A Guide to Hiring Remote Employees In Brazil

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 Latin American Post. The growth potential of remote work in Brazil is exponential as the number of South American professionals hired by foreign companies is only set to grow as more international employers focus their sights on the local market’s diverse talent pool.

If you’re looking to tap into this South American country’s sprawling workforce, you should know that hiring employees in Brazil isn’t completely straightforward. As a foreign employer, you’ll need to learn important legal considerations about pay and leave which, depending on your circumstances, may be too much of a drain on internal HR to be worthwhile. Regardless of the potential challenges of hiring remote employees in Brazil, there are several ways to get it done. It ultimately comes down to your approach and the hiring team you work with.

Is Remote Hiring in Brazil Feasible for Global Employees?

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 several 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 can 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.

What are the Latest Employment Laws Affecting Remote Hiring in Brazil?

Rather than just learning all local labor laws and staying content, you must be ready to cope with frequent Brazilian employment law changes because the Brazilian government frequently introduces new laws to ensure that all local professionals are properly catered for. For instance, the government recently addressed a lingering pay gap with employment legislation, popularly regarded as the Equal Gender Pay Gap Law. The government also introduced the Disconnecting from Work Policy to improve employee work-life balance. 

Equal Gender Pay Gap Law

Signed into effect in July 2023, this legislation targets pay disparities related to gender, race, and other characteristics. This law also affects minority pay and career discrimination. In November 2023, the Brazilian government also issued a federal decree and ordinance that shed more light on the law’s reporting obligations and administrative mechanisms to ensure the legislation is enforced. 

In compliance with the Equal Pay Law, all employers with 100 or more employees must submit employment data to the Ministry of Labor and publish a “Transparency Report” biannually, detailing salary differences within the organization. This report will be compiled by the Brazil government. 

However, you must also submit a data report on payroll which will be broken down based on gender. The information in the employer and government report is expected to tally. 

If discrepancies are found, you are required to create a corrective action plan within 90 days. The law also allows employees to claim moral damages for discriminatory pay practices, and non-compliant employers face hefty fines. 

Disconnecting from Work Policy

Another new employment legislation put into place by the Brazilian government is the ‘Disconnecting from Work Policy’. Released in early 2024, this regulation mandates that employers establish a policy allowing employees to disconnect from work outside of scheduled hours. 

This policy is intended to improve work-life balance by reducing expectations for off-hour communications. You must engage employees or unions in the policy-making process and implement the policy within one year after the effective date​. 

How to Successfully Hire Remote Workers in Brazil: Hotmart Case Study

Let’s review a case study of a company that successfully hires Brazilian professionals. Hotmart, a prominent Brazilian company specializing in digital products, has established itself as a leader in remote work by building a robust infrastructure that enables employees to work efficiently from anywhere in the world. 

Founded in 2011, Hotmart offers a platform for creators to sell and manage their digital content, such as online courses, e-books, and podcasts. With its rapid growth, the company has embraced remote work, especially in response to the COVID-19 pandemic, and continues to maintain a large portion of its workforce in a remote-first environment. 

To provide a seamless environment for their employees, Hotmart invests heavily in cloud-based solutions and collaboration tools. By using platforms like Slack for communication, Jira for project management, and Google Workspace for document sharing, the company ensures that employees have access to the tools they need to collaborate effectively regardless of location.

How Do You Prepare For Remote Employment in Brazil?

Employers have several options at their disposal when hiring employees in Brazil. The first is establishing a local 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. 

What are the Benefits and Downsides of Hiring Remote Workers Through a Local Entity?

The main benefit of hiring remote workers through a local entity is that this alternative offers the company complete control over the employment relationship, including payroll and compliance with local laws. Establishing a local entity is also a great way to build trust and gain recognition from the local populace. 

This trust and recognition gained by establishing this entity is useful in fostering long term growth and building strong relationships. Employees often tend to feel a stronger sense of loyalty and commitment when hired directly. 

Despite its exciting benefits, hiring through a local entity isn’t without its downsides. The process is complex, expensive, and time-consuming. You’ll have to register the company, submit necessary documentation, and ensure your policies are in compliance with local laws. 

