Employee benefits in Brazil: All you need to know

We finally live in a world where borders and time zone differences don’t stand in the way of hiring top talent. In fact, even prior to the pandemic, as many as 16% of global companies were already fully remote. We can also see this trend grow in Brazil, where, as of 2020, 11% of the country’s population were working in a remote model.

If you’d like to explore the hiring potential in Brazil, there are a number of legal requirements you need to follow. One particularly important area you need to understand is employee benefits in Brazil. In this guide, we’ll explain how to prepare a fair, competitive, cost-effective and compliant benefits package for Brazilian employees or contractors. We want to make it as easy as possible for you to hire remote talent in Brazil or any other nation around the world.

Let’s begin with a simple question.

Who is entitled to benefits in Brazil?

Each individual worker who is subject to Brazilian law is entitled to a number of statutory benefits. This includes both Brazilian nationals as well as foreigners based in the country.

If a Brazilian is hired by a foreign company, their contract should abide by the legislature of the country where the services are provided. For instance, if you have a Brazilian living and working in Sweden, as a general rule, they’ll be protected by Swedish labor law. However, the Brazilian law will apply, should it be more favorable to the employee.

That being said, as this guide focuses on employees based in Brazil, the Brazilian law will be the only one you’ll need to refer to in terms of benefits.

It’s also worth knowing that you can potentially be looking at two categories of workers:

• Full-time, part-time, and temporary employees, who are subject to all statutory employee benefits in Brazil (as explained in the next section).

• Independent contractors, who are self-employed and submit invoices for their work. While, by default, they aren’t entitled to statutory benefits, they can negotiate their work conditions with their employer to include benefits (for instance, they can receive the same vacation leave conditions as full-time employees).

Statutory employee benefits in Brazil

Let’s now look at the benefits that you, as an employer, must provide to your Brazil-based staff.

Brazilian minimum wage

Brazilian labor law guarantees a minimum wage which applies to all workers. It is increasing each year. As of 2021, the monthly minimum wage in Brazil stands at BRL 1,100 and is among the lowest ones in the world.

Overtime in Brazil

The maximum number of working hours on a full-time contract is 44 hours a week (or 8 hours a day). If the employee agrees, they can have a few extra weekly hours written into their contract.

Any additional working hours (i.e., those not specified in the agreement) will be counted as overtime. For each hour, an additional remuneration of at least 50 percent (or 100 percent, for holidays and weekends) must be applied.

Brazilian social security and pensions

In Brazil, pensions are managed by the National Institute for Social Security (INSS). Contributions are collected from both employees and employers.

Employees are subject to social security tax which is proportional to their earnings (7.5, 9, 12, or 14 percent). However, social security tax is only deducted up to a predefined maximum – as of 2021, the limit was set at BRL 751.97 per month. Employees don’t pay these contributions themselves; the employer deducts it from their salary and pays it to the INSS on their behalf.

The standard contributions paid by employers are between 26.8 and 28.8% of the employee’s monthly earnings. Contributions may be higher, depending on the specific industry or unique working conditions. Some companies are subject to an additional 1-2% social security tax.

Retirement

To become eligible for retirement, men must be over 65 years old and have submitted at least 240 monthly contributions to the INSS. Respectively, women can retire at 62, after having paid at least 189 monthly contributions to the social security system.

There is a special, shorter retirement route for employees who’ve worked in hazardous conditions. In order for an employee to become eligible, the company must pay additional contributions (6, 9, or 12% of the employees’ salary). The exact contribution amount is determined individually by the INSS, depending on the severity of work conditions.

Disability Pension

Disability pension is available for employees who’ve become injured or ill while performing work. It is approved by an INSS medical specialist, who must document the illness or injury, and conduct regular medical check-ups. Once the employee is back to full health, the disability pension will no longer be paid out, and they’ll be able to return to work.

Severance fund

Brazil protects full-time employees from being laid off by collecting contributions to a severance fund, known as the Fundo de Garantia do Tempo de Serviço (FGTS).

Each individual has a dedicated FGTS account, where employers are obliged to deposit 8% of the employee’s monthly earnings. If an employer terminates a full-time contract with an indefinite term, they must pay them an equivalent of 40% of all funds on their account. If a contract is terminated by mutual consent, the employer must pay 20% of the funds’ value.

