International Employment Law “Quick Facts”: Brazil

Author:
Mariana Villa da Costa – Littler Mendelson

Happy New Year readers!  We are excited to launch a new series of posts on the basics of global employment law called “International Employment Law Quick Facts.”    The series will bring basic, but important information on what an employer needs to know when hiring someone in a different country, using an easy to follow Q&A format.  We will capture information such as definition of employer and employee, requirements for written employment agreements, consequences of discrimination and harassment in the workplace, minimum wage requirements, etc.

We will kick off 2010 with the first country in the series – my native country of Brazil.   I would be more than happy to get suggestions from you, readers, on which other countries you want to see next!  Add a comment, or send me a note to let me know your suggestion.  We will try to publish upcoming installments in this series based on what you request, so keep checking back!

Q. What are the definitions of employee, employer and independent contractor?

A.

Employee:  The legal definition of employee by the Labor Code is  every individual (natural person, never a legal entity) that personally renders services on a non eventual basis (continuity), under the employer subordination (obedience to rules and orders given by the employer), and that receives a salary.  If one of these requirements is not present in the relationship, it is not an employment relationship.  As in most countries, it is very important to correct classify the relationship to avoid the common issues with independent contractors vs. employee definition.

Employer:  An employer is the sole-proprietorship or joint-proprietorship company that, in assuming the risk inherent to the economic activity, hires, remunerates and manages the personal provision of services.

Independent Contractor:  The difference between employee and an independent contractor lies on the requirements that one must have to be an employee.  An individual will be considered an independent contractor and, therefore, will not be covered by the labor legislation, if he or she has independence to perform the work and it is not subordinate to a company’s directives and regulations, and there is no exclusivity in the relationship between the parties.

Q. Is it necessary to have written employment contracts in Brazil?

A. According to the Brazilian law, the execution of an employment contract is not mandatory; however, it is important to note that this is common procedure in Brazil and should be observed as a good practice.

Q. Are there any specific rules in regards to the duration of employment contracts?

A. In Brazil, and due to the principle of continuity, the general rule is that the agreement is entered between the parties for an indefinite term. The agreement for a definite term is an exception to the general rule and should be entered in writing.

According to the Labor Code, an employment for a definite term can only be executed in a few circumstances:

  • A maximum of two years, provided that the nature of the work justifies the transitory nature, or the if the contract is for the performance of temporary business activities; or
  • A probationary or trial period (cannot exceed 90 days and must be in writing).

Q. Are there any rules in regards to discrimination in employment?

A. Yes, the Brazilian Federal Constitution prohibits discrimination, although it does not define what that is.  It simply says that any difference in salary or unequal treatment in relation to recruitment and employment is prohibited.

Q. What are the rules regarding working hours?

A. In Brazil, the Federal Constitution and the Labor Code provides that the maximum hours per week are 44 hours, or 8 hours per day.

An employee cannot work more than two overtime hours per day since the workday cannot exceed the legal limit of ten hours; however, the law provides some very exceptional situations for overtime in the excess of two hours.

The minimum additional overtime pay is 50% of the regular hourly rate, but it may be higher if established in a collective agreement.

Employers must allow an interval of 11 hours of rest between two working days.

Q. Are there any minimum wage requirements in Brazil?

A. Yes, the Brazilian Federal Constitution has established a system of national minimum wages.  The minimum wage is fixed every year by law, but some categories also put in place their own professional minimum wage that cannot be inferior to the national one.

Q. What are the rules regarding the terminations of contracts?

A. Employers in Brazil may terminate contracts in Brazil with or without a cause, provided that all termination and severance amounts are paid.

The only exception is that the employer cannot terminate an employment contract when the employee is under a provisional job tenure, for example, female employees during and after pregnancy, and employees who are union leaders.

In Summary

I hope this quick summary can be used as a road map for employers doing business in Brazil.  Please post your questions and comments.

Important Note:  This posting is intended to provide a brief overview of employment law in Brazil.  It is not intended as a substitute for professional legal advice and counsel.

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26 Responses to International Employment Law “Quick Facts”: Brazil

  1. Maxine T. McClellan

    Great post! And, I am thrilled you started with Brasil. Not only have I been an expat here (Belo Horizonte) for 3 years but we’ve just started an organization for expats in Minas Gerais (@minasintl) and I am posting news in English that I think will benefit them… This was top of the posts today… Keep up the great work!

  2. I was delighted to see this post given our operations in Brazil. I learned something new, which I always appreciate. I was surprised not to see a mention of the union driven pay increases and the 13 month of pay (those were new to me when I started working with Brazil). As far as future countries to profile, I’d love Mexico, Russia, India, UAE, Italy, Germany and the UK.

    • marianavcosta

      Hi Anne, thank you so much for your comment! Brazil has one of the most complex Employment Law legislations in the world with so many details that we would need a week worth of postings to address everything! But you are right, union pays, 13th salary, along with paid vacation and different types of paid leaves normally surprise foreigners when they arrive in Brazil! Blogs are good because they generate this type of feedback, so we can address questions and suggestions. I will make sure to prepare an addendum to talk about a few of those interesting issues from Brazil in a near future! Keep reading!
      In regards to new profiles, I will definitively write about some of those! For Russia – check one of my old posts – http://wp.me/pupHI-dV

  3. Leslie McMahon

    So excited about this new blog series as there’s so much to learn about int’l employment laws. To add onto Anne’s post it would be great if the posts included a section on mandatory benefits or bonus/additional payments (i.e. 13th month pay or religious payments such as is required in Indonesia). Would love to see future posts to include the Netherlands, France, Germany, UK, Ireland, Japan, China, and Hong Kong…to name a few :)

    Keep ‘em coming and thanks!