After navigating the complex procedure of establishing a local entity, you’ll also have to cope with the additional administrative burden it requires. Furthermore, you may require local expertise to set up and use a local entity, and this may come at extra cost. 

What are the Benefits and Downsides of Hiring Through an Employer of Record?

A major benefit of hiring through an employer of record is that the process is relatively fast. As it eliminates the need to establish a local entity, your company can enjoy a fast market entry and accelerated hiring process. This alternative also relieves the administrative burden of managing a local entity. 

While establishing a local entity robs your organization some flexibility in terms of the number of employees you can employ, Employer of Records are more scalable. This means you can hire more employees on a flexible basis. Finally, EORs ensure you don’t have to worry about compliance with local laws. 

If you want to hire in Brazil through an EOR, expect to pay more long-term. There’s also a chance that employees that join you through an EOR may fail to quickly grasp important concepts like company culture and vision. Additionally, Employer of Records may offer misaligned benefits and employer policies. 

Comparison of Hiring Models: Employer of Record (EOR) vs. Local Entity Setup

If you wish to hire employees in Brazil, there are two alternatives to try – establishing a legal or local entity and outsourcing to an Employer of Record (EOR). While each of these alternatives are designed to help you hire and manage your remote staff, there are a few differences in how they operate.

By setting up a local entity, foreign companies gain the exclusive rights to hire, pay and manage their staff in the same way as local companies. This alternative is convenient for large companies with enough resources to complete the lengthy registration process, submit all required documentation, and pay associated fees. 

While it may be relatively complex for a foreign company to set up a local entity in Brazil, they can hire a local expert to help them navigate the process. The initial costs of creating a local entity also open up your business to many long-term benefits. 

On the other hand, outsourcing remote employee hiring in Brazil to an Employer of Record means that a third-party will be responsible for connecting you with the right pool of talent for your role. This alternative is suitable for small and medium companies with limited resources to operate remotely. It also takes plenty of administrative burden off your HR team, allowing them to focus on the welfare of your staff. 

Unlike setting up a local entity, outsourcing to an EOR is relatively straightforward and requires no additional assistance. However, the monthly or annual costs of hiring this third-party service provider may accumulate over the long-term. 

What are the Payroll and Compensation Requirements for Remote Employees in Brazil? 

Payroll management is always a complex task, particularly when hiring remote international employees. 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 part of their monthly 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. 

What are the Taxation and Social Security Contributions for Remote Work in Brazil

As mentioned earlier, remote workers in Brazil are expected to contribute part of their monthly income as a social security contribution and personal income tax. However, the value of these contributions depends on the income bracket of the remote employee. 

The purpose of Brazil’s Social Security Fund, also known as Instituto Nacional do Seguro Social (INSS) is to protect employees in the event of illness, accident, pregnancy, and death, while also providing support to retired individuals. As a foreign employer, it’s important to keep in mind that employees and employers are responsible for these social security contributions. Employer contributions are usually around 20%. But there are a few sectors, including clothing manufacturing and textiles, that request employers to pay an additional 1% or 2%.  

On the other hand, the employee side of social security contributions range between 7.5% – 14% depending on income bracket, and are capped at R$828 monthly. Here’s a breakdown of social security contributions per income bracket: 

As a foreign company operating in Brazil, you must also note that this country uses a progressive tax rate system. In this system, personal income taxes are charged at 0% – 27.5%, depending on the total value of monthly earnings. Here’s a further breakdown of different tax rates and the salary ranges they are applicable to: 

Employee salary is subject to personal income taxes. However, not all parts of salary are subject to taxation. Remote employees in Brazil are tasked based on their: 

• Base salary
• Commissions
• Bonuses
• Hazard Pay
• Overtime Pay

Social security payments are also deducted from this part of the salary. 

Double taxation agreements exist to ensure that employees are not taxed twice, once in their home region and then again in Brazil. As of today, Brazil has a total of 36 Double Taxation Agreements. These agreements specify that dividends distributed to residents and non-residents are taxed at 10% or 15%, depending on the nature of the agreement between Brazil and the countries. There’s also a 10% or 15% rate applicable on loans. 

