PEO Brazil

World Bank Ease of Doing Business Ranking

• DB Rank – 124
• DB Score – 59.1

Rankings on Doing Business topics – Brazil

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Global PEO in Brazil

Brazil is an enticing choice as a PEO (Professional Employer Organization) country due to its vibrant and diverse economy, rich cultural heritage, and vast talent pool. As one of the largest economies in Latin America, Brazil offers numerous business opportunities across various industries, making it an attractive destination for international expansion. The country’s favorable regulatory environment and improving infrastructure create a conducive environment for businesses looking to set up operations. Additionally, Brazil’s multilingual workforce, skilled in a wide range of sectors, provides a competitive edge for companies seeking to tap into a dynamic and adaptable labor market. Despite its challenges, Brazil’s strategic location, favorable time zone, and increasing connectivity make it an excellent choice for businesses seeking to extend their global footprint and access the vast consumer market in South America.

What Is a PEO?

A PEO, or Professional Employer Organization, is a company that provides a range of HR and payroll services to small and medium-sized businesses. These services can include employee benefits, payroll, compliance with labor laws, and recruiting and training.

PEOs work by entering into a co-employment agreement with the businesses they serve. In this arrangement, the PEO becomes the employer of record for the business’s employees, taking on responsibilities such as payroll, tax withholding, and employee benefits. The business, however, retains control over its day-to-day operations and the supervision of its employees.

PEOs can help businesses streamline their HR and payroll processes, reduce costs, and free up time and resources to focus on their core business activities. They can also provide access to a range of benefits and resources that small businesses may not be able to afford or manage on their own.

PEOs are also understood as employer of record / EOR at times.

Brazil – Country Overview

Brazil is the fifth-largest country in the world and gets its name from the Brazilwood tree. The country is known for its passion for soccer, and every city in Brazil has a stadium. Brazil is the largest economy in Latin America and the second largest in the Americas, after the United States. Brazil has a vast quantity of natural resources, including gold, uranium, and iron. The fertile and enormous landmass makes the production of different agricultural products easy, thus making agriculture the main contributor to its economy.

Capital City

Brasília

Currency

Brazilian Real (R$)

Principal Language

Portuguese

Government

Federal Presidential Republic

Other Major Cities

São Paulo, Rio de Janeiro

Employment Contracts in Brazil

An employment contract might be verbal or written, according to the Brazilian Consolidation of Labor Laws. It could be in place indefinitely, for a set amount of time, or for sporadic employment.

Some of the details typically mentioned in the written employment contract in Brazil include:

• Procedure to offset extra working hours
• Employee responsibilities (that is, confidentiality, non-disclosure and non-competition obligations, compensation duties for damages caused to the employer)
• Company policies and procedures, such as IT-related processes and expense compensation
• The possibility and terms of travel and transfers
• and more

The different types of employment relationships are:

• Permanent Employment – Employment contracts are typically concluded for an indefinite term and at will, which means that either party may terminate without cause, with mandatory prior notice and severance pay.
• Fixed-Term Contracts – Per the labor law of Brazil, a fixed-term employment agreement may be implemented for a term of two years and during an initial 90-day probation period before becoming indefinite.
• Temporary Employment – A temporary employment agreement can be used to meet the temporary replacement of staff or a complementary demand for services under the Outsourcing Law (Lei da Terceirizaço). The temporary contract has a 180-day initial term that can be extended by 90 days (whether consecutive or not).

Probationary Period

In Brazil, a probationary period typically lasts up to 90 days and is extendable by not more than 90 days.

Working Hours in Brazil

Employees are required to work 8 hours per day or 44 hours per week, with exceptions for hazardous jobs. The daily working hours can be increased to 12 hours per day, but there is still a weekly limit of 44 hours

Holidays in Brazil

Employees in Brazil are entitled to the following leaves:

• Annual leave in Brazil – Per the Brazilian Labor Law, employees are entitled to annual leave after 12 months of service as follows:
  • 30 days – if the employee has been absent for 5 days
  • 24 days – if the employee has been absent for 6 to 14 days
  • 18 days – if the employee has been absent for 15 to 23 days
  • 12 days – if the employee has been absent for 24 to 32 days
• Maternity leave in Brazil – Female employees are entitled to 120 days (approximately 17 weeks) of paid maternity leave, with a maximum 4-week extension on medical grounds (2 weeks prior and 2 weeks after birth). Per the Corporate Citizenship Program (Programa Empresa Cidad) implemented under Law 11.770 of 2008 organizations may extend maternity leave for their employees by an additional 60 days.
• Sick leave in Brazil – In the event of illness, employees are entitled to paid sick leave. The employer pays the full salary for the first 15 days of the leave, and from the 16th day on, Social Security pays the sickness benefit.
• Parental leave in Brazil – If a mother adopts a child, she is entitled to 120 calendar days of fully paid maternity leave, regardless of the child’s age. In Brazil, there is no statutory right to additional parental leave.

