Employer of Record in Brazil: how to hire compliantly without an entity.
Employ Latam is an employer of record in Brazil. We become the legal employer for your hire, so you can employ full-time staff there without setting up an entity. Locally compliant contracts, monthly payroll, statutory benefits, taxes. Below: what the law actually requires, in plain English.
- Country
- Brazil
- Local name
- Brasil
- ISO code
- BR
- Region
- South America
- Phone code
- +55
- Employ Latam coverage
- Full EOR + contractor payments
Last updated July 2026
Overview
Brazil is the largest labor market in Latin America, with over 100 million people in its workforce. It runs on the Consolidação das Leis do Trabalho (CLT), a detailed labor code that governs contracts, wages, hours, benefits, and termination. The CLT favors employees by design, so getting the employment structure right from day one matters.
Hiring here without a local entity means you need an employer of record to sign the contract, run payroll in Brazilian reais, and handle statutory contributions including INSS (social security) and FGTS (the severance guarantee fund). Miss either of those and you have an immediate compliance problem.
A few things stand out about Brazil compared to the rest of LATAM:
- FGTS: Employers deposit 8% of each employee's monthly salary into an individual fund. The employee can withdraw it on termination without cause, among other qualifying events.
- 13th-month salary: Mandatory for all CLT employees. Half is paid by 30 November, the remainder by 20 December.
- eSocial: All employment relationships must be registered through Brazil's federal eSocial platform before the employee starts work. No registration means no legal employment.
- Collective bargaining: Union agreements (acordos coletivos) can modify certain CLT terms. The applicable agreement depends on the employee's job category and location.
Country at a glance
| Currency | Brazilian real (BRL) |
| Working week | Monday to Friday |
| Standard workday | 8 hours (44 hours per week maximum) |
| Probation period | Up to 90 days (can be split: 45 + 45) |
| Notice period | Minimum 30 days; increases by 3 days per year of service, up to 90 days |
| 13th-month salary | Mandatory; paid in two installments (November and December) |
| Payroll cycle | Monthly; must be paid by the 5th business day of the following month |
The standard indefinite-term CLT contract is the right default for most hires. Fixed-term contracts are valid for up to two years but only in specific circumstances. Misclassifying a fixed-term role that is actually ongoing work creates retroactive liability.
Employ Latam issues a locally compliant CLT contract, registers the hire in eSocial, and handles payroll in BRL from the first pay cycle. Onboarding is live in 72 hours.
Employment contracts and worker types
Brazil's labor law runs through a single framework: the Consolidação das Leis do Trabalho (CLT). Every employment relationship, regardless of contract type, sits inside this framework. Getting the contract type right matters because it determines statutory rights, termination rules, and how FGTS contributions accumulate.
The main contract types
Indefinite term (Contrato por Tempo Indeterminado). This is the default. No end date, full CLT protections, and the strongest employee rights. Most full-time hires in Brazil use this structure.
Fixed term (Contrato por Tempo Determinado). Allowed only when the role is genuinely temporary: seasonal demand, a project with a defined end, or covering an absence. The two-year cap is firm. If the work continues beyond that, the contract converts to indefinite term by operation of law.
Intermittent (Contrato de Trabalho Intermitente). Introduced by the 2017 labor reform. Workers are called in as needed, paid hourly, and can work for multiple employers at the same time. Inactivity between engagements cannot exceed three months. Statutory benefits (13th salary, FGTS, vacation) still apply on a proportional basis.
Part-time. Two bands exist: up to 26 hours per week (with up to 6 overtime hours permitted) or up to 30 hours per week (no overtime). Both carry proportional 13th salary, paid vacation, and FGTS.
