Employer of Record (EOR) in Brazil

Employment Laws and Regulations in Brazil

Employment Contracts

All formal employment relationships in Brazil are governed by the Consolidação das Leis do Trabalho, established by Decree-Law 5,452/1943 (WIPO Lex) and enforced by the Ministério do Trabalho e Emprego. Brazilian law presumes every contract is indefinite unless a specific exception applies. Fixed-term contracts are allowed only in limited scenarios such as temporary replacements or project-based roles, capped at two years.

All written contracts must be in Portuguese and include job title, duties, compensation, working hours, place of work, probation length, and the applicable collective bargaining agreement (CBA). Most industries in Brazil are covered by a CBA that can add sector-specific rules on minimum pay, bonuses, meal tickets, and overtime. Every new hire is registered in eSocial, the government’s unified payroll and labour reporting system.

Working Hours and Overtime

The CLT caps the standard workweek at 44 hours, typically arranged as 8 hours per day Monday to Friday plus 4 hours on Saturday, or as five 8.8-hour days. Daily hours may not exceed 10 including overtime, and employees are entitled to a 1-hour meal break on shifts longer than 6 hours plus at least 11 consecutive hours of rest between workdays (CLT Art. 58-71).

Overtime on regular weekdays is paid at a minimum 50% premium over the regular hourly rate; overtime on Sundays and public holidays carries a 100% premium (ICLG Brazil 2025-2026). Night work, defined as hours between 22:00 and 05:00, attracts an additional 20% premium and counts each “night hour” as 52 minutes and 30 seconds for pay purposes.

The table below summarises every statutory overtime and premium-pay rate that applies to CLT-regulated employment in Brazil, including the 50% weekday floor set by Article 7 XVI of the Constitution, the 100% premium for Sunday and public-holiday work under Law 605/1949, and the 20% night-shift premium established by CLT Art. 73.

Minimum Wage

Brazil’s federal minimum wage is $295 per month in 2026 (set by federal decree), approximately $295/month at the current exchange rate. The rate was set by Decree 12,797/2025 signed in December 2025 and took effect on January 1, 2026 (Agência Brasil). This is a 6.79% increase over the 2025 floor of $276.

Several states publish a higher regional “piso estadual” that applies to specific occupational categories. São Paulo, Rio de Janeiro, Paraná, Rio Grande do Sul, and Santa Catarina all maintain state floors above the federal minimum. Industry CBAs also frequently set higher sector minimums that supersede the federal rate for covered workers.

Probation Period

The CLT permits a probation period (contrato de experiência) of up to 90 days, either as a single 90-day period or split into two shorter terms that together do not exceed 90 days (CLT Art. 445). Termination during probation requires reduced notice, and severance is limited to accrued wages, proportional 13th salary, proportional vacation, and FGTS balance.

If the contract continues past the 90-day probation, it automatically converts to an indefinite-term employment relationship with full CLT protections. All statutory benefits including FGTS, INSS enrollment, and leave accrual apply from day one of the probation period.

Leave Entitlements

Brazilian law provides generous statutory leave protected by both the Federal Constitution and the CLT. Annual vacation, sick leave, and family leave accrue from the first day of employment, and most categories must be fully paid by either the employer or the INSS.

Annual Leave

Every CLT employee is entitled to 30 calendar days of paid vacation after 12 months of continuous service (CLT Art. 129-130). Vacation must be taken within the 12 months following the date of entitlement and can be split into up to three periods, provided one period lasts at least 14 days and none is shorter than 5 days. On top of the regular salary, employers must pay a mandatory vacation bonus equal to one-third of the monthly salary under Article 7, XVII of the Federal Constitution.

Employees who miss more than 5 but fewer than 15 workdays during the accrual period see their vacation reduced on a sliding scale. More than 32 unjustified absences forfeit vacation entirely for that year, although this is rare in practice.

