While remote work has transformed the employment landscape as a whole, there are few places in which it’s as popular as it is in Brazil. The South American country is home to a stay-at-home workforce of approximately 7.4 million people, according to the LatinAmerican Post. That number is only set to grow as more international employers focus their sights on the local market’s diverse talent pool.
Those looking to tap into Brazil’s sprawling workforce should know that hiring in the country isn’t completely straightforward. Employing individuals from any foreign country comes with important legal considerations pertaining to pay and leave which, depending on your circumstances, may be too much of a drain on internal HR to be worthwhile It ultimately comes down to the approach you take – and the hiring team you work with.
The Feasibility of Remote Hiring in Brazil
Brazil’s government is rather welcoming to foreign employers looking to hire employees in Brazil on both full and part-time bases. However, it still requires businesses of every kind to follow the standards outlined in the Federal Constitution and the Labour Code.
These guarantee employees a number of benefits, including paid vacation days, 13th salary (a bonus paid at the end of each year), and a mandatory contribution to social security. Employers are also required to withhold income tax from their employees’ salaries and contribute a percentage towards their employee’s retirement fund.
Law No. 6,019/1974 regulates outsourcing and temporary work arrangements in Brazil. Under its rules, employment contracts must be made in writing and not exceed 180 days in duration. This period can be extended by as much as 90 days if a company is able to prove the conditions that justified the original hiring still exist.
Remuneration and additional benefits are the responsibility of the recruitment agency, while the contractor is secondarily liable for non-compliance.
Setting the Stage for Remote Employment in Brazil
Employers have several options at their disposal when hiring employees in Brazil. The first is establishing a legal entity, or a subsidiary or branch office that operates independently and is treated as a local organization under Brazilian law. This approach allows for direct control over the employment relationship, but it comes with the administrative and financial burdens of managing payroll in-house.
Another option is partnering with a hiring agency. These organizations specialize in connecting employers with qualified candidates for remote jobs around the world. Once you find the right pick in Brazil, they’ll be able to connect you with an Employer of Record (EOR) service provider, who can take care of ongoing employment-related responsibilities such as payroll, benefits, and compliance.
There are benefits and drawbacks to each course of action, which is why employers must assess their needs and priorities before deciding on the best approach. Those looking for the safest option are best suited to work with an EOR, as these service providers are experts in navigating complex employment laws and regulations abroad. They can further assist in crafting job offers that resonate with local talent’s preferences and expectations.
Let Globy connect you with top talent and handle the complexities of remote hiring for you.
Payroll and Compensation for Remote Employees
Payroll management is always a complex task, particularly when dealing with cross-border employment arrangements. Brazil’s labor laws outline a long list of requirements for businesses to adhere to as they recruit the help of remote employees in Brazil.
Firstly, any employee who is hired on a full-time basis is entitled to the same constitutionally guaranteed compensation and benefits as their in-office counterparts. This means that even remote staff will need a 13th-month salary and paid vacation days factored into their payroll account.
Remote team members are no different from in-person ones with respect to taxes, either. Full-time employees in Brazil contribute 8% to 11% of their salary to social security, while employers have the responsibility of deducting payments to the public pension fund from paychecks, and must also contribute to social security.
Double taxation agreements exist to ensure that employees are not taxed twice, once in their home region and then again in Brazil. You’ll want to check if there’s one between the country in which your company is based and Brazil to avoid any issues with remote workers’ taxes.
Currently, Brazil has double taxation agreements with:
- America: Argentina, Bolivia, Canada, Chile, Ecuador, El Savador, Paraguay, the Province of Quebec (Canada), United States, Uruguay
- Europe: Belgium, Bolivia, France, Germany, Greece, Italy, Luxembourg, Portugal, Spain, Switzerland
- Asia: Japan, South Korea
- Africa: Cape Verde
Other double taxation agreements are currently in development with:
- Europe: Bulgaria
- Asia: China, India, Israel, East Timor
- Africa: Angola, Cabo Verde, Guinea Bissau, Mozambique, Sao Tome and Principe
What Are the Differences Between a Contractor and An Employee?
Employees and contractors are viewed differently under Brazilian labor laws and therefore require different treatment when it comes to things like taxes and benefits.
An employee is someone who works for a company under an employment contract. They are typically required to work specific hours, use company equipment, and report to a manager or supervisor. In Brazil, employees are entitled to various benefits such as paid vacation, sick leave, and social security contributions.
On the other hand, a contractor is an independent worker who provides services to a company but is not considered an employee. They have more flexibility in their working arrangements and are responsible for managing their own time and resources. Contractors do not have the same entitlements as employees, so they may not receive benefits like paid time off or social security contributions.