Contract comparison
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite term | Standard full-time hire | No limit | Yes, up to 90 days |
| Fixed term | Seasonal, project-based, temporary cover | 2 years | Yes, up to 90 days (counts toward the 2-year cap) |
| Intermittent | On-call or episodic work | No limit | No specific provision |
| Part-time | Reduced weekly hours | No limit | Yes, up to 90 days |
| Temporary (via agency) | Leave cover, peak demand | 180 days, extendable by 90 | No |
Worker classification risk
Brazil's courts look at four factors to determine whether someone is actually an employee: habitual service, economic dependence, personal subordination, and lack of control over their own schedule. A contractor who checks those boxes will likely be reclassified as a CLT employee, triggering back-payment of FGTS, 13th salary, and social security contributions. Misclassification exposure in Brazil is real and expensive.
What Employ Latam handles
When you hire through us, we issue a locally compliant employment contract in the correct CLT category, register the worker in eSocial (Brazil's mandatory employment registry), and handle statutory contributions from day one. Onboarding is live in 72 hours. Pricing starts from $349 per employee per month.
Hiring a contractor in Brazil
Many teams start with a contractor in Brazil before they hire an employee. We draft the contractor agreement, collect the contractor's local tax ID, pay them in local currency or USD, and withhold tax where Brazil requires it. You approve invoices and pay one USD invoice.
Contractor or employee
Before you start, we review the role and tell you whether it looks more like a contractor or an employee. How Brazil law draws the line is covered above.
When to convert
A contractor who works only for you, keeps set hours and uses your tools is effectively an employee under most Latin American labor law. We can move them onto an employment contract with us: same person, same pay.
Contractor payments from $29 per contractor per month.
Payroll, taxes, and the 13th-month salary
Brazil's payroll rules run through the CLT (labor code) and eSocial (the government's digital reporting system). Every ordinary employee must be registered before their start date, paid monthly by the fifth working day, and issued an itemized payslip. Employ Latam runs this process for you: locally compliant contracts, statutory contributions handled, payroll runs in local currency.
The 13th-month salary is mandatory. It accrues at one-twelfth of the employee's December remuneration for each month worked (at least 15 days counts as a full month). It's paid in two installments: an advance between February and November, and the balance by December 20. There's no separate third installment in January, and employees who request the advance in January can receive it alongside vacation pay.
Vacation pay follows a similar logic. After each 12-month accrual period, employees get 30 calendar days of leave (reduced if unjustified absences exceed five). Leave pay includes a mandatory one-third supplement on top of normal remuneration, paid at least two days before leave starts. Employees can convert one-third of their leave into cash if requested in time.
Income tax (IRRF) is progressive, not flat. The 2026 monthly table runs from 0% (up to BRL 2,428.80) through 7.5%, 15%, 22.5%, up to 27.5% on the highest band. A separate relief measure can zero out tax on monthly taxable income up to BRL 5,000, tapering out by BRL 7,350.
Employer and employee contributions
| Contribution | Employer rate | Employee rate |
|---|---|---|
| INSS (social security, general) | 20% | 7.5%–14% (progressive bands by salary) |
| INSS work accident insurance (RAT) | 1%–3% (varies by risk classification, adjusted by FAP) | Not applicable |
| FGTS (severance fund) | 8% | Not applicable |
| Income tax (IRRF) | Not applicable (withheld from employee pay) | 0%–27.5% (progressive) |
| Third-party/system charges | Varies by sector and collective agreement | Not applicable |
Employee INSS is progressive: 7.5% up to BRL 1,621, 9% on the next band to BRL 2,902.84, 12% to BRL 4,354.27, and 14% up to BRL 8,475.55. Each band applies to its own slice of salary, not the whole amount.
As a rough illustration: a BRL 10,000 gross salary plus 20% employer INSS and 8% FGTS gives a subtotal of BRL 12,800. This excludes RAT/FAP, third-party charges, the 13th-month salary and its charges, the vacation supplement, benefits, exit costs, and provider fees. It's a partial budget, not an all-in cost.
Other payroll basics
- Statutory work week: 44 hours, with overtime paid at a minimum 50% premium above the regular rate.
- Minimum wage (2026): BRL 1,621 per month.
- Vale-transporte (transport voucher) is required for qualifying commutes; the employer covers the cost above 6% of base salary.
