A Q&A guide to employment and employee benefits law in Brazil.
The Q&A gives a high level overview of the key practical issues including: employment status; background checks; permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; flexible working; data protection; discrimination and harassment; dismissals; resolution of disputes between an employee and employer; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; intellectual property; restraint of trade agreements, relocation of employees and proposals for reform.
Scope of employment regulation
1. Do the main laws that regulate the employment relationship apply to:
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Laws applicable to foreign nationals
The applicable law is that of the place where the employee renders the services. Therefore, if a foreign national works in Brazil, Brazilian labour law applies. In this case, Brazilian law is applied regardless of any choice of law governing the contract or the nationality of the parties.
The Brazilian labour law is set out in:
The Federal Constitution.
The Consolidation of Labour Laws (Consolidação das Leis do Trabalho - CLT).
The Brazilian Social Security Law.
The Brazilian Government Severance Indemnity Fund Law (Fundo de Garantia por Tempo de Serviço - FGTS).
Other special legislation and rules issued by the Ministry of Economy and the Secretary of Labour.
Collective bargaining agreements.
The labour rules are considered inalienable rights and guarantee equal legal treatment for native and foreign workers.
Laws applicable to nationals working abroad
As a general rule, when a Brazilian national is hired abroad to work in a foreign country, their employment contract is governed by the rules applicable in the country where the services will be provided (Article 14, Law 7064/1982).
However, Brazilian labour law must apply, if it is more favourable to the employee, when (Law 7064/1982, supplemented by Law 11962/2009):
A Brazilian citizen or a foreign national is hired in Brazil to work abroad.
The employment contract was already being executed in Brazil before the transfer to another country.
The employee maintains an employment contract with a Brazilian company or its subsidiary.
In addition, the Brazilian Social Security Law and the FGTS also applies in those cases.
2. Does the law distinguish between different categories of worker? If so, what are the requirements to fall into each category, the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?
Categories of worker
In general terms, Brazilian workers can be classified into the categories discussed below.
Employee/worker. To be classified as an employee, the following elements must be present:
The worker is a natural person who works on a regular basis.
The worker works for payment.
Subordination is present and the work is undertaken personally. Subordination is present if the worker integrates into the company's organisational structure, is subject to direction in their work, and has limited or no autonomy.
The new Labour Law, passed on 11 November 2017 (Law 13467/17) created a "more sufficient" category of employee, applicable to those who earn up to twice the amount of the social security maximum benefit and have a higher education. For these employees it will be possible to:
Negotiate directly with the employer about their working conditions, which will prevail over the law.
Submit their labour issues to arbitration. However, because this is a new law, it has not been tested in the Labour courts.
Employees can be:
Farm or urban works.
Domestic or company employees (including common employees, temporary workers, domestic workers, officers, apprentices, or part-time workers, among others).
Labour rights are largely the same for all these kinds of employees. However, there are certain specific laws, including Law 5889/1973 (farm employees), the Consolidation of Labour Laws (CLT) (urban employees), Law 5859/1972 and complimentary Law 150/2015 (domestic workers), the CLT and Law 6019/1974 (temporary workers), and the CLT and Law 10097/2000 (apprentices).
Independent contractor/self-employed. These workers provide independent and autonomous services.
The main consequences for an employer who wrongly classifies an employee as an independent contractor are:
Fines imposed by the Secretary of Labour.
Investigation by the Labour Public Prosecution Service and possible public civil actions.
An obligation to pay wage and social security payments to the worker, imposed by the Labour Court. These obligations would backdate to the beginning of the employment relationship but limited by the statute of limitations to five years from the filing of the labour claim.]
Directors, statutory officers and companies' legal representatives. These act according to the powers conferred in the company's bye-laws or articles of association/incorporation.
Interns. These are trainees who attend university courses and are not employees but are subject to Law 11788/2008.
Apprentices. These are young people from 14 to 24 years of age who, through their work in the company, develop technical and professional training, combined with technical training courses.
Entitlement to statutory employment rights
Employees have certain statutory rights that independent contractors do not have. The rights of independent contractors are usually contractually agreed between the parties (the Brazilian Civil Code establishes very few basic rules) and Article 442 of the Consolidation of Labour Laws sets out how self-employed workers are treated.
The general rule is that employment contracts are open ended. It is only possible, in a few specific cases, to establish an employment contract for a limited period of time.
A seasonal employment contract is a specific type of temporary contract, with the following main characteristics:
It must be justified. Seasonal work is typically justified by an increase in the company's demand during certain periods of the year.
It must have a maximum duration of two years.
Experience contracts are special contracts entered into for a specified period, with the purpose of verifying whether the employee has the ability to perform the activities he or she was hired to perform. These contracts are possible for a maximum period of 90 days.
Internship and apprentice contracts can be entered into for a maximum period of two years.
3. Are any grants or incentives available for employing people? Does any information/paperwork need to be filed with the authorities or given to new employees when employing people?
Grants or incentives
There are no grants or incentives for employing people.
