Hiring in Brazil

Brazil's labor framework is built on the CLT (Consolidacao das Leis do Trabalho), a sweeping labor code first enacted in 1943 and updated most recently by the 2017 labor reform (Law 13,467/2017). The CLT covers everything from working hours to termination rules, and it applies to all employees with a formal employment contract (carteira assinada). Collective bargaining agreements (CCAs) can override certain CLT provisions after the 2017 reform, so the terms of employment can vary by industry and region. The standard workweek is 44 hours, typically split across Monday through Saturday, though most white-collar roles follow a 40-hour, five-day schedule.

Termination in Brazil is expensive by global standards. Employers must give 30 days of notice, plus 3 additional days for each year the employee has worked at the company, up to a maximum of 90 days total (Law 12,506/2011). If you fire someone without just cause, you owe them a 40%% penalty on the total FGTS balance accumulated during their employment, on top of all accrued wages, unused vacation plus the one-third vacation bonus, and the pro-rata 13th salary. Mutual termination agreements (introduced by the 2017 reform) reduce the FGTS penalty to 20%% and cut the notice period in half to 15 days, but employees only get access to 80%% of their FGTS funds. Termination for just cause (such as fraud, insubordination, or habitual drunkenness under CLT Article 482) eliminates the FGTS penalty entirely.

Every employee earns 30 calendar days of paid vacation after 12 months of continuous service. When they take vacation, they also receive a bonus equal to one-third of their monthly salary on top of regular pay. Vacation can be split into up to three periods (one must be at least 14 days, the others at least 5 days each). If the employer fails to grant vacation within the 12-month window after it's earned, the employee gets double pay for those days. Brazil has 12 national public holidays per year, and employees required to work on holidays must receive either overtime pay or a compensatory day off.

Payroll costs in Brazil run high. Employers contribute 20%% of total payroll to INSS (social security), 8%% of each employee's monthly salary to FGTS (the severance guarantee fund), 1-3%% for RAT (work accident insurance, varying by industry risk level), and roughly 3.3%% to the S System (institutions like SEBRAE and SENAI). All told, employer-side contributions typically land between 26%% and 34%% on top of gross salary. Employees also pay progressive INSS contributions ranging from 7.5%% to 14%%. On top of all that, every employee receives a 13th salary (decimo terceiro), which is an extra month's pay split into two installments: one by November 30 and the other by December 20.

Maternity leave is 120 days at full pay, funded by INSS, and can start anytime in the last month of pregnancy. Companies enrolled in the Empresa Cidada program can extend this to 180 days with a tax deduction for the extra 60 days. Mothers have job protection from the date of pregnancy confirmation until five months after childbirth. Paternity leave is 5 days under the CLT, extendable to 20 days for Empresa Cidada participants. Adoptive parents receive the same leave entitlements as biological parents.

Overtime must be paid at a minimum of 150%% of the regular hourly rate (a 50%% premium). Night work between 10 PM and 5 AM carries an additional 20%% premium. Overtime on Sundays and public holidays is typically paid at 200%% of the normal rate. The CLT caps regular overtime at 2 hours per day, though collective agreements can modify this. Employers who consistently misclassify overtime or fail to track hours face significant fines from labor inspectors and exposure in labor court (Justica do Trabalho), which handles over 3 million cases per year.