- Payroll must reflect the applicable collective agreement, which can raise wage floors or add benefits beyond the statutory minimum.
Mandatory benefits, vacation, and parental leave
Brazil's CLT sets a high floor for employee entitlements. Every worker on a formal contract, indefinite or fixed-term, receives the same core package. There is no opting out of these obligations, and collective bargaining agreements can only add to them, not subtract.
Statutory leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 30 calendar days per year after 12 months of service | Employer |
| Sick leave | Days 1 to 15 paid by employer; day 16 onward paid by INSS (social security) | Employer (days 1-15), INSS (day 16+) |
| Maternity leave | 120 days (extended to 180 days for companies enrolled in the Empresa Cidadã program) | INSS, reimbursed to employer |
| Paternity leave | 5 days statutory (extended to 20 days under Empresa Cidadã) | Employer |
| Public holidays | 10 national public holidays per year, plus state and municipal holidays | Employer |
A few things worth noting:
- Annual leave is paid at the employee's regular salary plus a mandatory one-third bonus on top (the "terço constitucional de férias"). This is not optional.
- Employees can split annual leave into up to three periods, but one period must be at least 14 consecutive days.
- Maternity leave salary is advanced by the employer and then offset against the employer's INSS contributions.
- Sick leave beyond 15 days requires a medical certificate submitted to INSS. The employee is removed from the employer's payroll at that point.
13th-month salary
The 13th salary (décimo terceiro salário) is mandatory for all CLT employees. It equals one full month's salary and is paid in two installments: the first between February and November, the second by December 20. Employees who leave before year-end receive a proportional amount. This cost needs to be factored into your total compensation budget from day one.
FGTS contributions
Employers deposit 8% of each employee's gross monthly salary into a personal FGTS (Fundo de Garantia do Tempo de Serviço) account. This fund belongs to the employee and can be withdrawn under specific conditions, including termination without cause. It is not a benefit you can negotiate away. It is a statutory obligation.
Other mandatory benefits
- Meal or food allowance (vale-refeição / vale-alimentação): Required under many collective bargaining agreements. Check the relevant union agreement for the sector and state.
- Transportation voucher (vale-transporte): Employers must cover commuting costs above 6% of the employee's salary.
- Health insurance: Not mandated by the CLT but standard practice and often required by collective agreements. Absence of it makes hiring difficult in most markets.
When you hire through Employ Latam, statutory contributions are handled, the 13th-month calculation runs automatically, and the employment contract is locally compliant from day one.
Severance, termination, and notice periods
Brazil's CLT sets firm rules on how employment ends. Getting this wrong is expensive. Termination without cause triggers multiple obligations at once: a notice period, FGTS withdrawal rights, a 40% FGTS penalty, accrued vacation payout, and a proportional 13th-month salary.
Notice periods
Notice is calculated by tenure. The base period is 30 days, with three additional days added for each year of service beyond the first, up to a maximum of 90 days total.
The employer can either have the employee work through the notice period or pay it out in lieu. If the employee resigns, they owe the employer the equivalent notice; failure to give notice allows the employer to deduct that amount from the final settlement.
Severance on termination without cause
| Tenure | Notice period | Severance owed (without cause) |
|---|---|---|
| Under 1 year | 30 days | 40% penalty on total FGTS balance + release of FGTS funds |
| 1 to 3 years | 30 to 39 days (30 + 3 days per year after year 1) | 40% penalty on total FGTS balance + release of FGTS funds |
| 3 to 5 years | 39 to 51 days | 40% penalty on total FGTS balance + release of FGTS funds |
| 5+ years | Up to 90 days (capped) | 40% penalty on total FGTS balance + release of FGTS funds |
Every termination without cause also requires payment of: accrued and unused vacation plus one-third vacation bonus, proportional 13th salary for the year, and any outstanding wages.