However, there are certain quotas to be filled in relation to certain employees (for example, workers with disabilities and apprentices). In the case of apprentices, the Brazilian Government Severance Indemnity Fund Law's deposits are at the rate of 2% (instead of 8%) (see Severance payments).
To hire an employee, the employer must:
Record the contract in the Work and Social Security Card (CTPS), oreferably in digital form, including information on the job position, salary and admission date. The CTPS is a document owned by the employee, and it must remain with the employee and be returned to him or her after the employer has completed the data.
Fill in the employee data in the employee's records book (an employer's file that must be available for the auditing authorities). This is a document containing all information relating to employment contracts.
Inform the government of the hiring, through the General Register of Employed and Unemployed (Cadastro Geral de Empregados e Desempregados). This is a register that provides information to governmental institutions.
Subscribe the employee to the Social Integrated Program (Programa de integração Social).
Provide monthly information on the employee's remuneration in the Guia de Recolhimento do Fundo de Garantia por Tempo de Serviço e Informações à Previdência Social system (that is, a guide to government control of the Brazilian Government Severance Indemnity Fund Law and social security contributions).
Present annually information to the Annual Social Information register (Relação Anual de Informações Sociais). This is a register that provides information related to employment contracts to governmental institutions.
4. Are there any restrictions or prohibitions on carrying out background checks in relation to applicants?
It is prohibited to adopt any discriminatory and restrictive practices for the purposes of hiring, dismissal or promotion, including discriminating by reasons of sex, origin, race, colour, marital status, family status or age (Law 9.029/95).
The Labour Courts frequently decide that an employer or prospective employer cannot investigate pregnancy or fertility, unless the work conditions could be dangerous for a baby. Investigations relating to certain diseases are also forbidden.
There is no specific legislation regarding background checks, but this is a very sensitive issue. Therefore, it is recommended that the employer avoids unauthorised pre-employment investigations (such as checking criminal records and credit information), even if carried out by a third party, particularly if the applicant is not aware of the background check that is to be undertaken.
Conducting toxicological tests into alcohol and drug use is also a sensitive issue. There is no mandatory rule on this matter, apart from in the case of professional drivers (Law 13.103/2015) (for whom these tests can be carried out). There is a conflict between workers' rights of privacy and employers' rights to prevent alcohol or drug use interfere with work secureness and efficiency. Doctrine and the view of the labour courts is that these tests can be carried out to prevent accidents, as long as all of the following apply:
They are done in a non-discriminatory way.
There is a necessity and justification to do so, according to the activities that will be carried out.
The employee is aware of the procedure and it does not expose him or her to humiliation.
Permission to work
5. What prior approvals do foreign nationals require to work in your country? What information/paperwork needs to be kept or filed with the authorities when they start work?
Procedure for obtaining approval. To work in Brazil, the foreign national needs a Temporary Visa and an Authorisation for Residence:
Temporary Visa. Required for a foreigner who comes to work in Brazil, with or without an employment relationship or to act as director, manager or administrator of a Brazilian company, and needs to establish residency for a determined period.
Requirements: the foreign national must obtain an Authorisation for Residence, granted by the Secretary of Labour. Also, the job offer must be evidenced by presenting the agreement concluded with the company located in Brazil.
Expiry: in general, the Temporary Visa can be granted for a up to one year (it may vary from case to case) and it can be renewed. The Temporary Visa V can be renewed for the same period, indefinitely, or be converted into a Permanent Visa, by presenting an instrument for extending the term of the original employment agreement, a new employment agreement for definite term or a new employment agreement for indefinite term. The company must also justify the reasons for the extension].
Documents: the documents generally required to obtain a Temporary Visa are:
passport or laissez-passer;
international certificate of immunisation, when required by the National Health Surveillance Agency (Anvisa);
proof of payment of fees, when applicable;
visa application form filled in the electronic system, provided by the Ministry of External Relations;
other documents specific to each type of visa.
Cost: the fees for applying for a visa are at least BRL100,00. Consular fees may be periodically adjusted by the Ministry of External Relations.
Authorisation for Residence. As well as the visa, the foreign national, who intends to work in Brazil, needs an Authorisation for Residence, submitted to the Secretary of Labour before or after the arrival in Brazil.
Requirements: the same as for obtaining the visa (see above). The job offer must be evidenced by the agreement made with the company located in Brazil.
Expiry: in general, the Authorisation for Residence is granted for a up to two years (it may vary from case to case) and can be renewed for the same period or be converted to an Authorisation for Residence for an undetermined term.
Documents: the documents generally required to obtain an Authorisation for Residence are:
passport or valid identification documents;
proof of payment of fees, when applicable;
criminal background certificates;
declaration of the absence of criminal records, in any country, within five years before the date of the request for Authorisation for Residence.
Cost: the fees for applying for the Authorisation for Residence are at least BRL168,13. Consular fees may be periodically adjusted by the Ministry of External Relations.