Sick Leave

When a CLT employee is unable to work due to illness or injury, the employer pays 100% of salary for the first 15 days of absence. From day 16 onward, the INSS takes over and pays a sickness benefit (auxílio-doença) calculated on the employee’s average contribution salary (PwC Brazil). A medical certificate is required from the first day of absence, and continued absence beyond 15 days triggers a mandatory INSS medical examination.

There is no annual cap on sick leave days as long as each period is supported by a medical certificate and, if required, an INSS assessment. The employment relationship is suspended while the employee receives INSS benefits, but job protection applies upon return to work.

Maternity Leave

Maternity leave in Brazil is 120 days at 100% of regular salary, paid by the INSS rather than the employer and reimbursed through payroll tax offsets. Companies enrolled in the Empresa Cidadã tax incentive program may voluntarily extend leave to 180 days in exchange for a federal tax deduction, which is a common benefit at larger employers (L&E Global Brazil). Pregnant employees are protected from dismissal from confirmation of pregnancy until 5 months after giving birth.

Paternity Leave

Fathers are entitled to 5 days of paid paternity leave under the CLT, extended to 20 days for companies enrolled in Empresa Cidadã. Law 15,371/2026, signed in March 2026, establishes a phased increase of statutory paternity leave up to 20 days, beginning January 1, 2027, subject to fiscal conditions (Trench Rossi Watanabe). Leave must be taken within the days immediately following the birth.

Other Statutory Leave

• Marriage leave: 3 consecutive days, fully paid by the employer.
• Bereavement leave: 2 consecutive days for the death of a spouse, parent, child, or sibling.
• Blood donation leave: 1 day per 12-month period with proof of donation.
• Voter registration leave: up to 2 days to obtain the título de eleitor.
• Jury duty and military service: paid time off for the required period.

Statutory Employee Benefits

Brazilian employers must enroll every CLT worker in the federal social security system, which funds pensions, sickness benefits, maternity pay, work accident coverage, and family allowances through INSS contributions. Employers also deposit 8% of gross monthly salary into each employee’s FGTS account managed by Caixa Econômica Federal, and pay work-accident insurance (RAT) at 1% to 3% depending on the company’s risk classification. A full breakdown of mandatory and common voluntary perks is available on our Brazil employee benefits page.

Transportation vouchers (vale-transporte) are mandatory when public transport is used for the commute, with the employer funding the portion exceeding 6% of base salary. Meal or food vouchers (vale-refeição or vale-alimentação) are not legally mandatory but are standard in most CBAs and are effectively required to attract qualified candidates. Private health insurance, life insurance, and dental plans are not statutory but appear in the vast majority of CLT offers at professional salary levels.

Recent Regulatory Updates (2026)

Law 15,270/2025, published in the Official Gazette on November 27, 2025, took effect January 1, 2026. It expands the monthly income tax exemption to $909 with a gradual discount up to $1,336, introduces a new minimum individual income tax (IRPFM) of up to 10% on annual income above $218,000, and imposes a 10% withholding on dividends exceeding $9,091 per month paid to resident individuals (KPMG Flash Alert).

Decree 12,797/2025 set the 2026 federal minimum wage at $295 per month, a 6.79% increase over 2025. The 2026 INSS employee contribution table was published in Ordinance 13/2026, with the contribution ceiling rising from $1,483 to $1,541 and the maximum employee contribution increasing to $173 per month.

Law 15,371/2026, signed March 31, 2026, establishes a phased extension of statutory paternity leave from the current 5 days up to 20 days, beginning January 1, 2027, contingent on fiscal conditions. Employers planning 2026 hires should budget for the existing 5-day entitlement and prepare to update payroll systems ahead of the 2027 phase-in.

Work Permits and Visas in Brazil

Work Permit Requirements

Who Needs a Work Permit

Citizens of Mercosur member states (Argentina, Paraguay, Uruguay, Bolivia, Chile, Colombia, Ecuador, and Peru) qualify for a simplified residency process that grants work authorization with minimal documentation under the Mercosur Residence Agreement. Nationals of all other countries must obtain a Brazilian work visa sponsored by their employer before beginning formal employment. Work permits are administered by the Ministry of Justice and Public Security through the Coordenação-Geral de Imigração Laboral (CGIL) and consular posts.