FGTS: the severance fund
Throughout employment, the employer deposits 8% of the employee's gross monthly salary into a dedicated FGTS account held in the employee's name. The employee cannot touch this money while employed under normal circumstances. On termination without cause, two things happen: the employee gains full access to the accumulated balance, and the employer pays an additional 40% penalty calculated on the total deposits made over the entire employment period (not just the balance remaining). That penalty goes directly to the employee, not the fund.
Termination for just cause
Just-cause dismissal (justa causa) eliminates the notice period, the 40% FGTS penalty, and the right to withdraw FGTS funds. The employee still receives unpaid wages and any accrued vacation owed. Just cause must be well-documented. Brazilian labor courts consistently favor employees in disputes, so a poorly evidenced just-cause dismissal is likely to be converted to a without-cause termination by a judge.
Mutual agreement termination
Since the 2017 labor reform, employers and employees can terminate by mutual agreement (distrato). In this case, the notice period is halved (15 days), the FGTS penalty drops to 20%, and the employee can withdraw 80% of the FGTS balance. This route requires genuine agreement from both sides and written documentation.
Recent regulatory changes
Brazil's labor framework has been relatively stable since the 2017 CLT reform, but the past 24 months have brought targeted updates that affect payroll costs, worker classification, and digital compliance. If you're onboarding Brazilian employees now, these are the changes that matter.
Key changes: June 2023 to January 2026
| Date | Change | Impact on employers |
|---|---|---|
| May 2023 | Minimum wage raised to BRL 1,320/month (Decree 11,466) | Payroll floors, FGTS base, and INSS minimums all adjusted upward |
| January 2024 | Minimum wage raised to BRL 1,412/month (Law 14,663/2023) | Further increase to statutory floors; affects proportional 13th salary and vacation pay calculations |
| August 2023 | eSocial simplified event tables took full effect for all employer sizes | Reporting of admissions, terminations, and payroll events now consolidated; non-compliance triggers fines |
| November 2023 | STF ruling on union contribution (contribuição assistencial) | Employees who do not formally opt out are now subject to union fees; employers must manage opt-out records |
| March 2024 | INSS contribution table updated with new progressive brackets | Employer INSS calculation base shifted; payroll systems needed recalibration |
| January 2025 | Minimum wage raised to BRL 1,518/month (Provisional Measure 1,303) | Third consecutive annual increase; cascading effect on FGTS deposits, overtime floors, and severance calculations |
| January 2026 | Minimum wage raised to BRL 1,621/month | Current floor for FGTS, INSS and 13th-salary calculations |
What this means in practice
Minimum wage increases in Brazil are not cosmetic. The wage floor sets the base for FGTS deposits (8% of gross salary), INSS contributions, and the 13th salary calculation. Three increases in two years compound quickly across a growing team.
The eSocial consolidation is the other operational pressure point. Brazil's digital payroll reporting system now requires:
- Real-time admission registration before the employee's first day
- Accurate event sequencing for terminations and contract changes
- Correct benefit and deduction codes or automated penalties apply
The STF union fee ruling adds an administrative step. Employers must document which employees have opted out of the contribuição assistencial for each relevant union agreement. Missing this creates retroactive liability.
What's on the horizon
The Brazilian government has signaled continued annual minimum wage adjustments tied to GDP growth and inflation. A broader social security (INSS) reform is under discussion in Congress but has not passed as of mid-2025. No confirmed implementation date exists, so plan for the current contribution structure to hold through at least year-end 2025.
Frequently asked questions
- Do I need a local entity to hire someone in Brazil?
- No. A Brazilian entity (CNPJ) is required to employ someone under the CLT, but you do not need to set one up yourself. An employer of record acts as the legal employer on your behalf, so your hire is covered by a compliant CLT contract from day one without you incorporating locally. You manage the work; the EOR handles the legal and payroll obligations.
- What is the most common employment contract in Brazil?