Authorisation for Residence for director, manager or administrator of a Brazilian company. To obtain such authorisation, the Brazilian company must receive foreign investment equivalent to BRL600,000 or BRL150,000 per foreign worker. If the company receives BRL150,000 per foreign worker, it must also create at least ten new job positions, within two years from the arrival of the foreign national.
In this case, the Authorisation for Residence if granted for undetermined term.
Time frame: it usually takes from 30 to 45 days for the Secretary of Labour or the Ministry of External Relations to analyse the documents and information.
Sanctions: when a foreign national enters or remains into national territory without government authorisation, they can be subjected to fines and deportation.
When a foreign national does not deliver documents required by the government or does not communicate changes to their foreign national status, they can be liable for a fine.
When a foreign national makes false statements in any visa process, they can be subject to detention and expulsion from Brazil.
Procedure for obtaining approval. As well as the specific working visa (see above, Visa), the foreign national must obtain a National Migration Registration Card (Carteira de Registro Nacional Migratório) (CRNM), issued by the Brazilian Federal Police.
Cost: the cost of obtaining CNRM is BRL204,77, but it may be periodically adjusted by the Brazilian Federal Police.
Expiry: the CNRM expires after nine years.
Time frame. it usually takes 60 to 180 days to obtain the CNRM.
Sanctions: a foreign national who fails to obtain a CNRM can be liable to a fine. Also, the company that employs the foreign national without a CNRM is also liable to a fine.
Restrictions on managers and directors
6. Are there any restrictions on who can be a manager or company director?
As a general rule, it is forbidden to employ children aged under 16 years of age in any kind of position. Certain restrictions apply on employing children aged between 16 and 18 years.
At least two-thirds of a Brazilian company's employees must be Brazilian, including managers and directors.
There are no other restrictions in Brazil concerning who can occupy management or board positions.
However, Article 1.011 of the Brazilian Civil Code enumerates a number of situations which prevent a person from administering a society, as follows:
Where a person is prevented from the role by reason of a special law (for example, judges, state governors, and the President of the republic).
Where a person is subject to a sentence that prevents (even temporarily) them from having access to public office.
Where a person is convicted is of bankruptcy, prevarication, bribery, collusion or embezzlement.
Where a person is convicted of a crime (whilst that conviction continues):
against the popular economy;
against the national financial system;
against the anti-trust rules; or
against consumer relations, public faith or property.
Regulation of the employment relationship
7. How is the employment relationship governed and regulated?
Written employment contract
A written employment contract is not required, if the employment relationship is governed by the Federal Constitution, the Consolidation of Labour Laws, the Brazilian Social Security Law, the Brazilian Government Severance Indemnity Fund Law or other special legislation and rules issued by the Ministry of Labour and Employment, or collective bargaining agreements. A tacit or oral contract is acceptable. However, it is strongly recommended to execute a written contract, in Portuguese, to agree certain conditions, such as:
Salary and benefits.
Place of work.
Procedure to offset extra working hours.
Employee's duties (that is, confidentiality, non-disclosure and non-competition obligations, compensation duties for damages caused to the employer).
Company policies and standard practices, such as IT-related practices and reimbursement of expenses.
The possibility and conditions of travel and transfers.
Without a written contract, provisions concerning the above may not be considered valid and enforceable.
Certain terms are automatically implied into employment contracts and do not need to be included in a written contract, such as:
The payment of a minimum wage.
Holiday entitlement. This is 30 remunerated days per year plus one-third of the amount of the monthly remuneration paid (for example, if the employee receives BRL900 for 30 holiday days, he or she will also be entitled to receive one-third of that amount, BRL300).
13th salary (one extra monthly salary per year).
The Brazilian Government Severance Indemnity Fund Law.
A remunerated weekly day off.
Requirement to pay social security.
Legal benefits provided for in collective bargaining agreements.
Collective agreements with trade unions are automatically binding on all employment contracts. These instruments are valid for a maximum of two years and are negotiated between the union that represents the employees and the union that represents the employer (or the company itself).
8. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?
All modifications of the terms and conditions of the employment contract that are harmful to the employees (even those made by mutual agreement between the parties) are forbidden and considered void. A reduction of salaries is only allowed when expressly authorised by an agreement entered into with the employees' union.
9. Is there a national (or regional) minimum wage?
There is a national minimum wage that applies to all employees, regardless of their age, industry or experience, and this is increased on an annual basis. Some states have a regional minimum wage, that must be observed, if it is higher than the national minimum wage.
Some collective agreements also establish minimum wages for certain professional categories and positions.
Restrictions on working time
10. Are there restrictions on working hours? Can an employee opt out on either an individual or collective basis?
As general rule, the Federal Constitution restricts working hours to eight hours a day and 44 hours a week.
Some types of worker have specific restrictions on working hours, such as:
People who work in continuous rotating shifts.
Air service employees.
Some collective agreements also provide for special maximum working hours.
Employees who work outside the employer's establishment (remotely) and those who occupy a management position are not subject to working time limitations.
Employees who work more than six hours a day are entitled to one to two hours' break. Employees who work from four to six hours are entitled to at least a 15-minute break.