    • marianavcosta

      Hi Leslie, thank you for your comment! Statutory payments and benefits are always very tricky and demand a broad understanding of a countries’laws. One idea is, in a near future, develop an entire series focusing on those issues so we can address them in detail!
      I will definitively write about those countries you suggested! For China please check one of my most successful posts on our blog http://internationalhr.wordpress.com/2009/05/04/employment-laws-in-china/

  4. Thanx, Mariana – I am really looking forward to this series! I am pleased you started with Brazil as I still do a number of projects there every year and loved my time there as an expat manager of an HR consulting practise.

    One thing that I would suggest for each country in the series is to add a brief description of statutory termination payments (e.g., termination indemnities), as they are often significant and can be a big surprise to people new to international.

    Thanx very much again, and I look forward to future articles!

    Best regards,

    Keith

    • Hi Keith! Good to hear from you and thank you! I am so glad you enjoyed the post. Brazil is an amazing and intriguing country and one of the future economic leaders of this new decade. I sure will add some information on statutory termination payments as they normally raise questions! Keep checking our blog for more posts soon. Mariana

  5. Hi Mariana,

    Very useful information, I am currently working on a business case for a company for setting up business in Brazil, so this helps indeed.
    I do look forward to future articles.
    In case you are planning to do an article on the Netherlands, and you could use some help, pls let me know.

    Kind regards,

    Kathelijne

    • Thanks Kathelijne, so glad you enjoyed the post! Netherlands is one of the countries on my list and I will definitively touch base with you then!
      Keep reading our blog! We will have more and more interesting topics for our readers soon.

  6. Dear Mariana,

    I am pleased to read this note as all those who have responded. Its great to see a note on Brazil as I am based in India and often need some research points on other geos for our company foraying in to those nations.

    If possible would like to see more info on Dubai, China and Australia.

    Also I can contribute to similar notes on India and you could reach out to me for the same.

    Great start, thanks again!

    Best Regards,
    Suvarna

  7. Maxine T. McClellan

    Suvarna,

    Many IT outsourcing and development companies are setting up shop and gaining contracts here in Brazil, particularly in the State of Minas Gerais where I live (case in point – Infosys just announced a new development center in Belo Horizonte). Belo Horizonte is not like Rio or Sao Paulo in regards to their preparedness to manage foreign visitors. So, if you or any of your colleagues find yourself in my city in the future please don’t hesitate to contact me. It would be my pleasure to help you out.

    Thanks,
    Maxine

    maxinetmcclellan@yahoo.com

    http://br.linkedin.com/in/maxinetmcclellan

    • Hi Maxine and Suvarna, Minas Gerais is definitively experiencing a great expansion and development, especially on mining and infra-structure companies. However, as Maxime pointed out, not the best place for a foreigner. Hopefully that will change in a near future. And, please, feel free to contact me if you ever have questions. I would be happy to help. And keep reading our blog for more countries’ profiles! Mariana

  8. I have found really a lot of useful information on Brazil, business in Brazil, real estate and investments in Brazil etc….on this Google Group:

    http://groups.google.com/group/investinbrazil

    We are an independent real estate & investment advisory firm in the North East Region Fortaleza City Area and appreciate your posts Mariana…If you could please, in addition, expand further on the labor laws I believe all of the readers would and could benefit from such elaborations.

    This subject is complicated and complex but even more it is not well-known or explored by foreigners of this rapidly growing country.

    • Hi Martin, I am so glad you enjoyed the post! I will definitively expand further on debatable and interesting Brazilian issues soon! Keep reading our blog and please feel free to contact me if you have additional questions! Thanks!

  9. Bom dia, Mariana,
    Great post – suggest that you add definitions of the types of employment including “estagiario” and trainee as well as different interpretations of terms such as third party employers.
    Looking forward to the next country.
    NwC

    • Hi Neil, thank you so much! I like your suggestion and we may address those topics in a new post. The “Quick Facts” post, however, was really a short summary on Brazilian laws. But keep reading our blog for more countries!

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  13. Hi Mariana,

    Indeed a very good post. However, as other people posted that it requires more refinement. I would also love to see the definitions of the employment types like CLT & PJ, which are kind of mystery to me.

    To add to it I would also like to know what are the mandatory leave types, an employer needs to give to it’s employees.

    Looking forward to more information.
    Amit

  14. Cliff Caldwell

    Mariana,
    Your post showed up in a search where we are trying to clarify requirements for expatriates working in Brazil. We have had a local operation of a multinational organization indicate that Brazilian law requires that the employer ‘make whole’ the expatriate employee for any medical expenses not covered by an international health program. We have not encountered this issue previously. I have referenced the Littler Mendelson’s Guide to International Labor Law (an excellent resource) but could not find anything on point to this particular issue. Any insight or redirection is appreciated.

  15. Oi Mariana!
    I was wondering, are there any laws that the government sets to restrict private businesses? Are there any kind of government restrictions with foreign companies? Is the government really involved in establishing regulations?

    Obrigado!

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