Eligibility and Required Documents

Applicants for a VITEM V temporary work visa must submit a valid passport with at least 6 months of remaining validity, a police clearance certificate from their country of residence, proof of professional qualifications or a diploma, a signed Brazilian employment contract compliant with the CLT, and evidence the Brazilian employer has obtained prior residence authorization from CGIL. All foreign documents must be apostilled and translated into Portuguese by a sworn (juramentado) translator. A medical examination may be required depending on the country of origin and the visa subcategory.

Processing Time and Validity

The full VITEM V process typically takes 2 to 4 months, covering the CGIL residence authorization at the Ministry of Justice, consular visa issuance, travel to Brazil, and Federal Police registration. Initial validity is up to 2 years, tied to the duration of the employment contract. Delays commonly come from missing apostilles, consular backlogs, and incomplete diploma translations (Brazilian Ministry of Foreign Affairs).

Renewal Process

VITEM V holders may apply for a single 2-year extension before their initial permit expires, bringing the total temporary stay to 4 years. After that point the employee typically qualifies for a permanent residence transformation. Employees must register with the Polícia Federal within 90 days of arrival to obtain the Carteira de Registro Nacional Migratório (CRNM) and RNM number; missing this deadline can invalidate the visa.

Common Visa Types for Foreign Workers

Foreign nationals typically need a work permit or employment-authorised visa to take up a job in Brazil (Brazilian Ministry of Justice and Public Security). The table below summarises the most common visa categories employers use when relocating international hires, along with typical eligibility requirements and permit durations.

How an EOR Handles Work Permits

An employer of record in Brazil can sponsor VITEM V work visas because the EOR already holds a registered Brazilian legal entity that meets the CGIL sponsorship requirements. The EOR files the residence authorization, provides the employment contract, and supports the employee through the consular visa appointment, Federal Police registration, and CRNM issuance. You can see the full visa workflow on our Brazil work visa and permit page.

The visa process adds 2 to 4 months to the onboarding timeline covered in the “typical onboarding” section, so foreign hires should plan accordingly. Brazilian nationals and Mercosur citizens can be onboarded within the standard 1 to 2 week window because no visa sponsorship is required.

Payroll, Taxes, and Social Security in Brazil

Employer Contributions

Employers hiring in Brazil owe mandatory contributions on top of gross salary, funding social security, health, pensions, and other statutory schemes (PwC Brazil Tax Summaries). The table below lists the employer-side contribution rates so you can calculate the true all-in cost of each hire.

Employee Contributions

Alongside income tax, employees in Brazil pay statutory payroll deductions that fund social security, health cover, and other state schemes (PwC Brazil Tax Summaries). The table below summarises the employee-side contribution rates payroll must withhold from gross pay each month.

Income Tax

Personal income tax in Brazil is levied on a progressive basis, with the rate rising as taxable income crosses statutory thresholds (PwC Brazil Individual Taxes). The table below sets out the current income-tax brackets that apply to resident employees so you can model net-of-tax compensation before making an offer.

Payroll Cycle

Brazilian payroll runs on a monthly cycle, with salaries paid by the 5th business day of the following month per CLT Article 459. Payment must be made by bank transfer to the employee’s registered account in Brazilian reais; cash payments are technically allowed but almost never used in formal employment. Every employer must issue a monthly pay slip (holerite) detailing gross pay, deductions, and net pay.

INSS contributions are due by the 20th of the following month, and FGTS deposits must be made by the 7th. All payroll events are reported through eSocial in real time, and annual income reports (informe de rendimentos) must be provided to employees by the end of February for the prior tax year.