Some special rules and collective agreements provide for special rest breaks for certain professional categories.
There must be a minimum rest period of 11 hours between the end of a working day and the beginning of another.
Employees are entitled to 24 hours paid weekly rest, preferably on Sundays.
The same working time rules apply as for other workers (see above, Working hours).
11. Is there a minimum paid holiday entitlement?
Minimum paid holiday entitlement
Employees are entitled to a minimum holiday period after a period of 12 months' employment, which depends on how many days' leave the employee has taken, as follows:
30 days' holiday when no more than five days' leave have been taken during the year.
24 days' holiday when between six and 14 days' leave have been taken during the year.
18 days' holiday when between 15 and 23 days' leave have been taken during the year.
12 days' holiday when between 24 and 32 days' leave have been taken during the year.
There are national and municipal holidays that are fixed by the public authorities. On these days, work is forbidden without the Ministry of Labour and Employment's authorisation.
Illness and injury of employees
12. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Who pays the sick pay and, if the employer, can it recover any of the cost from the government?
Entitlement to paid time off
Employees are entitled to paid time off in the event of illness or injury, provided that they present a medical certificate stating the number of days that they must be absent from work. The first 15 days of time off are paid by the employer, at the usual salary rate. Any further days off are paid through fixed rates by the National Institute of Social Security (INSS) (a governmental institution).
Entitlement to unpaid time off
There is no entitlement to unpaid time off, since in all cases of illness or injury, employees are entitled to paid time off (see above, Entitlement to paid time off).
Recovery of sick pay from the state
The first 15 days of time off are paid by the employer. Any further days off are paid through the INSS at fixed rates.
When the INSS pension is lower than the employee's last salary, some collective agreements establish an additional payment by the employer during the time off.
If the illness or injury is caused by bad working conditions, the employer may be responsible for:
Paying an indemnification for moral and material damages to the employee (if ordered to do so by the court in a court judgment).
Reimbursing the INSS.
Statutory rights of parents and carers
13. What are the statutory rights of employees who are:
Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
Carers (including those of disabled children and adult dependants)?
A pregnant employee is entitled to 120 days of paid maternity leave. This payment is made by the employer and reimbursed by the National Social Security.
An employer can grant an additional 60 days of paid maternity leave and recover that payment from tax benefits granted by the federal government.
The pregnant employee also has job stability (that is, they cannot be made redundant) from confirmation of pregnancy up to five months after the delivery.
Fathers are entitled to up to five days' paid parental leave. An employer can grant an additional 15 days' paid paternity leave and recover that payment from tax benefits granted by the federal government.
Brazilian legislation does not provide for surrogacy rights.
The employee is entitled to the same maternity and paternity rights of a natural parent.
There are no other applicable parental rights.
An employee is permitted one day of leave per annum to accompany a child up to six years in medical consultation.
There are no other rights related to the emergency care of family members. However, collective agreements commonly grant time off for this purpose.
Continuous periods of employment
14. Does a period of continuous employment create any statutory rights for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?
The transfer of an employee can happen between companies from the same economic group, in an M&A transaction or asset purchase.
The transfer does not allow modifications of the employment conditions not formally authorised by the employee. Further, even if the employee authorises it, modifications to the employment conditions that damage the employee are void for all purposes.
On transfers, employees retain their period of continuous work. This is relevant to:
Holiday rights. The period worked before the transfer is included for the purposes of holiday rights.
Additional days on advance notice. For every year worked for the same employer, the employee is entitled to three extra days of advance notice, limited to 90 days.
The calculation of the Brazilian Government Severance Indemnity Fund Law (FGTS) 40% penalty, if the contract is terminated without cause (see Severance payments).
Fixed term, part-time and agency workers
15. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?
Temporary work is provided by an individual, through a temporary employment agency, to a hiring company (Law 6.019/74):
To meet a transient need to replace regular and permanent staff (for example, where a permanent employee is ill and needs to be absent from work for a certain period of time).
In the event of an extraordinary increase in work (for example, the hiring company receives an extraordinary demand for production).
A temporary employment agency must be registered with the Ministry of Labour and Employment (MTE). Certain conditions must be satisfied, such as:
Temporary work is not allowed if increases in work are common to the hiring company, and the increase is due to the hiring company's growth, expansion of its business or the opening of branches.
There must be a written contract between the temporary employment agency and the hiring company for each temporary employment contract.
The term of the contract cannot exceed 180 days, whether consecutive or not, and may be extended for up to 90 days, consecutive or not, beyond the established period, where there is evidence that the original purpose of the contract is still valid.
Further, temporary workers are entitled to rights and funds similar to permanent employees in the same professional category (that is, the same wage and benefits, the same working hours and rest breaks, and proportional vacation time, among others).
The Higher Labour Court's previous understanding was that the only possible way to hire workers through an outsourced company was in cases of:
Specialised services not related to the core business of the hiring company, such as security (Law 7102/1983), maintenance, conservation and cleaning services, as long as there is no direct subordination.
