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.
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:
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.
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:
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 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:
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.
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.
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 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:
Work on a holiday is paid at the rate of 200% of the regular pay.
The payroll cycle is either bi-weekly or monthly and is paid on the 15th and 30th of each month.
There is a mandatory 13th salary equal to one months’ pay is paid out at the end of the year.
PTO is calculated by the:
There are 13 national holidays. Other additional holidays may apply depending on the region.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
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.
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.
There are no provisions in the law regarding parental leave.
Death of a parent, child, or spouse- 2 days
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.
The notice period in Brazil is:
Notice is only required in certain cases.
Termination of the employment agreement initiated by the employer:
Termination initiated by the employee:
Termination under mutual consent:
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.
The probation period is 45 days but can be extended to 90 days.