Additionally, any royalties generated as a result of the use or right to use cinematographic films and tapes for radio or television broadcasts, and copyright of scientific, artistic or literary works by residents of a contracting state is subject to a rate of 10 – 15%. This royalty rate also covers money generated from the use of right the use trademarks, and patents. 

Before hiring from Brazil, you may want to check if there’s an existing agreement between the country in which your company is based and Brazil to avoid any issues with double payment remote workers’ taxes. Here’s  a list of countries on each continent which have a Double Taxation Agreement (DTA) with Brazil:

• 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

To improve the quality of remote work in Brazil, the government is working to get more Double Taxation Agreements. Other DTAs which are currently in development include: 

• Europe: Bulgaria
• Asia: China, India, Israel, East Timor
• Africa: Angola, Cabo Verde, Guinea Bissau, Mozambique, Sao Tome and Principe

How Do Contractors and Employees Differ Under Brazilian Labor Law?

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.

Before hiring contractors in Brazil, it’s essential to ensure that you have correctly classified them based on the nature of the work, supervision and contractual terms between both parties. There’s a thin line between employees and contractors in this jurisdiction, and misclassification is treated as a serious offence. Any employer (local or foreign) found guilty of misclassification will be punished, depending on the circumstances surrounding the case such as the severity of the offences and number of workers affected. 

Here’s a list of the punishments which an organization may incur for misclassification: 

• Fines: Any company guilty of employee misclassification may be fined by government agencies. The amount charged as fine varies considerably between a few thousand to millions worth of BRL. If you have been previously guilty of misclassification, your fine will be doubled. 
• Payment of back wages and benefits: Companies guilty of misclassification may be required to settle any owed wages and employee benefits to those affected. These payments may cover overtime pay, vacation pay, sick leave and other entitlements stipulated under the Brazilian Labor Code. 
• Payment of back taxes: If the misclassified employee paid any taxes before it was discovered, you may be required to reimburse them. This tax reimbursement also includes a 75% penalty on social security contributions. 
• Court orders to change employment practices: In certain instances, the court may force employers to change their employment practices to recognize contractors as employees. These orders may insist that the employer provide benefits, such as overtime pay, minimum wage, social security contributions, and all other benefits in compliance with local labour laws. 
• Legal and administrative costs: Employers will also incur legal and administrative costs to handle the misclassification allegations and any related court cases. 

Further reading: How to Hire Independent Contractors in Brazil

The Risks of Employee Misclassification: Uber Case Study

Let’s review a real-life example of a foreign company that failed to properly classify its employees. Uber, along with its Brazilian counterpart 99, has faced multiple legal battles in Brazil over the classification of its drivers as independent contractors instead of employees. Although not directly related to remote work, these cases provide a significant precedent regarding misclassification under Brazilian labor law.

In 2021, a São Paulo labor court ruled that a former Uber driver was entitled to full employment benefits, including severance pay, accrued vacation, and social security because the court found the relationship between the driver and the company met the characteristics of an employment relationship. This decision was based on factors such as exclusivity, subordination, and regular payment, which mirror the conditions often faced by remote workers hired as independent contractors.

This case, along with similar rulings, signaled that Brazilian courts take a worker-centric approach, often ruling in favor of the employee if there are signs of subordination and control. So, when hiring remote workers in Brazil, you should ensure that contractors do not have schedules, exclusive tasks, or supervisory conditions that resemble formal employment.

What are the Compliance and Legal Risks When Hiring Remote Employees 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. 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.

It’s not uncommon to find employers who fail to comply with Brazilian labor law when hiring remote workers from the region. A common mistake by foreign employers is the misclassification of employees and independent contractors. Another common mistake you can make is failing to create a written agreement on all terms negotiated between employer and employee. Additionally, certain employers fail to provide remote workers with the necessary equipment to carry out their duties. 