However, Law 13467/17 authorized outsourcing for all activities (intermediate and final). On 30 August 2018, the Federal Supreme Court, in analyzing cases before the new Labour Law came into effect, decided that outsourcing is legal in all stages of the production process, whether it is intermediate or final, as long as there is no direct subordination between the outsourcing company's employees and the contracting company.
Part-time workers are employees who work up to 30 hours per week, without the possibility of overtime, or even employees whose working hours do not exceed 26 hours per week, with the possibility of adding up to six extra hours per week. These workers are entitled to compensation proportional to the number of working hours. This type of contract can only be entered with the union's authorisation.
The Law 13467/17 created a new type of contract, called an intermittent contract, in which an employee must carry out their activities sporadically, with intervals of inactivity. Employees who have an intermittent employment contract are hired on the basis that they can be called on to perform their activities when necessary.
The demand must be made at least three days in advance, so that the professional has time to organise their time and must be able to accept or refuse the call, without suffering any punishment. From the moment the demand is made, the employee assumes their position for a pre-determined period of time (but not more than eight hours per day and 44 hours per week).
16. Is there a statutory right for employees to request to work flexibly?
There is no statutory right for employees to request to work flexibly in Brazil. However, the flexibility in terms of working hours or the workplace, can be adjusted and negotiated between employer and employee, as long as the Brazilian labour rights and the collective agreements are respected (for example, the maximum working hours must be respected, the work environment must be adequate to the activities developed, the rules applicable to home offices must be followed, and so on). Similarly, in the case of a home office, the employment contract must be formal (written) and must specify exactly which activities will be performed at home. The employee must sign a responsibility term committing to comply with the instructions provided by the employer to prevent illnesses and accidents at work, among other formalities.
17. Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?
Employees' data protection rights
The Law 13.709/2018, the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (LGPD), complemented by the Law 13.853/2019, came into force in September 2020. The LGPD regulates the processing of personal data in Brazil, including its collection, supply, transmission, storage, use and so on. In an employment contract, data protection applies from the pre-contractual phase (selection process) throughout the duration of the contract and even after the termination of the employment contract.
Employers will have to take various measures to keep all data received confidential, especially "sensitive personal data" (regarding racial or ethnic origin, religious belief, political opinion, union affiliation or religious, philosophical or political affiliations, health or sex life data, genetic or biometric data).
Any violation of the General Data Protection Law will make the employer liable for fines, among other implications. After the filing of an administrative proceeding, the national authority can apply sanctions such as:
Warnings to adopt corrective measures.
Simple or daily fines.
Publication of the infraction.
Blocking or elimination of the personal data related to the infraction.
Suspension or prohibition from exercising activities related to the processing of personal data.
However, the Federal Constitution already ensures the protection of intimacy and privacy of all citizens. This means that, for example, employers cannot access employees' personal e-mails.
18. What protection do employees have from discrimination or harassment, and on what grounds?
Protection from discrimination
It is prohibited to adopt any discriminatory and restrictive practices for the purposes of hiring and during an employment relationship, including discriminating by reasons of sex, origin, race, colour, marital status, family status or age (Federal Constitution and Law 9.029/95).
There is no qualifying period of continuous employment to file a claim on the grounds of discrimination. The employee can seek indemnification for moral and material damages.
Protection from harassment
There are no specific employment laws protecting employees from harassment. However, the rules on protection against discrimination and civil liability can be applied.
19. Do whistleblowers have any protection?
There are no specific protections for whistleblowers, but companies can create internal communication/reporting channels, which are recommended to be confidential or to guarantee anonymity.
Termination of employment
20. What rights do employees have when their employment or employment contract is terminated?
In cases of resignation or dismissal without cause, employees and employers must provide each other with 30 days' notice. Employees are entitled to an additional three days' notice for every year worked for the company (the employer can pay in lieu of notice).
Termination without cause or constructive dismissal. Employees are entitled to receive:
The balance of their wages.
A proportional payment for untaken holidays, plus one-third of the holiday remuneration.
A proportional 13th month salary (Christmas bonus).
Access to the funds deposited in a severance fund called the Brazilian Government Severance Indemnity Fund Law (FGTS). The FGTS contains monthly deposits of 8% of an employee's gross compensation. Deposits are made by the employer into an escrow account with a governmental bank, in the name of the employee. The employer must also pay a 40% penalty on the balance in the account.
Any payments due under collective agreements.
Any other benefit provided under the employer's policies or the employment contract.
Termination with cause. Employees are only entitled to receive the balance of their wages, an unused holiday payment and a proportional 13th month salary.
Resignation. Employees are entitled to all funds that are due in the case of a termination without cause (see above), except for the FGTS penalty and the indemnification for not having received the advance notice period.
Procedural requirements for dismissal
Termination without cause. Employees can be dismissed without cause at any time, subject to notice periods and severance pay.
Constructive dismissal. Employees are entitled to resign on the basis of constructive dismissal if:
They are assigned to tasks outside the scope of the services for which they were hired or that are immoral or illegal.
