard expatriates in Brazil, it’s essential to structure employment contracts that adhere to the local regulations and clearly articulate the mutual expectations between your organisation and the international talent.
For expats, having a written contract is highly recommended, as it is required to obtain a working visa. This contract should cover key employment terms, including, but not limited to, role descriptions, compensation, benefits, working hours, and termination conditions.
It’s also important to identify the appropriate visa type that aligns with the nature of the employment and the duration of the expatriate’s assignment. Partnering with legal experts or an employer of record provider like CXC can streamline this process and ensure that all processes and documentary pre-requisites are met efficiently. This approach can minimise the risk of delays or complications, enabling a smooth transition for your international
Employment laws in Brazil
Employment contracts in Brazil are governed by a mix of federal laws, regulations, and collective agreements.
Here’s a list of key legal regulations that you need to keep in mind:
- Consolidated Labour Laws (CLT): Every aspect of the employment relationship, including employment contracts, hiring, wages, working hours, termination, and benefits, is governed under the CLT. It’s essential to structure your employment contracts in accordance with these regulations to ensure compliance.
- Article 7 of the Constitution of Brazil: This provides fundamental labour rights, including the right to fair wages, safe working conditions, and job security. It also establishes principles for employment relationships.
- Labour Reform Law (Lei da Reforma Trabalhista) Law No. 13.467/2017: It introduces significant changes to the labour laws, including flexibility in work arrangements, adjustments to labour negotiations, and modifications to various employment contract provisions.
- Collective bargaining agreements: The collective agreements negotiated between unions and employers may modify certain aspects of employment contracts, such as salary and working conditions, within the framework provided by CLT and the Constitution.
- Legal courts: Disputes regarding employment contracts and other labour-related issues are often resolved through the Brazil’s Labour Courts (Justiça do Trabalho).
These are some regulations around employment contracts in Brazil that you need to be aware of to avoid any legal repercussions.
Probationary periods in Brazil
The employment laws in Brazil allow for a probationary or trial period, also referred to as the “probation period,” which can be established for up to 90 days. This period may be agreed upon once and can be renewed as long as the total does not exceed the 90-day limit.
For example, an initial probation period of 45 days can be extended by another 45 days, or a 30-day period can be renewed for an additional 60 days, as long as the overall duration does not exceed 90 days.
The probationary period serves as a mutual evaluation time for both the employee and the employer to decide if the employment relationship is a good fit. It’s essential for companies hiring in Brazil to be aware of these regulations in order to manage employment relationships effectively.
Employment policies in Brazil
It is a legal obligation for businesses to implement documented health and safety protocols, including programs like the Occupational Health Medical Control Program (PCMSO) and the Environmental Risk Prevention Program (PPRA)
The PCMSO is guided by Regulatory Standard No. 7 (NR-7), which aims to promote and preserve the health of the workforce. It focuses on the risks employees may face in their specific working conditions and includes mandatory medical examinations, such as pre-employment, periodic, and return-to-work exams, among others. The goal of the PCMSO is to detect early signs of work-related health issues and ensure that employees are physically fit for their roles.
On the other hand, the PPRA, outlined in Regulatory Standard No. 9 (NR-9), aims to identify, recognise, and systematically control environmental risks within the workplace. Employers are required to assess potential hazards that could impact workers’ health, covering a wide range of environmental factors such as physical, chemical, and biological risks. The program is designed to create a safer working environment and to minimise the risk of health problems and accidents among employees.
Third-party approval in Brazil
When a company hires a foreign employee in Brazil, they need to secure approval from the Secretary of Labour. This is an important step to ensure that the employment is valid and meets all the legal criteria of the country.
Contract terms in Brazil
The general rule for employment agreements is that they are indefinite, meaning there isn’t a predetermined end date when the contract is signed.
However, there are specific situations where fixed-term contracts are permitted, including for work whose nature or duration justifies a predefined term, for transitory business activities, and for probationary periods.
Indefinite contracts in Brazil
Unless there’s a clear, justifiable reason for setting a specific term, most employment relationships in Brazil operate under an indefinite-term contract. This means employers should be prepared for long-term commitments with their employees, which includes understanding the implications for termination rights and severance pay.
