Brazil 12 min

How to use an Employer of Record in Brazil

Written by Paula Dieli
Paula Dieli

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Brazil has captured a place in popular culture with its world-famous images of Christ the Redeemer in Rio, a raging football subculture, and the fight to preserve the Amazon rainforest. But the country is also home to a growing population of knowledge workers and a burgeoning tech ecosystem. As a result, many companies are looking to tap into the Latin American economy, build local operations, and hire talent in Brazil

To legally hire employees in Brazil, though, you’ll need to set up a local entity, ensure compliance with Brazilian employment regulations, and manage and pay your employees in the country. This is a labor-intensive and expensive process that could take months.

But hiring abroad doesn’t have to be a hassle. If you’re looking to scale globally, you can partner with an employer of record (EOR) service to do all the heavy lifting for you. An EOR has its own entity in Brazil, and does all the legal legwork required to hire employees in the country quickly and safely.

In this article, we’ll explain how to use an employer of record in Brazil, the benefits of using an EOR, and how to account for Brazilian employment laws as you add talent in Brazil to your team.

Six steps to hiring employees in Brazil using an employer of record

An employer of record simplifies hiring for businesses looking to build an international team  — that's if you choose an EOR that’s well-positioned to maintain a local entity and manage administrative duties like payroll and benefits on your behalf. The following steps can help you find a suitable employer of record to hire employees in Brazil.

Step 1: Weigh up the pros and cons of each potential partner

Think about the kind of services you need to hire internationally and make a list of EORs that suit your needs. For example, check if the EOR:

  • Has a local entity qualified to hire in Brazil

  • Offers global payroll to pay your employees in their local currency

  • Drafts employment contracts and manages employee terminations

  • Offers competitive benefits and compensation packages

  • Stays compliant with changes to Brazil’s labor laws, etc.

  • Secures your intellectual property and invention rights

Making a shortlist of the features you require will help you vet your options. Analyze the pros and cons of each EOR and shortlist some EORs that are well-equipped to support your international hiring needs.

Step 2: Select the most appropriate EOR service provider 

It’s essential to check whether the EOR owns its own entity in Brazil. Some EORs render their services through a network of local entities owned by their partner agencies. These agencies can jack up prices at will, default on local compliance, or expose your organization’s sensitive information.

It’s best to stick with an employer of record that owns their own local entities since they’re in a better position to guarantee reasonable prices and offer liability protection and data security.

Step 3: Check the reviews, testimonials, and coverage of your shortlisted providers

Third-party review sites like Trustpilot, G2, Capterra, and Saasworthy can help you gauge the customer sentiment around an EOR provider and how their customers’ experiences measure up with their marketing claims. You can also review the company website, and online press coverage, and read client testimonials to get additional information about how the company operates.

Step 4: Ensure that the EOR will provide a best-in-class employee experience

Since the EOR hires employees on your behalf, check if offer your employees a positive and engaging experience. An employer of record should demonstrate that they can disburse salaries and resolve your employees’ queries quickly, as well as provide explanations for any payroll deductions.

Step 5: Work with your partner to provide a fair and equitable compensation package 

Salaries for remote roles can vary wildly depending on skill level, local cost of living, and general market rates for a position. To attract the best candidates, work with your EOR partner to figure out a fair rate for the role you’re hiring for, factoring in market rates, local cost of living, and other variables. You’ll also have to ensure that the benefits package is in compliance with specific labor laws in Brazil. 

Step 6: Make sure your EOR offers strong security measures

Ensure you stick with EORs that are committed to protecting your intellectual property and your sensitive data, armed with the right certifications to prove it. It’s vital that your EOR has measures in place to safeguard your data and offers the highest level of security and compliance standards.

Hire and pay your global team with speed and security

Start using Remote’s employer of record services and local entities to avoid the time, cost, and risk of building your own.

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What are the benefits of using an employer of record in Brazil?

The key benefit of using an employer of record is that it saves you the time, hassle, and expenses involved in hiring, onboarding, and paying employees in Brazil.

An employer of record does the administrative heavy lifting and reduces your workload when it comes to HR functions related to employee management. An EOR makes international hiring easier for you by: 

  • Issuing contracts to new hires and terminating employees compliantly

  • Rolling out a benefits and compensation package which are compliant with local labor requirements

  • Staying compliant with evolving labor regulations

  • Securing rights to your intellectual property

  • Handling taxes, payroll deductions, and global payroll

In other words, you can try hiring international employees on your own, but be prepared to spend a lot of time and money setting up local subsidiaries, filing the required paperwork, and providing a competitive employment experience to your hires.

Remote can ease the burden of international hiring and help you scale quickly, securely, and compliantly. Read our helpful article on when to use an EOR to decide whether an EOR is right for your business.

How much does it cost to use an EOR in Brazil?

EOR costs can vary depending on the kind of services provided by the company, the location of the workers, and where in the world they are based. Generally, prices range from as low as $599 to upwards of $2,000 per employee per month.

The older, traditional EORs tend to charge enterprise fees (and are typically aimed at large corporations). You might find that these companies don’t include the full range of services in the cost, and often add on hidden costs that may come as a surprise to you at a later point. When you consider EOR costs, make sure you clarify the services that are included in the price, and what’s not.

Smaller startups charge lower fees, but note that these EORs may have limited resources or infrastructure. You might find yourself turning to different companies to manage payroll, benefits, and compliance, — which can turn out to be costly in the long run. Always check to make sure companies that offer their services for less are not comprising compliance or security.