13th Month Salary and Bonus Pay

The 13th month salary (gratificação natalina or décimo terceiro) is mandatory under Law 4,090/1962 and Article 7, VIII of the Federal Constitution. It equals one additional month of salary per year, prorated for employees hired mid-year, and must be paid in two installments: the first (50%) between February 1 and November 30, and the second by December 20 (Europortage Brazil).

INSS and income tax are withheld only from the second installment, not the first. The 13th salary must be paid to all CLT employees, including those on maternity leave, sick leave, or during the notice period of a termination. There is no 14th month salary in Brazil, but the one-third vacation bonus under the Federal Constitution functions as an additional mandatory payment tied to annual leave.

Cost of Hiring Through an EOR in Brazil

EOR Service Fees

EOR service fees in Brazil typically fall between $300 and $600 per employee per month, depending on the provider, the number of employees, and the complexity of the role. The fee covers payroll processing, CLT contract drafting, eSocial filings, INSS and FGTS remittance, statutory benefits administration, and a local point of contact for labour compliance. It does not include the employer contributions themselves or the employee’s gross salary.

Total Employment Cost Breakdown

The all-in cost of employing someone in Brazil goes well beyond gross salary. The table below walks through a realistic cost build-up for a typical hire, layering mandatory employer social contributions, statutory benefits, and payroll taxes on top of base pay so finance teams can budget accurately before an offer goes out.

On a $1,200 monthly gross salary, total employer contributions add $429.60 (35.8% above gross) before the EOR service fee. Including the $400 monthly EOR fee, the all-in cost comes to $2,029.60, or roughly 69.1% above gross salary. This does not yet include the 13th salary (prorated at one-twelfth of gross per month, about $100) or the one-third vacation bonus. All USD amounts use the April 2026 exchange rate (1 USD ≈ 5.50 Brazilian real). For a detailed Brazil payroll and tax breakdown, see our Brazil payroll and tax page.

Ready to hire in Brazil? Contact Remote People and we will handle CLT-compliant contracts, payroll, tax withholding, and full Brazilian compliance. No local entity needed.

Benefits of Using an EOR in Brazil

Speed to market is the headline advantage of using an EOR in Brazil. Setting up a Limitada or S.A. in Brazil takes 2 to 6 months and involves CNPJ registration, state and municipal licensing, bank account opening, and accountant engagement. An EOR can have your first employee onboarded in 1 to 2 weeks, which is the difference between hiring a top candidate and losing them to a faster competitor. Compliance certainty is the second major benefit: CLT rules, eSocial reporting, and INSS/FGTS obligations change frequently, and the EOR carries the legal and administrative risk of keeping up.

Cost efficiency matters for small teams. Running a Brazilian entity typically requires a local accountant, a payroll provider, legal counsel, and an annual maintenance budget that easily exceeds $25,000 before a single employee is hired. An EOR bundles all of that into a per-employee fee, which makes small deployments financially rational and keeps overhead predictable as you scale. It also gives you the flexibility to scale down or exit without dissolving a legal entity, a process in Brazil that can take more than a year.

Local expertise closes the loop. A reputable EOR in Brazil knows how the relevant CBAs treat meal vouchers, what health insurance plans candidates expect at different salary bands, and how to structure compensation to stay tax-efficient. That operational knowledge shows up in better candidate experience, faster onboarding, and fewer compliance surprises during the first year.

Termination and Offboarding in Brazil

Notice Periods

The statutory notice period (aviso prévio) under Law 12,506/2011 is 30 days for employees with up to one year of service, plus 3 additional days for every full year of service thereafter, capped at 90 days total. During a worked notice period the employee is entitled to either a 2-hour daily reduction in hours or 7 consecutive days off without loss of pay. Employers may instead pay the notice period in lieu, releasing the employee immediately and compensating for the full notice amount.

The schedule below shows the proportional notice (aviso prévio) an employer must give for dismissal without just cause at different tenure points. Notice may be worked or paid in lieu, and the proportional add-on only applies to dismissals without just cause per TST Súmula 276.

