Payroll and Benefits Guide Brazil

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee

Employee Income Tax

General

The national minimum wage is 1,320 Brazilian reals

Payroll Cycle

The payroll cycle in Brazil is generally either bi-weekly or monthly, the monthly cycle is more common.

13th Salary

In Brazil, a mandatory 13th-month salary payment is paid to the employees at the end of the year.

Employees who have worked for 12 months are entitled to receive the full payment, while those who have worked for part of the year will receive a payment proportional to the period worked.

The 13-month payment is made in two installments; one in November, which corresponds to the six months worked up to that date (with no INSS deduction from or withholding taxation due), and one in December (INSS contribution and withholding tax are applied to this second installment.)

General

Standard working hours within Brazil are 44 hours per week, 8 hours per day.
The maximum weekly and daily working hours can differ as stipulated in employment contract/collective bargaining agreements.

Overtime

All work that exceeds the standard 44 hours a week is to be paid as overtime and is regulated by the employment contract/collective agreements, etc. In general, overtime maximum limits are set at 2 hours per day and paid at 150.00% of the standard salary rate.

Work on a holiday is paid at the rate of up to 200.00% of the regular pay.

Working Week

Monday-Friday

Paid Time Off

Paid leave in Brazil is set in the employment contract as a minimum of 30 days paid holiday per year (following completion of  one year of service) in addition to public holidays.

The leave is calculated as a monthly salary plus an additional bonus of one-third of the monthly salary and must be paid two business days before the start date of the leave.

The Labor Reform allows the split of the paid leave period, where the employee can take the leave in up to three periods, one of which cannot be less than 14 days and the others cannot be less than five days each.

Public Holidays

There are 13 national holidays.  Other additional holidays may apply depending on the region.

Sick Days

Termination Process

The termination process is standard in Brazil, with notice periods required unless an employer can provide sufficient cause for dismissal without notice (due to misconduct, disobedience, etc.). Lack of notice of termination must be in writing and sent to the relevant governmental authorities.

Notice Period

In general, notice periods in Brazil are stipulated within the employment contract/collective agreement and are linked to the reason for termination and the employee’s length of service. For employees with one year of service, the employer must provide 30 days’ notice. For employees with over one year of service, the employer must provide 30 days’ notice plus three additional days for each year of service (maximum of 60 additional days).

Employee termination must require the employee to give 30 days’ notice.
Should the termination be with mutual consent, the required notice period may be halved.

Severance Pay

In case of termination without cause, the employee is entitled to severance, amounting to the equivalent of 40 percent of the balance in the employee’s Unemployment Guarantee Fund (Fundo de Garantia por Tempo de Serviço or FGTS), accrued during the employment relationship.

Additional payments will be due, such as one month’s salary if the termination takes place in the 30 days before the expected date of the collective bargaining agreement for the following period; payout of accrued vacation plus 1/3 vacation bonus; pro-rated 13 months’ pay; and other payments required by the applicable collective bargaining agreement or contract.

In case of termination with cause, accrued unused vacation plus vacation bonus and other payments required by the applicable collective bargaining agreement or contract are still required, but there will be no FGTS payout or an additional one month’s salary. In case of termination by mutual agreement, the company must pay half of the notice and 20 percent of the FGTS balance, as opposed to 40 percent when the termination is on the company’s initiative.

The employee will be allowed to withdraw 80 percent of the balance of the FGTS fund, as opposed to 100 percent when the termination is on the company’s initiative, but they are not entitled to unemployment benefits in this type of termination.

Probation Period

The probation period in Brazil for indefinite employees is set to 45 days with the ability to extend to 90 days.

General

• Phone allowance – 50 to 100 USD per month
• Home office allowance – 70 to 120 USD per month
• Gas/auto allowance – typically 7% of the monthly salary depending on Collective Agreement terms.
• Gym & Wellness allowance – 100-200 USD per month

VISA

General

The Brazilian Government passed the working hours legislation applicable to remote workers including those remote workers on a hybrid set up, regular, permanent, or casual basis. This requires employers to implement an electronic timekeeping system (after approval by their relevant union) for employees working remotely.

Legislation and Collective Bargaining Agreements must also apply be applied to remote employees working outside of their employer’s jurisdiction (except if otherwise agreed by the parties).

The working hours legislation includes the following provisions

•  Employers are not responsible for reimbursing expenses that a remote employee may incur to return to in-person work, when such teleworker chose to work in a location other than the one provided in their written teleworking agreement.
• Employers are required to give priority to employees with disabilities and those with small children when allocating positions that can be performed remotely.
• The teleworking regime should be expressly stipulated in the individual employment contracts. The teleworking regime applies to interns and apprentices on the same basis as regular employees, when expressly stipulated in their internship contract, and expressly agreed upon by the intern and the grantor and the educational institution.
• Food allowances and vouchers paid by the employer to the remote employees must be only used for food purchases in restaurants or other commercial establishments.

General

The commonly used standard rate of VAT Imposto Sobre Circulação de Mercadorias e Serviços (ICMS) in Brazil is 17.00%; however, these differ slightly regionally.

• The ICMS rate of 17.00% applies to the following states: Acre, Alagoas, Ceará, Espírito Santo, Goiás, Mato Grosso, Mato Grosso do Sul, Pará, Piauí, Rondônia, Roraima and Santa Catarina.
• The ICMS rate of 18.00% applies to the following states: Amazonas, Amapá, Bahia, Distrito Federal, Maranhão, Minas Gerais, Paraíba, Paraná, Pernambuco, Rio Grande do Norte, Rio Grande do Sul, São Paulo, Sergipe and Tocantins.
• The ICMS rate of 19.00% applies in Rio de Janeiro.

Companies looking to hire in Brazil without a foreign subsidiary can check out our full PEO service in Brazil.