How to Hire Remote Employees In 

Brazil

The Basics

Currency
Brazilian Real (BRL)
Employer Taxes
36.8%
Payroll Frequency
Bi-Weekly
Official Language
Portuguese

Employment in 

Brazil

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Brazil

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Brazil can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Brazil, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Brazil.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Brazil is not the same as paying workers in your own country. Employees have to be paid using Brazil’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Brazil

 Specific Information

Working Hours

A full-time workweek is 44 hours or 8 hours per day.

A one hours rest period is required for employees who work more than 6 hours per day.

Overtime

Overtime is limited to up to 2 hours per day.  Any hours worked in excess of 8 per day is considered overtime and is paid at the rate of 150% of the regular pay.

Employees can be exempt from overtime pay if:

  • They perform activities that are not compatible with defined working hours and are completed within a company’s facilities
  • They are an employee in a trust position
  • The employee works from home

Work on a holiday is paid at the rate of 200% of the regular pay.

Payroll Tax

Employer

Employer

  • Social Security (INSS)
  • Guarantee Fund
  • Third Party Companies
  • Accident Insurance

Minimum Wage

The National Minimum wage is 1,100 Brazilian reals.

Payroll

Pay Cycle

The payroll cycle is either bi-weekly or monthly and is paid on the 15th and 30th of each month.

13th Salary

There is a mandatory 13th salary equal to one months’ pay is paid out at the end of the year.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • If an employee has been employed for 12 months, they are entitled to 30 days of paid annual leave.
  • The leave must be taken within the following 12 month period.
  • Leave can be taken on 3 different occasions, where one of the periods must be at least 14 days and the other two must be at least 5 days.
  • Annual leave cannot be taken 2 days before a holiday or weekend.
  • Employees are able to cash in 1/3 of their annual leave and receive a holiday bonus in lieu.

Public Holidays

There are 13 national holidays.  Other additional holidays may apply depending on the region.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • For the first 15 days of illness, the employer pays 100% of the employee’s salary.  
  •  From the 16th day onward, social security pays for the leave (up to 6,101 BRL).

Maternity Leave

Female employees are entitled to 120 days of paid maternity leave and extension by a maximum of 4 weeks on medical grounds (two weeks prior and two weeks after birth). Maternity leave is paid at 100% of the regular wages by the employer, however, the employer can claim payment back through deductions on social security payments.

If the employer is enrolled in the government scheme (Empresea Cidada), maternity leave can be extended to a total of 180 days.

Paternity Leave

Fathers are entitled to 5 days paid paternity leave. Pay is 100% of regular wages and is paid by the employer. If the employer is enrolled in the government scheme (Empresa Cidada), paternity leave can be extended to 20 days.

Parental Leave

There are no provisions in the law regarding parental leave.

Other Leave

None.

Marriage Leave

3 days.

Bereavement Leave

Death of a parent, child, or spouse- 2 days

Termination

Termination Process

Employment contracts can be terminated at any time, as long as the proper notice is given.

Employees who are exempt from this are those that fall under union representatives, members of the Internal Committee for Accidents Prevention (CIPA), pregnant employees, employees with work-related injuries, and employees who fall under certain collective agreements.

Termination must be communicated in writing.

Notice Period

The notice period in Brazil is:

Notice is only required in certain cases.

Termination of the employment agreement initiated by the employer:

  • Up to 1 year of employment- 30 days’ notice
  • Over 1 year of employment- 30 days’ notice + 3 additional days for each year worked (up to a maximum of 60 additional days)

Termination initiated by the employee:

  • The employee must give 30 days’ notice. If the termination is initiated during the probation period, the employee may request to be released earlier than the 30 days.

Termination under mutual consent:

  • The notice period is halved.

Severance Pay

The Severance Pay in Brazil depends on:

The amount of severance pau varies based on how the employment agreement is terminated.

When severance is required, the employee is entitled to one month’s wages for every year employed.

Employers contribute 8% to the Severance Fund (FGTS), and when the employee is dismissed by the employee, 4o% of the balance is paid as a termination fine. When the termination falls under mutual consent, 20% of the balance is paid out.

Probation Period

The probation period is 45 days but can be extended to 90 days.