Severance Pay

The schedule below models the core severance components for a $1,200 gross-monthly employee dismissed without just cause at different tenure points. The 40% FGTS penalty is the largest single item and is calculated on the employer’s full FGTS deposit history, which is why severance grows linearly with tenure.

Calculation Method

Severance on dismissal without cause in Brazil has several components: the final salary balance for the days worked in the termination month, the proportional 13th salary, accrued and proportional vacation plus the one-third vacation bonus, the FGTS account balance, and a 40% penalty on total FGTS deposits paid directly to the employee (CMS Law Brazil). The 40% FGTS penalty is the largest single severance cost and is funded entirely by the employer.

Caps and Exceptions

There is no monetary cap on severance for dismissal without cause; the cost grows proportionally with tenure and FGTS deposits. Dismissal for just cause (justa causa) under CLT Article 482 eliminates the 40% FGTS penalty, the aviso prévio, the proportional 13th salary, and access to unemployment insurance, but just cause is interpreted narrowly by Brazilian labour courts and must be documented meticulously. Mutual agreement terminations under Law 13,467/2017 reduce the FGTS penalty to 20% and allow the employee to withdraw 80% of the FGTS balance, offering a middle-ground option when both sides want to part ways.

Grounds for Termination

Brazilian employment law recognizes four main termination categories: dismissal without cause, dismissal with just cause, resignation, and mutual agreement. Dismissal without cause is the most common and triggers full severance. Just cause dismissals cover offenses listed in CLT Article 482, including repeated misconduct, abandonment of work, and serious breach of duty, and are litigated frequently in labour court. Protected categories cannot be dismissed without cause: pregnant employees, members of the internal accident prevention committee (CIPA), union representatives, and employees on sick leave all enjoy temporary job stability.

EOR vs. Other Hiring Models in Brazil

EOR vs. Setting Up a Local Entity

Choosing between an Employer of Record and setting up your own legal entity in Brazil comes down to timeline, upfront cost, ongoing administrative burden, and how quickly you can scale up or wind down. The table below lays out both paths side by side across setup time, cost, compliance risk, and flexibility so you can match the right model to the size and duration of your Brazil hiring plan.

Setting up a Limitada (Ltda.) or Sociedade Anônima (S.A.) in Brazil is viable when you expect to scale past 15 employees or need to bid on public contracts that require a local CNPJ. The upfront and ongoing costs are substantial, and the exit process is slow: winding down a Brazilian entity can take 12 to 18 months and requires tax clearance certificates from federal, state, and municipal authorities.

For smaller teams or market-entry phases, an EOR removes nearly all of that friction. The trade-off is that the EOR is the legal employer on paper, which means you cannot use the arrangement to capture government procurement contracts or certain tax incentives that require direct CNPJ ownership. If the goal is simply to hire a team and run operations, the EOR is almost always the faster and more cost-effective path.

A common pattern is to start with an EOR during the first 12 to 24 months in Brazil, validate the business case, and transition to a local entity once headcount and revenue justify the overhead. The EOR can support the handover by transferring employment contracts to the new entity without disrupting the employees.

EOR vs. Hiring Independent Contractors

Classifying a Brazil-based worker as an independent contractor rather than an employee can expose you to back-taxes, unpaid social contributions, and reclassification penalties if the working relationship looks like employment in practice. The table below contrasts EOR employment with contractor engagement across legal relationship, tax and benefits treatment, IP ownership, and misclassification risk so you can pick the right model role by role.

Hiring independent contractors in Brazil is only appropriate in some cases, such as short-term project work, specialized consulting, or roles with genuine operational autonomy. Brazilian labour courts apply a substance-over-form test, and if the contractor works exclusively for one company, receives detailed instructions, and has a fixed schedule, a court can reclassify the relationship as employment. The consequences of reclassification include retroactive FGTS deposits, back INSS contributions, vacation and 13th salary payments, plus interest and legal fees.