Further reading: How to Hire Independent Contractors in Brazil
How Do You Navigate Compliance and Legal Risks When Hiring In Brazil?
Anyone doing business in Brazil is subject to fines and other forms of legal action for not following local labor laws. Organizations operating abroad have a responsibility to familiarize themselves with applicable regulations and build their presence in other countries with those rules in mind.
Misclassification is one of the biggest missteps companies can make when expanding their workforce in Brazil. HR departments must review The Brazilian Labor Law, or Consolidação das Leis do Trabalho, and what it defines as an employee versus an independent contractor. Clearly differentiating these terms in contracts is essential to preventing any misinterpretation or potential legal challenges.
Depending on the length of stay and purpose of work, a visa may be required for foreign workers in Brazil. Companies should ensure that their employees have the necessary documentation before entering the country to avoid any issues with immigration authorities.
Foreign companies may face permanent establishment risks when looking to hire remote employees in Brazil. Permanent establishment occurs when a company has a physical presence in the country through its employees. It comes with tax and legal implications that can be complex, which is why most employers try to avoid the status by working with an Employer of Record.
Read more: Employee Benefits in Brazil and Leave Policies in Brazil
Balancing Preferences with Business Needs
In any case, Brazilian workers collectively value job security, company affiliation, and project diversity. Steady jobs with reputable companies provide a sense of stability and security, and therefore, are highly sought after. It’s in every business’ best interest to exude stability and longevity, as well as offer opportunities for growth and variety in projects.
Hiring models can take many forms, including full-time, part-time, contract-to-hire, and freelance. Each of these options has its own benefits and drawbacks for both the employer and employee. For example, full-time staff are guaranteed certain benefits under Brazilian law, while contractors are not. You may need to compensate for this disparity by offering higher pay or additional benefits to contractors.
Financial Planning for Your Remote Team in Brazil
Aside from legal planning, companies also need to be prepared for the financial implications of hiring remote workers in Brazil. There are both direct and indirect costs to keep in mind.
Direct costs include salaries, benefits, and any additional expenses related to hiring and managing remote workers. It’s important to consider the local currency and cost of living when determining compensation for your Brazilian team members. Additionally, you may need to budget for travel expenses if you plan on visiting them in person or bringing them to your home country for training or meetings.
Indirect costs can include things like taxes, insurance requirements, and other regulations that may differ from those in your home country. These can add up quickly, especially when employing large teams.
Use Budgeting Tools to Plan Compensation
Expatistan’s Cost of Living Calculator takes into account various factors such as housing costs, groceries, transportation expenses, healthcare costs and more to provide an accurate estimate of how much it would cost for someone to live in a particular location.
It’s very helpful when planning compensation for staff in other countries, as not every region is comparable in terms of cost of living. For example, a salary that might be considered high in Brazil may actually be just average or even low in the United States due to differences in local economics.
Use the compa-ratio to gauge whether the salary you’re offering remote employees in Brazil is up to par with local expectations:
Compa-ratio = (Employee’s salary/Median Salary) * 100
The answer is expressed in a percentage that indicates how close to the market value your given salary is.
If it’s lower than average, consider increasing it to draw more talent in. If it’s higher than what Brazilian employers pay, you could either maintain that rate for a competitive advantage or reduce it to save money.
The latter case may make more sense if your company is offshoring employees as a means of cutting labor costs. Whatever the case, taking the time to consider how cost of living factors into the equation is essential to making smart decisions that are in line with long-term business goals.
Streamlining Remote Hiring in Brazil
Hiring remote employees in Brazil is difficult when done alone. Companies of every size can benefit by having a partner with local experience by their side. Both hiring agencies and the they connect clients to are well-versed in the complex and ever-changing labor laws of Brazil, as well as cultural norms and expectations. Outsourcing talent search and onboarding to them eliminates many of the barriers that otherwise slow the global hiring process. It also comes with peace of mind – you can trust that your remote employees are being treated fairly and legally in their new roles, in Brazil and anywhere else for that matter.
Globy simplifies remote hiring by finding the best talent and ensuring compliance with local laws.
FAQs
Yes, you can hire an employee from Brazil as long as they have the necessary work permits and visas. It is important to follow all legal requirements and guidelines when hiring international employees.
The recruitment process in Brazil usually involves posting job openings on online platforms, conducting interviews and background checks, and selecting the most qualified candidate. It is common for companies to also use recruitment agencies or referrals from current employees.
You can find employees in Brazil through various methods such as online job portals, recruitment agencies, referrals from current employees, or professional networks. It is important to also have a strong employer brand and company presence in order to attract top talent.
Employees in Brazil are typically paid on a monthly basis, either through direct deposit or by check. Employers are required to deduct taxes and social security contributions from employees’ salaries and pay them to the government.