Fixed-term contract limitations in Brazil
While fixed-term contracts are allowed, they are subject to strict conditions. For example, they’re suitable for project-based work or replacing temporary workers. Understanding these conditions is essential to avoid misclassifying employment relationships.
Beyond the contractual terms, employers should be mindful of the cultural and legal environment in Brazil. The strong emphasis on employee rights means that navigating labour relations can be complex and requires a thorough understanding of local practices and legal requirements.
Contract extension in Brazil
Employers should be aware of several key considerations when thinking about extending employment contracts in Brazil, including:
Nature of the contract in Brazil
The country’s labour law predominantly favours indefinite-term employment contracts, with fixed-term contracts being the exception and subject to strict regulatory conditions. You cannot simply enact an extension of a fixed-term contract to prolong an employee’s term of employment indefinitely without a valid legal basis.
Extending the probationary period in Brazil
If a company considers extending a probationary period, they should be aware that such periods have limitations. Probationary contracts cannot exceed 90 days. Any extension of a probationary period or conversion into an indefinite-term contract should be approached with careful attention.
When extending any contract, employers must ensure that the extension adheres to local employment laws, including but not limited to matters related to severance pay, notice periods, and other termination rights. The complex legal environment in Brazil demands careful attention to detail and compliance to mitigate risks associated with labour disputes.
Working with independent contractors in Brazil
Given the evolving nature of work and the increasing preference for flexibility, Brazil’s workforce has seen a significant rise in the number of independent contractors. The difference between employees and independent contractors is primarily based on the nature of the working relationship and the degree of autonomy.
Independent contractors and freelancers in Brazil operate with substantial autonomy and are responsible for their own business expenses, without the benefit of employee perks like health insurance or retirement plans provided by clients.
Under Brazil’s Labour Code (CLT), an employee is defined as an individual who renders services to an employer on a permanent basis, under the employer’s direction, and for a salary. This definition is critical for distinguishing between an employee and an independent contractor to avoid misclassification risk.
Fixed-term contracts in Brazil
In Brazil, fixed-term employment contracts are specifically regulated to address the needs of temporary or seasonal activities. These contracts should be used cautiously and are predominantly used to serve temporary purposes such as completing a specific project, substituting permanent staff temporarily, or for jobs that are by nature temporary.
Fixed-term contracts are a special category of employment that differs from standard indefinite-term contracts. These contracts are characterised by having a specific end date, and there are several key aspects to consider when dealing with fixed-term contracts in Brazil:
Duration and renewal: Fixed-term contracts can be established for a maximum duration of up to two years. Importantly, these contracts can be renewed, but the total duration, including renewals, cannot exceed the two-year limit.
Specific purposes: Generally, fixed-term contracts are used for temporary activities. These include completing of a specific project or task, replacing a permanent employee temporarily, or accommodating seasonal increases in workload.
Regulatory conditions: The use of fixed-term contracts is strictly regulated. Employers must ensure that the rationale for employing a fixed term contract is valid and complies with the country’s labour laws.
Employment rights: Employees under fixed-term contracts enjoy the same rights as those employed indefinitely. This includes access to FGTS (Government Severance Indemnity Fund for Employees), vacation benefits, and the 13th salary (a year-end bonus), among other statutory rights.
Drafting considerations: When drafting a fixed-term contract, it is essential to clearly specify the duration of the contract, the reasons for its temporary nature, and any conditions for renewal. A well-drafted contract can help prevent disputes and ensure compliance with Brazil’s labour laws and regulations.
It’s crucial to understand these aspects to ensure that your employment practices comply with local employment laws. Employee misclassification or incorrect use of fixed-term contracts can lead to legal challenges and financial liabilities.
Working hours in Brazil
Standard working hours in Brazil
The Consolidated Labour Laws (CLT) set the country’s standard working hours at a maximum of 44 hours per week. Typically, this is structured as 8 hours per day from Monday to Friday, with a 4-hour shift on Saturdays, culminating in a maximum of 44 working hours per week.
Employers should keep in mind that work beyond these hours could be considered overtime, and hence, employees should receive appropriate compensation for this work. Collective bargaining agreements may also influence the number of working hours and should be taken into consideration.
Additionally, there is a mandatory one-hour break for rest and meals for employees working shifts longer than 6 hours per day. Employers must ensure compliance with these regulations to avoid any legal issues concerning employee rights and working conditions in Brazil.