They are treated immorally or without respect by the employer.
The employer does not respect their main employment rights.
They suffer physical abuse or damage to their (or their family members') honour or reputation, among other circumstances.
Resignation. Employees can resign at any time and for any reason, by giving a 30-day notice period in advance.
Termination with cause. An employer can dismiss an employee with cause in the flowing circumstances:
Improper act or lack of self-restraint.
Direct or indirect competition with the employer or with its activities.
Definitive prosecution of the employee.
Dereliction of duties.
Ongoing drunkenness or drug abuse.
Breach of a trade secret.
Failure to obey the orders of the employer, or non-compliance with the employer's general policies.
Abandonment of job.
Acts that damage any colleague's or superior's honour or reputation, or cause physical injury, unless in the employee's or someone else's legitimate defence.
Loss of the driver's licence or of the legal requirements established for the exercise of the profession, as a result of intentional conduct of the employee.
Acts detrimental to national security.
Contracts can be terminated by mutual agreement, in which the employee has the right to receive:
At least half of their prior notice.
At least half of the fine on the FGTS balance (corresponding to 20%, instead of 40%).
Other severance funds in their entirety (such as vacations, Christmas bonus, salary balance and so on).
A voluntary dismissal plan can be set up by an employer to compensate the employee for circumstances of breach of contract without just cause, The new Labour Law (Law 13467/17) establishes that the adherence to the plan formally varies an employment contract, provided there is provision in a collective convention or agreement.
Procedure. The employer must register the termination of the employment contract in the employee's Work and Social Security Card, communicate the dismissal to the proper government agencies and pay the severance pay within ten days of the termination of the contract. Also, an instrument of termination or receipt must be signed, informing the cause of the termination and the nature of each amount paid to the employee, specifying its value.
21. What protection do employees have against dismissal? Are there any specific categories of protected employees?
Protection against dismissal
Employees can be dismissed without cause at any time, subject to notice periods and severance pay. The employer is not required to formally justify the dismissal, except in the case of termination with cause.
Brazilian legislation and some collective agreements provide that in certain circumstances, employees cannot be dismissed without cause within a defined period of time. For example:
Pregnant employees have job stability from confirmation of pregnancy up to five months after the delivery.
Employees who suffered a work-related accident or illness and were kept away from work for more than 15 days, receiving social security benefit, have job stability for one year from their recovery.
Union leaders have job stability for up to one year after they are no longer officers in the particular union.
Employees elected as members of the In-House Accident Prevention Commission have job stability for one year after they are no longer officers in the Commission.
Up to seven employees can elect to form an Employee Representation Committee, in companies with more than 200 employees.
Resolution of disputes between an employee and employer
22. Is there a governmental or independent organisation to which employees can refer complaints in the event that there is a dispute between the employee and the employer?
Employees can file individual lawsuits before the Labour Court, to claim rights they see fit. Individual labour claims can relate to, for example:
Overtime and other payments.
Health hazards exposure additional payment.
Compensation for property or moral damages.
Indemnity for occupational diseases.
For employees with higher salaries (that is, higher than twice the amount of the maximum social security benefit), Law 13467/2017 permits the use of arbitration as an alternative solution.
Employees can also report complaints or possible irregularities to the Public Ministry of Labour, the Labour Inspection Secretary and even the trade union.
Reports can be made in person, by phone or on the websites as follows:
These organizations will always try to find a mutually acceptable solution to a labour conflict, rather than imposing a solution on the parties.
23. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?
Definition of redundancy/layoff
There is no legal distinction between dismissal, redundancy and collective dismissals.
The procedural requirements for redundancy dismissals are the same as those applied for termination without just cause. There is no requirement for a trade union's prior authorisation or for the execution of a collective convention or agreement.
Redundancy/lay off pay
In general, in the case of collective redundancy, dismissals are treated as terminations without cause.
Employee representation and consultation
24. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? What does consultation require? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?
Employees are not entitled to management representation.
Employees are not entitled to be consulted about their employer's decisions. However, under Law 13467/17, it is possible to create an Employee Representation Commission within a company, which has the following purpose:
Represent the employees before the management of the company.
Improve the relationship between the company and its employees based on the principles of good faith and mutual respect.
To promote dialogue and understanding in the workplace to prevent conflicts.
Seek solutions to the conflicts arising from the employment relationship, in a fast and efficient way, aiming at the effective application of legal and contractual rules.
Ensure fair and impartial treatment of employees, preventing any form of discrimination based on sex, age, religion, political opinion or trade union activity.
Relay specific claims of the employees to the employer.
Monitor compliance with labour and social security laws, as well as the collective bargaining conventions and collective bargaining agreements.
Employee consultation or consent is not required for the completion of major transactions (such as acquisitions, mergers or joint ventures).
25. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?