If you want to avoid any fines or punishments that come with a lack of compliance, there are a few things to keep in mind. Here’s a checklist of legal mistakes to avoid when hiring remote employees in Brazil: 

• All remote workers hired from Brazil are properly classified as employees or contractors. Misclassification errors can result in fines and additional costs. 
• The decision to hire remote workers must be stated clearly in writing. This agreement or adjustment to the employment agreement must state all the terms affecting the remote work agreement. 
• The employer and employee must negotiate and agree about the equipment to be provided to aid their work, as well as any payment for work done. 
• You must comply with all the laws relating to health and safety, even when hiring remote workers. Local labor laws require that you must guide all employees on health and safety practices which the employee must agree to comply with in writing. 
• If required to resume to work in-person, you must give all remote workers in Brazil a 15-day notice and create a written agreement in this regard. Employees must also maintain their current work schedule, unless their schedule is related to the pay they receive. 
• You must ensure all remote employees remit their personal income taxes and social security contributions. You must also remit social security contributions, as stipulated by local labor laws. However, care must be taken to comply with the stipulated date if your company is based in a region with a Double Taxation Agreement. 

Read more: Employee Benefits in Brazil and Leave Policies in Brazil

How Can You Balance Employee Preferences and Business Needs When Hiring For Remote Jobs in Brazil? 

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’s 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 benefits and drawbacks for both the employer and the 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.

What are the Cultural Considerations in Hiring Remote Workers in Brazil?

When hiring or managing employees in Brazil, there are several cultural considerations to keep in mind, especially regarding job security, work hours, stability and growth opportunities. These factors play a significant role in shaping employee expectations and engagement.

Job Security and Stability

Job security is highly valued in Brazil. Historically, the Brazilian labor market has been characterized by high levels of job informality, but for formal positions, employees place a significant emphasis on stability. Many employees seek long-term, stable employment contracts, as Brazil has strong labor protections, including severance packages (like the FGTS fund) and unemployment insurance. These severance packages are due to the volatile economic conditions that have affected job availability in the region in past.

You’d do well to note that Brazilian labor law also provides strong protections for employees against arbitrary dismissals. Workers typically expect formal employment relationships that guarantee them benefits like health insurance, severance pay, and social security.

Local and foreign companies offering stability and legal protection are often viewed more favorably. Employers who provide contracts with social benefits and clear pathways to permanency generally attract and retain talent better than those who offer short-term contracts.

Work Hours and Flexibility

While Brazilian labor laws stipulate a standard workweek of 44 hours which is divided into eight hours per day, flexibility is increasingly sought after by modern workers, especially with the rise of remote work.

While Brazilian employees value work-life balance, many are accustomed to working extra hours, especially in competitive sectors like technology, finance, and law. However, these additional hours are expected to be compensated with overtime pay or time off.

Since the COVID-19 pandemic, remote work has gained traction in Brazil, with many employees appreciating the flexibility it provides. However, Brazilians tend to value clear boundaries between personal and professional life. Therefore, policies like “disconnect from work” laws that regulate communication outside working hours are increasingly appreciated.

Growth Opportunities and Professional Development

Brazilian employees, particularly younger workers, place a strong emphasis on career growth and professional development. Employees generally expect clear opportunities for advancement within a company. Companies that offer training programs, mentorship, and a defined path for career development are more likely to retain their workforce.

Brazilians highly value education, and companies that provide on-the-job training, access to further education, or opportunities for skills development are considered more attractive. Employees expect employers to invest in their growth, both for personal satisfaction and long-term career prospects.

Workplace Relationships and Hierarchies

Brazil is a relationship-driven society, and workplace culture often reflects this. As a result, Brazilian businesses tend to have well-defined hierarchical structures, where respect for authority is important. However, modern companies are increasingly adopting flatter hierarchies, promoting a more collaborative work environment.

Because of Brazil’s closely-knit society, building personal relationships in the workplace is also highly valued. Brazilians appreciate a warm and social work environment where team bonding is encouraged. Trust and personal rapport are critical to workplace harmony.

Cultural Communication

Communication in Brazilian work culture is often indirect and diplomatic. Brazilians may avoid confrontation to maintain harmony, which can affect how feedback is given or how decisions are made.