- The indefinite term contract is by far the most common. It carries no end date and gives employees the full set of CLT rights, including FGTS accumulation, 13th salary, and paid vacation. Most companies hiring full-time talent in Brazil default to this structure, and Brazilian courts will assume an indefinite term relationship exists unless a fixed-term contract clearly meets one of the narrow legal justifications.
- When is the 13th-month salary paid in Brazil?
- It's paid in two installments: an advance between February and November, and the remaining balance by December 20. It accrues at one-twelfth of December's remuneration per month worked, with at least 15 days of service counting as a full month. There's no standard third installment; employees who request the advance in January simply receive it earlier, alongside vacation pay.
- How long is paid maternity leave in Brazil?
- The statutory minimum is 120 calendar days, fully paid and funded by INSS (reimbursed to the employer through social security offsets). Companies enrolled in the federal Empresa Cidadã program extend this to 180 days. Paternity leave is 5 days by default, or 20 days under the same program. Both periods begin from the date of birth or adoption.
- How much severance is owed for terminating an employee without cause in Brazil?
- There is no single fixed severance amount. The total cost combines several elements: the notice period (30 to 90 days depending on tenure), a 40% penalty on the employee's total FGTS balance, release of the full FGTS fund to the employee, proportional 13th-month salary, and any accrued unused vacation plus the one-third vacation bonus. For a long-tenured employee with a high salary, the FGTS penalty alone can represent a significant lump sum, since it applies to every deposit made over the entire employment period.
- How do Brazil's recent minimum wage increases affect my total employer cost?
- Each BRL increase to the monthly minimum wage raises the base for FGTS (8%), proportional 13th salary, and vacation pay simultaneously. A worker paid at the floor in January 2023 (BRL 1,302) now costs meaningfully more in statutory contributions at BRL 1,621 (the 2026 floor), even before any negotiated salary increase. If you have a team of ten employees at or near the floor, model the full loaded cost at each new rate before your annual budget cycle.
We handle the contract, payroll, taxes, and benefits in Brazil so you can hire that person this month.
Statutory figures for Brazil, each traced to a named source with its reference year. Sourced from OECD, the World Bank, the ILO, ISSA and national statutes.
Latest reference period: 2027
| Annual income | Marginal rate |
|---|---|
| 0 – 28,259 | 0% |
| 28,259 – 37,519 | 7.5% |
| 37,519 – 46,604 | 15% |
| 46,604 – 55,977 | 22.5% |
| 55,977+ | 27.5% |
Figures are statutory reference values maintained internally and refreshed against primary sources. They are a starting point for planning, not legal advice — we confirm the exact numbers for your role before you hire.
What changed in Brazil
Checked against official sources on .
No rule changes recorded since we began logging them.
What a hire in Brazil costs
Employers in Brazil pay statutory contributions of 29% on top of gross salary. At the average monthly wage of BRL 3,393, that adds BRL 984 a month.
| Salary | Gross per month | Employer contributions | Total per month | Total per year |
|---|---|---|---|---|
| Minimum wage | BRL 1,621 | BRL 470 | BRL 2,091 | BRL 25,093 |
| Average monthly wage | BRL 3,393 | BRL 984 | BRL 4,377 | BRL 52,526 |
Employer contribution rate: National government, as of Sept 2026
Minimum wage: National government, as of Jan 2026
Average monthly wage: ILOSTAT, as of Jan 2025
Amounts in BRL. Totals per year are twelve monthly salaries plus contributions.
What the contributions pay for
- Pension, invalidity and survivors20%
- Work injury1%
Components: ISSA Country Profiles, as of Jan 2024
From a different source from the headline rate, so they do not add up to it exactly. The worked example uses the headline rate.
On top of this: the 13th salary where the law requires one, paid leave, and notice and severance if the employment ends (all in the tables above), plus our employer of record fee, from $349 per employee per month. Every quote we send breaks each of these out for the actual role.
Found someone in Brazil? Let's employ them.
We'll send a fully-loaded cost breakdown for the role within a few hours, then draft a locally compliant employment contract. Most Brazil hires can start within 1 to 3 business days once docs are in.
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