Accumulated funds may also be paid out to the employee for other purposes, such as retirement, purchase of real estate, or when the employee learns they’re suffering from cancer or HIV.

Christmas bonus

After spending 12 calendar months at a company, an employee is entitled to an extra salary amounting to their monthly remuneration. It’s usually paid in two installments between November and December.

Vacation bonus

Employees who’ve worked as full-time employees for at least a year become entitled to vacation bonus. The amount is regulated by Brazilian labor law, and translates to one-third of the employee’s monthly salary. Employers are obliged to pay out a vacation bonus at least two days ahead of the employee’s planned leave.

Throughout the year, employees can request to receive up to 33% of their bonus without going on actual leave. In such an event, the funds must be paid out at least 15 days ahead of the standard pay day.

Bear in mind that unused vacation bonuses can’t be transferred on account of the upcoming year. Instead, employers must pay out all unused vacation funds at a doubled rate before the end of the year.

Medical & dental care

The public healthcare system known as “Sistema Único de Saúde (SUS)” is universal and free for all Brazilian citizens and foreign visitors who work in Brazil. It’s funded through taxes, as well as donations from federal, state, and municipal governments. Those insured get access to primary, outpatient, mental health, hospital care, and prescription drug coverage.

Although all Brazilian citizens are entitled to free medical and dental care, as many as 25% of them also use private medical insurance as it guarantees access to better quality healthcare. While offering it is not compulsory, an increasing number of companies provide it as standard.

Lump sum death benefits

If an employee passes away, their dependents are entitled to lump sum death benefits from the country. The amount will reach up to 100% of the old age pension the employee would have received if they were retired on the day they’ve passed away.

There are a number of entitled individuals, including the deceased individual’s spouse, partner, children and unmarried siblings under the age of 21, and parents. The benefit is divided equally among all eligible individuals.

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Paid-time off and mandatory leave in Brazil

Sick leave

Another statutory employee benefit in Brazil is sick leave. Employers are obliged to pay their workers up to 15 days of sick leave per year at a full rate. However, in order to qualify, the sick employee must obtain a signed doctor’s medical certificate and show it to their employer. If the illness lasts more than 15 days, then the sick leave payments are taken over by social security, provided that the worker was sick during the unpaid leave.

Bereavement leave

In case an employee experiences death in the family, they have the right to a paid bereavement leave of two consecutive days. This applies to the death of a wife/husband, child, or direct relatives including parents and siblings. It can be extended to up to five days, but it’s down to individual agreements with the employer.

Marriage leave

Workers can request paid leave of up to three consecutive days if they’re getting married.

Holidays leave

If your employee has no more than five unexcused absences per year, then they are entitled to 30 calendar days of paid holidays annually. Holiday entitlement will depend on the number of absences. For instance, if your worker was absent between six and 14 days, then they receive 24 vacation days. This number decreases to 18 days, if they didn’t work between 15 and 23 days.

Brazilian employees are also subject to seven paid national holidays and five religious or municipal ones.

Maternity & paternity leave

All pregnant employees have the right to 120 days of paid maternity leave covered by the employer. The payment is then reimbursed by the INSS. The employer can decide to extend it by an extra 60 days, and cover the expenditure with tax benefits offered by the federal government. Fathers receive up to five days of paid parental leave, with an opportunity to extend it by an extra 15 days. Just like in the case of female employees, this payment can be later recovered from tax benefits.

Do you have over 30 females on board who have children younger than 6 months? If so, then you’re obliged to either provide them with daycare or payment in lieu. Bear in mind that in order to guarantee job stability, pregnant employees cannot be made redundant from disclaiming their status, up to five months after giving birth.

Common employee benefits in Brazil (non-obligatory)

While the above mentioned benefits are compulsory, if you’re targeting A-players, you should go way beyond them. There are a number of additional benefits that you should offer to attract employees.

Insurance

Group life insurance

While it’s not an obligatory benefit, group life insurance has become a standard, and most employees in Brazil expect to get it. The height of the insurance benefit is calculated based on the employee’s gross salary, and excludes any bonuses and commissions. Remuneration updates must be provided to the insurer on a monthly basis.