The pejotização practice (hiring individuals through their own PJ company to avoid CLT status) is also scrutinized closely by the Ministry of Labour and labour inspectors. It works for genuine consultancies but fails inspection when the “company” is effectively a single person doing day-to-day work for one client. If you need a reliable long-term worker, a CLT contract via an EOR is the safer path.

Remote People offers a dedicated contractor management solution for companies that do need to engage Brazilian contractors for legitimate project work. The service handles compliant contractor payments, classification assessments, and contract templates so the relationship holds up under inspection.

EOR vs. PEO (Professional Employer Organization)

EORs and PEOs both simplify international hiring, but only an EOR becomes the legal employer of record in Brazil — a critical distinction when you don’t have a local entity of your own. The table below maps the practical differences across legal employer status, entity requirement, liability allocation, and scope of coverage.

Brazil does not have a formal Professional Employer Organization framework equivalent to the US PEO model. What is sometimes called a “PEO” in Brazil is typically an HR outsourcing provider or payroll bureau that supports a company which already holds a CNPJ. The legal employer is still you; the provider only delivers back-office services.

The EOR model is fundamentally different because the EOR actually employs the worker under its own Brazilian entity and assumes the CLT obligations that go with that status. For any company without an existing Brazilian entity, the EOR is the only path that works without first incorporating locally. Once you have a CNPJ and a few dozen employees, an HR outsourcing provider can be a lower-cost option for day-to-day payroll and compliance.

The practical takeaway is to start with an EOR during entry and early scale, then evaluate whether incorporating locally and switching to an outsourced payroll provider makes sense once headcount grows. The EOR is the simplest way to be legally compliant in Brazil on day one.

Public Holidays in Brazil

Brazil observes a defined set of official public holidays on which most private-sector employers must give staff a paid day off (Presidência da República). The table below lists the statutory holidays employers need to build into payroll calendars and leave planning for the year, along with the date rule for each.

Brazil has 9 mandatory national holidays plus optional ponto facultativo dates that most employers observe, especially Carnaval and Corpus Christi. States and municipalities add their own holidays (for example São Paulo’s January 25 founding day or Rio de Janeiro’s April 23 Saint George’s day), so the effective calendar varies by location. When a national holiday falls on a Tuesday or Thursday, employers commonly grant a “ponte” (bridge) on the adjacent weekday to create a long weekend.

How to Get Started with an EOR in Brazil

The employer of record hiring process in Brazil is fast and structured. Remote People can onboard your first Brazilian employee in 1 to 2 weeks, from contract drafting through eSocial registration, INSS and FGTS setup, and benefits enrollment. Here is what each step involves:

• First, share your candidate details (name, role, salary, start date, location) and we will send you a country-specific cost breakdown within 24 hours.
• Second, sign the EOR service agreement and we will prepare a CLT-compliant employment contract in Portuguese for the candidate to review and sign.
• Third, we register the employee in eSocial, INSS, and FGTS, set up bank transfers, and enroll them in statutory benefits and any optional plans you want to offer.
• Fourth, the employee officially starts work on the agreed date and is paid on the next monthly payroll cycle, fully compliant with Brazilian labour law.
• Fifth, we handle every subsequent payroll run, FGTS deposit, INSS filing, vacation tracking, 13th salary payment, and termination process for as long as the employee is on payroll.

Ready to build your team in Brazil? Contact Remote People for a free consultation and a transparent quote covering every payroll, tax, and compliance cost before you commit.

Where companies hiring in Brazil expand next

Companies hiring in Brazil commonly expand across South America, leveraging Spanish and Portuguese talent pools and regional trade frameworks. Common expansion paths include operations in Portugal (shared Lusophone hiring dynamics) and Chile (shared Mercosur trade and workforce framework). Teams scaling further usually add hiring in Colombia for a shared Spanish-speaking workforce, with an EOR partner in Peru extending coverage through shared Andean-market workforce norms.