The following are the statutory national holidays in Brazil:

• January 1 – New Year’s Day
• February 15 – Carnival Monday
• February 16 – Carnival Tuesday
• February 17 – Carnival end 
• April 2 – Good Friday
• April 21 – Tiradentes Day
• May 1 – Labor Day / May Day
• June 3 – Corpus Christi
• September 7 – Independence Day
• October 12 – Our Lady of Aparecida / Children’s Day
• October 28 – Public Service Holiday
• November 2 – All Souls’ Day
• November 15 – Republic Proclamation Day
• December 24 – Christmas Eve 
• December 25 – Christmas Day
• December 31 – New Year’s Eve 

Taxation

Employer contributions: 

• 0% – Social Security (INSS)
• 8% – FGTS
• 5.8% – third party companies
• 45.59% – payroll taxes

Employee social security contributions: 

• 7.5%: 0 – 1,100 BRL
• 9%: 1,100.01 – 2,203.48 BRL
• 12%: 2,203.49 – 3,305.22 BRL
• 14%: 3,305.23 – 6,433.57 BRL

Brazil income tax rate for employees: 

• 0.00%: 0 – 1,903.98 BRL
• 7.50%: 1,903.98- 2,826.65 BRL
• 15.00%: 2,826.65 – 3,751.05 BRL
• 22.50%: 3,751.06 – 4,664.68 BRL
• 27.50%: 4,664.68 BRL and above

Employee Termination in Brazil

In Brazil, employment is considered to be usually at will.

Each party who wishes to terminate an indefinite employment contract without cause must give the other party notice or pay instead of a notice period in Brazil. This is as follows:

• 8 days in advance if salaries are paid weekly or at shorter intervals.
• 30 days in advance if salaries are paid on a twice a month or monthly basis or if the employee’s service in the organization exceeds 12 months.

Global Mobility in Brazil

There are typically the following categories of visas in Brazil:

• Temporary visas – Temporary visas, furthermore, include:
  • VITUR – Tourist visa
  • VITEM 1 – Cooperation visa
  • VITEM 2 – Business visa
• Temporary residence visas – Temporary resident permits allow for a lengthier stay and allow the tourist to bring in personal belongings. The length of these visas is determined by the activity for which they are issued such as:
  • VITEM 3 – Performer’s visa
  • VITEM 4 – Student visa
  • VITEM 5 – Work visa
  • VITEM 6 – Journalism visa
  • VITEM 7 – Religious visa
• In addition, the following types of visas are available:
  • VIPER – Permanent visa
  • VIDIP/VISOF – Diplomatic visa

The Ministry of Labor and Employment grants temporary visas/VITEM-V to employees with work permits in Brazil. Working for a legally established Brazilian entity is one of the eligibility conditions.

Employee Benefits in Brazil

Insured employees are covered for retirement, public healthcare, accident aid, family allowance, maternity leave, and death under the Brazilian contribution-based social security system (INSS) (family monthly pension). The social security system is funded by both employers and employees.

Some examples of social insurance programs in Brazil are:

• Dependents’/Survivors Benefit – The National Institute of Social Security in Brazil provides for the dependents and survivors of an insured worker in the event of the worker’s death. The death pension, which must be equal to the retirement benefit owed to the insured, is paid out to them monthly.
• Life and Disability Insurance/Benefit – Employees who retire due to disability in Brazil get a monthly pension after a medical evaluation by a recognized practitioner confirms their entire inability to work. An employee must have made at least 12 months of contributions to be eligible for this perk.
• Unemployment Insurance – Employees in Brazil are eligible for unemployment benefits if they have worked for at least the past 6 months and have contributed to the Guarantee Fund for Severance Pay (even as an autonomous worker) for at least 15 months in the last 24 months. The Social Security System does not pay unemployment benefits.