In most cases, the insurance amounts to 12, 24, or 36 times the gross salary. While the majority of plans are not contributory, employers can add it to their expenses and deduct it from tax.

Accidental death insurance

The employee’s family receives a payment of 200% of the death benefit in case of their accidental death. The coverage amount is unlimited.

Permanent & total disability insurance (due to sickness)

If the insured employee falls ill and becomes permanently and totally disabled, they are eligible for up to 100% of the insurance coverage amount.

Partial or total disability (due to an accident)

Depending on the level of disability the accident leaves the individual with, they will receive up to 100% of the entire coverage amount.

Private health & dental insurance

While private health insurance isn’t required by law, it’s among the most common, non-obligatory employee benefits in Brazil (estimates show that one in every four residents has private medical coverage). There are a number of medical insurance companies to choose from when considering a package for your Brazil-based workers. If you want to truly stand out from other employers, we recommend offering a package that features dental coverage and physiotherapy sessions. When it comes to health benefits, it’s the little things that count to premium employees.

It’s also worth knowing that insurance expenses can be used as tax deductions.

Profit-sharing

Profit-sharing, commonly known as the Profit and Results Sharing Program (PLR) is another non-obligatory benefit offered by many companies in Brazil. The benefits can be paid twice during the same calendar year. Companies can create multiple PLR programs. Also, as specified in law 10,101/2000, they can freely decide on the exact conditions, such as linking profit sharing to individual employee performance.

Flexible work schedule

As of late-2021, the state legislature does not regulate flexible work conditions in Brazil. The exact conditions, such as the workplace and working hours, can be freely negotiated between both parties. The key is to ensure that none of the conditions violate Brazilian labor rights (such as the maximum weekly working hours or health & safety of the working place).

If the employee and employer agree on full-time or partial home-based work, the contract must describe the activities that will be performed off the company premises. The employer should also make sure that the employee signs a statement, where they agree to comply with the company’s health & safety regulations. All so that they can avoid any work-related risks while working at home.

Food vouchers

Many companies offer food vouchers, which correspond to the average daily costs of meals during the work day. When hiring an employee in Brazil, it’s worth investigating the standard lunch costs in their state of residence, as these will vary depending on the region. If you’d like to go the extra mile, consider offering a premium meal package or meal subscription, with lunch delivered to the employee’s doorstep every day.

Child care assistance

Employees who are parents can either get additional paid days off to care for their children, or get on-site childcare. Alternatively, companies can provide subsidies to reduce the cost of childcare.

Extended parental leaves

As mentioned in the previous section, employees are entitled to paid maternity and paternity leave. These, however, are fairly short and extending them can be a nice employee benefit. Especially, considering the fact that this expenditure can be deducted from tax.

Gym memberships

A gym membership is one of the main benefits that top companies offer. It can either be “free” or discounted. Adding a gym membership to your benefits’ portfolio is a great way to keep your employees fit and healthy, and as a result, reduce the number of sick days they take.

Education / development stipend

These can come in the form of fully or partly covered college tuition fees, a training of choice to improve their current skills or acquire new ones, or employer-sponsored scholarships. You can also consider providing your employees with language classes either on-site or by paying for a language school. It’s a great investment that will surely pay off.

Benefits & Leave —

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How do you set up, deliver, and manage these benefits?

We know that getting your head around all these benefits might seem a bit overwhelming, however, with a solution like Remote, staying compliant won’t be a problem. Our platform makes it easy for you to attract and engage international talent. We handle all HR responsibilities and paperwork through locally-based entities.

Whether you’re looking to hire a full-time employee or a contractor, we’ll guide you through the entire process – from onboarding, through drafting contracts, all the way through to handling payments.

Easily manage your employee benefits in Brazil with Remote

With remote work now in the mainstream, hiring talent in Brazil or anywhere else in the world has become a lot easier and faster.

That being said, you still need to be aware of the legal requirements, such as the statutory benefits which must be provided by employers.

The good news is, you don’t have to worry about compliance if you use a platform like Remote – we can manage a competitive, consistent, and compliant benefits package for your Brazilian employees, and the rest of your global team.

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