Employer of Record in Brazil

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Brazil if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Brazil below, to avoid any compliance issues.

Employment Contract Requirements

In Brazil, verbal agreements are legally valid, but it is recommended to have written employment contracts. These contracts are generally indefinite, with the option for fixed-term contracts of up to two years in certain situations. They must be in Portuguese and use the local currency, covering essential employment terms such as:

• Identification of both parties
• Workplace, working hours, and overtime
• Starting date (and duration for temporary contracts)
• Job description, duties, and responsibilities
• Basic wage (including compensation or benefits)
• Total number of holidays
• Notice periods for employment termination
• Probation period
• Company policies
• Travel and transfer options
• Reference to collective bargaining agreements

Onboarding Process

We can help you get a new employee started in Brazil quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Brazil

In Brazil, the typical work schedule involves 44 hours per week, distributed over 8 hours per day. However, the maximum weekly and daily hours can vary from this standard, as stipulated in the employment contract or collective bargaining agreements.

Overtime in Brazil

Overtime, exceeding the standard 8 hours a day in Brazil, is compensated at 50% of the regular hourly wage, with potential increases based on collective bargaining agreements. For Sundays or holidays, the extra payment is 100%. Exemptions from overtime apply to roles such as trust, managerial, executive positions, and remote workers.

Brazilian labor laws establish a standard workweek of 44 hours, typically divided into 8-hour workdays. Overtime is allowed but is limited to a maximum of 2 additional hours per day, with compensation set at a minimum of 50% above the regular hourly wage. For work performed on holidays and weekends, overtime pay increases to 100% above the standard rate.

Certain industries, such as banking and telemarketing, have shorter daily work limits, while managerial employees may be exempt from standard working hour restrictions. Employees are entitled to rest periods, including a mandatory 60-minute meal break for shifts exceeding 6 hours and a 15-minute break for shifts between 4 and 6 hours. A minimum of 11 consecutive hours of rest between workdays is required.

Night shifts, defined as work performed between 10:00 PM and 5:00 AM, must be compensated with an additional 20% wage increase. Each hour of night work is considered to last for 52 minutes and 30 seconds. Employers who fail to comply with these regulations may face legal penalties, including fines and labor sanctions.

As of January 1, 2025, Brazil's minimum wage has been set at R$1,518.00 per month, reflecting a 7.5% increase from the previous year. This adjustment aligns with inflation and economic growth, ensuring a real wage increase for workers. Employers must comply with federal and state-specific wage laws, as some regions, like Rio Grande do Sul, have set higher minimums. Additionally, part-time employees receive proportional pay, while interns and trainees may be subject to different wage structures under specific legal conditions.

Understanding Brazil's minimum wage regulations is essential for employers to maintain compliance and uphold fair labor practices. The government reviews and adjusts the minimum wage annually based on economic indicators such as inflation and GDP growth.

Employers should also be aware of industry-specific variations and how wage policies impact expatriates. Ensuring compliance with these laws helps businesses avoid penalties and supports fair compensation for workers across different employment categories.

Growing your team in Brazil is exciting, but it’s not without challenges. Local labor laws are often nuanced, and hiring without the right legal structure or processes can lead to misclassification, non-compliance penalties, or disputes. An Employer of Record removes that risk by acting as the legal employer on your behalf, taking full responsibility for compliance, contracts, payroll, and employee benefits.

This gives you the freedom to scale at your own pace, whether you're adding one employee or building out an entire function, without the burden of setting up and managing a local entity. You remain in control of day-to-day responsibilities and performance, while the EOR ensures every hire is legally protected and properly supported. It's a strategic way to expand globally without spreading your internal team too thin or exposing your business to legal liabilities in unfamiliar markets.

Payroll taxes in Brazil involve key obligations for employers, including Income Tax Withholding (IRRF), Social Security Contributions (INSS), and the Guarantee Fund for Length of Service (FGTS). Employers must adhere to progressive tax rates, deposit deadlines, and statutory requirements to remain compliant, while also ensuring accurate reporting and timely payments to tax authorities.

These taxes fund essential employee benefits such as retirement, disability, and financial security in cases of dismissal or illness. Given the complexity of Brazil's payroll system, leveraging payroll management software can streamline compliance, simplify calculations, and consolidate payroll data effectively.