Overtime in Brazil
The law generally grants employees overtime pay if they exceed the standard work hours. The standard workweek is typically 40 to 44 hours, and any hours worked beyond this limit are subject to overtime compensation, unless specific exemptions apply. The regular overtime pay rate is at least 50% higher than the normal hourly rate. In practical terms, if an employee’s regular hourly wage is $10, the overtime rate must be at least $15 per hour.
Overtime policy in Brazil stipulates that overtime must be paid at 150% of the normal rate on weekdays, and at 200% on Sundays and holidays. There are regulations on the maximum amount of overtime that can be worked; no employee may work more than two hours of overtime per day unless there’s a special agreement or circumstance.
Working week in Brazil
Monday – Friday
Remote work in Brazil
Brazil has approved amendments to the Labour Code to more effectively regulate remote working. The legislative changes make permanent Executive Order (EO) No. 1,108, which had introduced a temporary measure to address remote work. These amendments present an expanded definition of remote work, establish rules governing working hours and overtime for remote workers, set requirements for returning to the office, and clarify other relevant aspects of remote employment arrangements.
The broad definition covers a wide range of remote working arrangements to ensure that the labour law covers workers who perform their duties remotely. Here are the key changes around remote work in Brazil:
Remote work location and expense reimbursement
Employers are not obligated to cover any costs that a teleworker might incur if they opt to work remotely from a location different from the one agreed upon in their teleworking contract.
This provision safeguards employers from unforeseen expenses. Businesses must ensure that specific work locations are stated in teleworking agreements to set clear expectations for remote work logistics and avoid unnecessary costs.
Priority for positions eligible for remote work
The legislation mandates that employers prioritise individuals with disabilities and those with small children for remote work positions, where the job is conducive to such an arrangement. By facilitating remote work for these groups, businesses can demonstrate their commitment to inclusivity, potentially boosting their reputation and attracting top talent who value such principles.
Overtime for remote workers
The new provisions clarify that remote employees are eligible for overtime pay under the same conditions as in-person employees, provided that they have previously agreed upon and recorded the extra work time.
Formalising the teleworking arrangement
Employers should also explicitly outline the requirements for teleworking arrangements in the employment contracts. This ensures that both parties have a clear understanding of the terms of employment, including remote work expectations.
Expense reimbursement
Employers must specify in the employment contract how they will reimburse remote employees for any teleworking-related expenses to prevent undue financial burden.
Right to disconnect
Employees have the right to disconnect outside of their working hours, supporting work-life balance and safeguarding personal time.
Health and safety
The employer’s occupational health and safety obligations extend to the remote working environment, and guidelines ensure the provision of a safe and ergonomic setup for remote workers.
Data protection and privacy
Employees must adhere to company policies on data protection and privacy, a critical consideration given the use of digital platforms and the potential risks involved in handling company data remotely.
Adaptation Period
When transitioning to telework, there is an initial 15-day adjustment period where the work format can be reverted back to in-office by either party, allowing for a trial period to gauge the suitability of remote work.
Remote work visa in Brazil
Brazil has introduced a visa specifically for remote workers, known as the Digital Nomad Visa (VITEM XIV), which became effective as of January 2022. This visa is tailored for individuals who work remotely and wish to live in Brazil, catering to freelancers, remote employees, and those engaged in digital businesses.
The Digital Nomad Visa allows for an initial stay of up to one year, with the possibility of extension for an additional year, provided the conditions are met. Notably, European Union nationals can enter Brazil as digital nomads without requiring a visa for stays of up to 90 days. Other nationalities should check specific requirements and whether they need a visa to enter Brazil based on their nationality.
Tailored employment contracts in 100+ countries
At CXC, we understand your need to hire and onboard talent quickly. That’s why our team of compliance and HR experts is committed to providing you with the support and guidance you need. Our comprehensive EoR solution allows you to create compliant employment contracts for talent in Brazil and over 100+ countries.
Streamline your global hiring process and stay compliant with in-country specific labour laws and regulations.
Compliantly hire employees anywhere with CXC
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.
Australia/New Zealand Head Office
Asia Head Office
EMEA Head Office
North America Head Office
Latin America Head Office
Level 3, 99 Walker Street
North Sydney, NSW 2060 Australia