Remote offers the best of both worlds: we’re a modern employment infrastructure company designed to help businesses hire anyone anywhere in the world for the best price possible. Our employer of record service is available at an affordable, flat-rate and includes:

  • Fully-owned entities for hiring employees in Brazil

  • A wide range of customizable benefits and perks to suit your global team

  • Fast, secure, and reliable global payroll

  • Integrations with the HR tools you already use

  • GDPR and SOC 2 compliance which keeps your sensitive data secure, and

  • Simple employment contracts

Compare Remote to other EOR providers to help you make the best choice for your growing business. 

Hiring in Brazil

Brazil’s Labor Code (Consolidação das Leis do Trabalho) spells out standards that are designed to regulate employment relationships. Understanding how Brazilian labor laws work will help you choose an employer of record that has systems in place to help you stay compliant with these regulations.

Employment contracts and agreements in Brazil

Verbal and written contracts are equally valid under Brazilian law and must be translated into Portuguese if written in any other language.

Labor compliance in Brazil

Brazil has strong labor protections in place and employers are required by law to provide a healthy, non-discriminatory working environment where workers can carry out their duties without undue physical, mental, or financial hardship.

Employers should be able to demonstrate their commitment to:

  • Protecting employees from any form of discrimination or harassment due to race, religion, nationality, ideology, political affiliation, sex, financial, social, or physical condition

  • Limiting working hours to eight hours daily and 44 hours per week with a one-hour lunch break every day

  • Providing safe and dignified working conditions

  • Paying employees a premium (50% extra) for any overtime work

  • Paying a 13th-month salary — employees are eligible to receive a 13th-month salary annually and upon termination.

Payroll and payroll taxes in Brazil

Personal income and payroll taxes are capped at 27.5% and 11% respectively, both of which are to be withheld by the employer.

Employer payroll taxes are capped at 36.8%, covering:

  • Public Pension Fund (20%)

  • Severance Fund (8%)

  • Additional contributions (5.8%)

  • Accident Insurance (1% – 3%)

Our guide to hiring in Brazil explains Brazil’s tax regimes for employers and employees in detail.

Employment benefits and compensation in Brazil

Brazilian law mandates several employee benefits. Beyond that, a combination of the right perks will help you attract and retain top talent without breaking the bank.

Maternity and paternity leave

Expectant mothers (both natural and adoptive) are entitled to 120 days of maternity leave with full wages paid by the employer. Employers can file for reimbursement from the Brazilian government. Fathers are entitled to five days’ paternity leave with full wages.

Vacation and holidays

Professional employees are entitled to 30 calendar days of paid annual leave with a third of their monthly salary as a vacation allowance.

Other benefits and perks Remote can help you offer your Brazilian employees

Remote can help you roll out a wide range of global benefits and perks for your international employees, such as:

  • Private health insurance

  • Coworking allowances

  • Mental health support

  • Home office and personal development benefits, and

  • Paid time off

Brazilian severance pay and employee terminations

Brazil practices at-will employment and severance benefits are typically equal to a month’s pay for every year an employee has spent with a company.

Employers in Brazil must contribute 8% of each employee’s salary to a government-run severance fund. When an employer terminates an employee, the employer must pay 40% of the balance in the fund as a termination fine. If the employee and employer mutually agree to part ways, the employer must pay 20%.

Employers are required to give 30 days’ notice to employees who’ve been employed for at least a year, plus three days for each extra year, up to a maximum of 90 days.

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What are the risks of employee misclassification in Brazil?

Brazil enforces strict penalties for misclassifying employees, and employers can face sanctions such as:

  • A BRL 400,000 ($79,343) fine, if the Ministry of Labor rules an employee has been misclassified, with fines doubled for repeat offenses.

  • Paying back pay for any benefits an employee has been denied, with interest penalties ranging from 22% to 75%.

  • Unlimited moral and material damage as a labor court deems fit.

  • A BRL 420 ($83) per employee fine for defaulting on FGTS contributions, etc.

  • Up to BRL 3,500 ($694) for not registering employees.

Since there are serious consequences associated with worker misclassification, you have to make sure you classify workers correctly. Remote has a team of experts who have in-depth knowledge of Brazilian employment law. Use Remote to correctly classify your workers, maintain compliance, and avoid misclassification risks.

link to When should you convert a contractor to an employee?

When should you convert a contractor to an employee?

While contractor designations may be appropriate for some business relationships, companies cannot simply pay people as contractors because it’s easier. Contractors and employees fulfill different roles and have distinct legal definitions. Converting a contractor to an employee can protect the employer from penalties, provide a better experience for the employee, and make it simpler for both parties to collaborate.

Get started with an employer of record in Brazil

If you’re ready to tap into Latin America’s evolving tech market and expand your team in Brazil, then an employer of record can kick-start your journey. The best part? You won’t have to spend a significant amount of time and resources setting up a subsidiary, filing paperwork, and flying back and forth for months. An EOR makes it easy to start hiring your global dream team in minutes. Remote’s global HR platform simplifies hiring in Brazil, leaving you to focus on business growth. Partner with Remote to:

  • Pay workers on time, every time, via our global payroll

  • Roll out a wide range of benefits like healthcare and insurance in a few clicks

  • Cover a range of HR functions from employment contracts to employee terminations

  • Make sure your employees are correctly classified to avoid crippling fines and penalties

  • Secure your intellectual property and sensitive data

  • Stay compliant with local employment laws

Learn how Remote compares with other global HR and payroll solutions. If you’re ready to start onboarding employees in Brazil, sign up and get started with Remote today!

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