Consequences of a business transfer
26. Is there any statutory protection of employees on a business transfer?
Automatic transfer of employees
Employees are protected on a transfer of an establishment. "Establishment" includes intangible elements, such as market share, goodwill and workforce. The law considers employment agreements to be personal agreements concerning the employee only. This means that the employer may change during the course of the employment relationship without interfering with the agreement's effectiveness in relation to the employee. Therefore, if a company acquires another company's establishment or corporate control of a company, the acquiring company becomes responsible for complying with the labour obligations of the previous employer.
A company's new owner/controller may also become responsible in situations in which the workforce is not maintained by the company's new owners/controllers (for example, if a company acquires another company's establishment or corporate control of a company).
A business transfer does not usually trigger employment termination. Theoretically, it is not necessary to dismiss and re-hire the employees, since continuing the business activity justifies an automatic transfer of employees without terminating the prior employment status.
Protection against dismissal
There is no protection against dismissal on a business transfer.
Harmonisation of employment terms
Changes of employment conditions are contingent on the employees' consent. Further, regardless of whether the employee has authorised them, changes that are disadvantageous to employee are deemed void for all purposes.
Employer and parent company liability
27. Are there any circumstances in which:
An employer can be liable for the acts of its employees?
A parent company can be liable for the acts of a subsidiary company's employees?
The employer is liable for the acts of its employees, which are committed while carrying out the employer's tasks (Civil Code).
Parent company liability
The parent company of a business group can be held responsible for acts of employees of its subsidiaries (Article 932, Civil Code and Article 2, § 2, Consolidation of Labour Laws (CLT)).
28. What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?
Employee rights on insolvency
On an employer's insolvency, credits arising from the employment relationship have priority in the liquidation of the employer's assets. In some cases, other companies from the same economic group or the company's owners/shareholders can assume the labour debts.
State guarantee fund
There is no state fund which guarantees repayment of employment debts.
Health and safety obligations
29. What are an employer's obligations regarding the health and safety of its employees?
Employers are responsible for the health and safety of their employees and must take measures to prevent diseases arising out of work conditions or job-related accidents. These measures include:
Advising the employees about the risk of injury and safety methods.
The main rules concerning health and safety obligations are issued by the Secretary of Labour and can vary depending on the type of activity performed by the company, its size, and so on. The main rules are established under regulatory acts of the Secretary of Labour for specific situations, industries and/or worker categories.
Taxation of employment income
30. What is the basis of taxation of employment income for:
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Foreigner nationals are liable for personal income tax (IRPF) if they are permanently resident in Brazil, in which case they will be considered a fiscal resident. Foreign nationals residing temporarily in Brazil will only be considered by the tax authorities as subject to taxation if they have completed 184 days of work in Brazil (whether they are consecutive or not) with an employment bond or in the "Mais Médicos Program", based on the provisions of Article 2(I)(III)(b) of Normative Instruction RFB No. 208/2002 combined with No. 1383/2013. The rate is variable, from 7.5 to 27.5%, based on the IRPF table for 2020.
Nationals working abroad
A Brazilian who leaves the country, definitively or temporarily (that is, for more than 12 months), must report to the Federal Revenue, forwarding the Communication of Definitive Exit of the Country and the Declaration of Final Exit. It is only with the presentation of these documents that the income tax declaration in Brazil will be released to a taxpayer residing in another country, otherwise, the individual may be subject to double taxation (that is, he or she will be taxed in two jurisdictions on the same source of income).
If the Declaration of Final Exit is delivered late, a fine of 1% of the tax owed during the period of delay may also be imposed in addition to the tax due.
If the national is absent from Brazil for a period of less than 12 months, the Federal Revenue will consider him or her to be a resident in Brazil. Therefore, IRPF returns must be made normally, in addition to the returns in respect of income tax rules relating to the country in which he or she resides.
31. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?
Rate of taxation on employment income
For 2021, employees must pay income tax on their salaries at the following monthly rates:
7.5% minus BRL142.80 on earnings from BRL1,903.99 to BRL2,826.65.
15% minus BRL354.80 on earnings from BRL2,826.66 to BRL3,751.05.
22.5% minus BRL936.13 on earnings from BRL3,751.06 to BRL4,664.68.
27.5% minus BRL869.36 on earnings above BRL4,664.68.
Social security contributions
For 2021, employees must pay contributions to social security at the following monthly rates:
7,5% on earnings up to BRL1,100.00.
9% on earnings from BRL 1,100.01 to BRL 2,203.48.
12% on earnings from BRL 2,203.49 to BRL 3,305.22.
14% on earnings from BRL 3,305.23 to BRL 6,433.57.
The employer withholds these contributions at source. There is a cap of BRL 6,433.57 (reviewed on a yearly basis).
The employer must also pay contributions to the National Social Security on its entire payroll at rates that vary from 26.8% up to 28.8% depending on the company's core business.
32. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded, whether generally or in particular sectors?
Rewarding employees through the payment of bonuses is very common in all sectors. Employers can grant any sort of bonus, contractual or discretionary, as long as they provide equal opportunities to employees at the same level.
Bonuses, which are agreed between employer and employee, or paid on a regular basis in consideration for services rendered, are considered as part of the employees' remuneration for the purposes of calculating labour rights, income tax, National Social Security contributions and Brazilian Government Severance Indemnity Fund Law (FGTS) contributions.
