Employment Contracts in Brazil

A Comprehensive Guide to Employment Contracts in Brazil
Hiring employees in Brazil requires understanding the local labor laws and ensuring that contracts are compliant. Whether you're hiring directly or using an Employer of Record in Brazil, it’s crucial to have a legally sound employment contract. Here’s a straightforward guide to help you get it right.

1. When Does the Employment Contract Start?
In Brazil, an employment contract is considered effective once both parties sign the agreement. The contract should specify the start date and other key terms related to the role and the working conditions.
💡 Pro Tip: Ensure the contract is signed before the employee begins working to prevent any legal issues.

2. Key Components of a Brazil Employment Contract
An employment contract in Brazil must include the following key elements:
Job Title and Responsibilities: Clearly define the role, duties, and responsibilities to avoid misunderstandings.
Contract Type: Contracts in Brazil are typically fixed-term or indefinite-term, with indefinite contracts being the most common.
Compensation and Benefits:
Salary: The salary should be clearly stated, including the payment frequency (typically monthly) and the agreed amount in Brazilian Reais (BRL).
Allowances: Common allowances may include transportation, meal, and housing benefits.
Health Insurance: Employers are encouraged to provide health insurance, especially for foreign employees.
Working Hours: Brazil follows a 44-hour work week (8 hours per day, 5 days a week), although exceptions may apply for specific roles or industries.
Leave Policies:
Annual Leave: Employees are entitled to 30 days of paid annual leave after 12 months of service.
Sick Leave: Employees are entitled to paid sick leave, with the first 15 days covered by the employer. After that, the government social security system covers additional sick leave.
Maternity and Paternity Leave: Female employees are entitled to 120 days of paid maternity leave, while male employees are entitled to 5 days of paternity leave.
Termination Terms: Employment contracts should outline the notice period, which is typically 30 days for employees who have worked for less than a year. For longer periods of employment, the notice period increases.
💡 Why This Matters: A well-drafted contract ensures clarity, compliance, and reduces the risk of disputes in the future.

3. Salary Structure in Brazil
The salary structure in Brazil generally includes the following components:
Base Salary: The main taxable income, typically paid on a monthly basis.
Allowances: Employers often provide allowances for transportation, meals, and housing.
Bonuses: Bonuses may be paid based on individual performance or company results, and employees are also entitled to a 13th-month salary as a mandatory end-of-year bonus.
💡 Key Takeaway: A structured compensation package not only ensures compliance but also helps with employee retention and satisfaction.

4. Legal Considerations: Protecting Your Business
a. Non-Compete and Confidentiality Clauses
Non-compete clauses are enforceable in Brazil but must be reasonable in terms of scope and duration. Confidentiality clauses are often included to protect sensitive business information.
b. Statutory Contributions
Employers in Brazil must make mandatory contributions, including:
Social Security: Employers must contribute to Brazil’s national social security system, which includes pension, health insurance, and unemployment benefits.
FGTS (Severance Fund): Employers must contribute 8% of the employee's monthly salary to the FGTS, which the employee can access if terminated without just cause.
💡 Tip: Ensure you are compliant with all statutory contributions to avoid penalties.

5. Background Checks and Employee Protections
Background checks are standard in Brazil, but employers must respect the privacy rights of candidates. Written consent is necessary before conducting background checks, including criminal record checks and verification of employment history.

6. The Importance of Written Contracts
In Brazil, written contracts are essential for legal protection. The contract clearly defines the rights and duties of both the employee and the employer, ensuring compliance with local labor laws and protecting both parties in case of disputes.

7. Why Partner with GlobainePEO?
Partnering with GlobainePEO simplifies the process of hiring and managing employees in Brazil:
We ensure that employment contracts comply with local labor laws.
We handle statutory contributions and benefits management.
You can focus on growing your business while we manage the legal and administrative aspects.

💡 GlobainePEO Advantage: As your trusted Employer of Record in Brazil, we take care of everything from drafting compliant contracts to overseeing payroll and benefits management.

Drafting compliant employment contracts is the foundation of successful business expansion into Brazil. Partnering with a Brazil EOR, like GlobainePEO, allows you to focus on your core operations while ensuring legal and administrative requirements are met efficiently.