Employees expect to be paid accurately, on time, and in full compliance with local standards. When you're hiring in Brazil, providing a smooth payroll experience is critical to retention and trust. An Employer of Record ensures that employees receive what they’re owed, without errors, delays, or confusion about taxes or benefits.

Key Ways an EOR Supports Payroll in Brazil:

• Reliable Salary Payments: Ensures employees are paid promptly in local currency.
• Clear Payslips & Documentation: Provides employees with compliant, understandable records.
• Correct Benefits & Contributions: Delivers legally mandated contributions and any changes in compensation, like bonuses.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Boosts Employee Confidence: Builds trust with compliant, consistent payroll operations.

In Brazil, work permits and visas are essential for employers hiring international talent. The key visa types include the VITEM V for temporary assignments, the Permanent Work Visa, the VITEM II for business trips, and the Digital Nomad Visa (VITEM XIV).

Employers must comply with Brazilian labor laws, provide the necessary documentation, and plan ahead to navigate the application process successfully. According to Brazilian labor law, at least two-thirds of a company's workforce must consist of Brazilian nationals.

In Brazil, employees are entitled to 30 days of paid annual leave after completing 12 months of continuous employment. This leave can be split into up to three periods, with one lasting at least 14 days and the others at least 5 days each, subject to employer approval. Additionally, employees receive a vacation bonus equivalent to one-third of their regular salary. Public holidays are separate from annual leave entitlements.

Employers must also comply with mandatory leave policies, including sick leave, maternity and paternity leave, and marriage leave. Sick leave is covered by the employer for the first 15 days, after which the National Social Security Institute (INSS) assumes payment. Maternity leave lasts for 120 days, with an optional 60-day extension under the Empresa Cidadã program, while paternity leave is 5 days, extendable by 15 days under the same program.

Employers should maintain accurate records, stay informed of labor laws, and ensure clear communication with employees to promote compliance and a positive work environment.

In Brazil, mandatory benefits such as the 13th salary, paid vacation, social security (INSS), and FGTS provide essential financial security to employees. Employers must also comply with occupational safety and leave regulations. Employers in Brazil to include psychosocial risk assessments—covering factors such as stress, harassment, and mental workload—in their Occupational Health and Safety management programs.

Meanwhile, supplemental benefits like private health insurance, meal vouchers, and gym memberships help companies attract and retain top talent. Understanding and implementing these benefits ensures compliance with Brazilian labor laws while fostering employee well-being.

In Brazil, failing to provide the correct employee benefits can have serious consequences. Mistakes in benefits administration may result in fines and harm your reputation as an employer. An Employer of Record ensures statutory benefits and leave are handled correctly, every time, and provides comprehensive options for extra perks to reward your team.

Beyond just avoiding legal issues, a well-managed benefits program builds trust with your employees. An EOR ensures benefits are set up quickly during onboarding, updated when employee status changes, and fully compliant with national regulations. They also manage communication with employees, so there’s no confusion around what’s offered and how to access it. This combination of legal compliance and positive employee experience is hard to replicate without local infrastructure. With an EOR, you can offer peace of mind to your team (and to yourself) knowing that your benefits program in Brazil is running as it should.

Brazil's labor laws provide comprehensive protections for employees during termination, requiring employers to follow strict legal procedures.

• Employment can be terminated either with or without cause, with termination without cause requiring employers to provide prior notice or pay in lieu, along with severance payments.
• The minimum statutory notice period is 30 days during the first year of employment, with an additional three days per year of service thereafter, up to a maximum of 90 days.

Employees dismissed with cause for serious misconduct lose most severance entitlements. Additionally, certain categories of employees have legal protections against dismissal, including pregnant workers (from pregnancy confirmation until five months after giving birth), employees recovering from work-related injuries (protected for one year after recovery), union leaders (until one year after leaving their post), members of In-House Accident Prevention Commissions (for one year after leaving their post), and employees who are one year away from retiring.

The termination process in Brazil includes providing written notice, settling final payments, conducting a mandatory medical examination, and issuing necessary termination documents such as the termination letter, employment contract termination form (TRCT), and FGTS withdrawal forms.

Employees terminated without cause are entitled to severance pay, which includes the balance of their FGTS and an additional 40% penalty paid by the employer. Proper compliance with these regulations ensures that employers meet their legal obligations while minimizing the risk of disputes or legal claims.