Bonus issues are within the scope of the parties' will, but once a bonus is stipulated or paid regularly, it could be considered part of the employment contract and its conditions should not be altered to the detriment of the employee, unless the contract already establishes the possibility to make periodic alterations to its conditions.
To ensure that the bonus received by the employee is not considered part of their remuneration, for labour and social security purposes, the following parameters must be met:
The premium payment must be made at the employer's discretion.
The premium payment cannot be paid on a regular basis.
The premium payment must be linked to the employee's performance being "above the usual expected" in the exercise of their activities.
Intellectual property (IP)
33. If employees create IP rights in the course of their employment, who owns the rights?
If the invention arises under an employment contract executed in Brazil, as a result of creative activities that the employee was hired to perform, the employer exclusively owns the rights over it.
If the invention arises from the employee's personal efforts, while using premises or equipment supplied by the employer, both employer and employee own the invention equally, unless the employment contract provides otherwise. If the employer economically exploits the invention, the employee is entitled to fair compensation (there is no clear rule about how to calculate this compensation).
If the invention has no relation with the employment contract and was created without using the employer's premises or equipment, the employee exclusively owns the rights over it. The employer has no right to exploit the invention, unless the employee has previously authorised it.
It is strongly recommended that IP is protected in the employment contract.
Restraint of trade
34. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?
Restriction of activities
The duties of confidentiality and non-disclosure of information are inherent to the employment relationship, not only during the contract but also after its term.
Employees can also be subject to non-compete obligations during the employment contract, simply as a result of receiving salary from the employer.
Breach of these duties authorises the employer to terminate the employment contract with cause. The employee can also be liable for damages caused to the employer.
Legislation does not provide expressly for these obligations or consequences, so it is advisable to put them in writing.
Post-employment restrictive covenants
The law does not prevent an employee from working for a competitor after the termination of their employment contract. In addition, the right to work freely is a fundamental right under Brazilian law (Articles 1º, III and IV, and 5º, XIII, Constitution/88).
However, the labour courts allow post-employment restrictive covenants that meet certain requirements, such as the:
Payment of a fair indemnification in consideration for the non-compete obligation.
Specification of the scope of restrictions on competition (for example, a reasonable duration (no longer than two years) and clear territory limits).
Relocation of employees
35. Can employers include mobility clauses in employment contracts, or take any other measures, to ensure that employees are obliged to relocate?
Mobility clauses must be expressly provided for in the employment contract. Therefore, it is advisable to draft the clauses to be as specific as possible, to ensure that both parties mutually agree with the relocation obligations.
However, there are cases in which an employee's transfer can occur unilaterally, without the need for prior agreement or authorisation (for example, if the subsidiary in which the employee works closes, and in cases where employees hold an office of trust).
In the case of a provisional transfer requiring the employee's change of domicile, Brazilian law provides for the payment of an additional 25% for the duration of this situation. In the case of a definitive transfer, the current legislation does not provide for any additional payment.
In addition, all expenses resulting from the transfer must be borne by the employer.
Proposals for reform
36. Are there any major proposals to reform employment law in your jurisdiction?
Brazilian labour legislation was reformulated under Law 13.467/2017, which came into force on 11 November 2017.
Also, see Time periods, for an explanation of Federal Government Provisional Measure 905/2019, that creates a new kind of limited period contract.
Areas of practice. Labour and social security law; corporate social security and payroll charges.
Non-professional qualifications. Law, Universidade de São Paulo, 1998; specialised in Social Security Law at the Social Security Attorneys' National Association (ANPREV), 1998; specialised in Stock Market Law, Law School of Universidade de São Paulo (USP), 2002; Doctorate in Economic and Financial Law, Universidade de São Paulo, 2004
Languages. Portuguese, English, French
Professional associations/memberships. Member of the Brazilian Bar Association since 1999; Member of the Attorney's Association of São Paulo; Member of the Labour Attorney's Association of São Paulo; ranked in Chambers Latin America – Labour – 2013; Awarded the LTr Award (1996) for best academic performance in Labour Law.
Areas of practice. Labour and social security law; corporate social security and payroll charges.
Non-professional qualifications. Law, Universidade Presbiteriana Mackenzie, 1997; Master's Degree in Comparative Civil Law, Pontifícia Universidade Católica de São Paulo, 2006; Doctorate in Labor Law, Pontifícia Universidade Católica de São Paulo, 2012; Professor and Lecturer for graduate and specialisation courses at Pontifícia Universidade Católica de São Paulo, Universidade Nove de Julho, Universidade de Mogi das Cruzes and Fundação Instituto de Administração
Languages. Portuguese, English
Professional associations/memberships. Award for teacher merit, received from the Brazilian Bar Association, São Paulo, 2013; Member of the Brazilian Bar Association since 1998; Member of the Labour Attorney's Association of São Paulo; Member of the Iberoamericana Association of Labour Law and Social Security.