In team settings, Brazilian employees tend to prefer open, collective communication and value collaboration. However, decision-making often rests with higher-level management due to the hierarchical nature of many businesses. Managers should also be mindful of how they deliver feedback, preferring positive, constructive criticism to avoid potential embarrassment or loss of face.

What Financial Planning Do You Need For Remote Work in Brazil? 

Aside from legal planning, companies also need to be prepared for the financial implications of hiring remote workers in Brazil. Let’s review a detailed breakdown of the key costs, including salaries, benefits, taxes, and other indirect expenses like legal fees:

Salary

The salary will vary based on the role, location within Brazil, and the employee’s qualifications. Salaries in Brazil are generally lower than in the U.S. or Europe, but they should still be competitive based on the local market, cost of living, and job demand.

Mandatory Benefits

Brazilian labor laws (Consolidação das Leis do Trabalho, or CLT) require several mandatory benefits for employees. These include:

• 13th Month Salary: Employees are entitled to an additional one month’s salary at the end of the year (also known as the Christmas bonus) which is equivalent to 1 month’s salary.
• Paid Annual Leave: Employees are entitled to 30 days of paid vacation per year. Additionally, they receive a vacation bonus equal to 1/3 of their salary.
• FGTS (Fundo de Garantia do Tempo de Serviço) – Severance Fund: Employers must deposit 8% of the employee’s monthly salary into a government fund, which the employee can access in case of dismissal or retirement.
• Meal and Transportation Allowance: Employers often provide subsidies for meals and transportation, though this may not apply for remote workers.
• Health Insurance: While not legally required, many companies offer private health insurance to attract skilled workers. The cost will depend on the plan and coverage.

Social Security Contributions (INSS)

Employers are required to contribute to social security for employees. The contribution rate depends on the employee’s salary bracket.

Taxes

Remote workers in Brazil are subject to the following tax rates: 

• Corporate Income Tax: This is not directly related to hiring remote workers but should be considered as part of overall business costs when operating in Brazil. Rates range from 15% to 34%, depending on the company’s profits.
• Employee Income Tax: The employee is responsible for paying income tax on their salary, but it’s common for employers to assist with tax-related services. Income tax rates are progressive and range from 7.5% to 27.5%, depending on the employee’s salary level.

Indirect Costs

In addition to direct salary and benefits, there are several indirect costs associated with hiring in Brazil:

• Legal Fees: Hiring employees in Brazil requires compliance with labor laws and tax regulations, which can be complex. You’ll likely need legal services to draft compliant employment contracts, handle payroll, and manage terminations.
• Payroll and HR Administration: You may need to hire a payroll processing service or a Professional Employer Organization (PEO) to handle compliance, salary payments, and benefits management.
• Termination Costs: In Brazil, terminating employees can be expensive due to severance requirements under the CLT. Termination costs may include payment for unused vacation days, proportional 13th salary, and an additional 50% of the FGTS balance, among other potential expenses.
• Equipment and Office Setup: If you provide remote workers with equipment such as laptops, monitors, or stipends for home office setup, this cost will be associated with hiring them.
• Workforce Training and Development: If training is provided, there may be additional costs for educational materials, online courses, or workshops.
• Currency Exchange and Payment Fees: If you are paying salaries from a foreign account, consider currency conversion and international payment fees.These charges are typically between 0.5%–3% of the payment amount, depending on the payment provider.

You can use the compa-ratio to gauge whether the salary you’re offering remote employees in Brazil is up to par with global 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.

What are Workplace Compliance and Labor Code Requirements for Remote Jobs in Brazil?

As a foreign employer of labor, it’s crucial to pay attention to the local labor laws in this jurisdiction to avoid infringing on these legislations while hiring. These legal requirements will considerably influence the nature of your employee agreement with remote workers. Many of these laws are designed to protect employees from exploitation and discrimination and create a balanced work ecosystem. They include:

• The minimum salary stipulated in Brazil’s labor laws is R$1,320 per month. You’ll not be allowed to pay any employee or independent contractors less than this amount or risk legal action. The common practice in Brazil is to settle employee salaries monthly. However, you may also pay twice a month. 
• Employees are expected to work a maximum of eight hours per day and 44 hours per week, unless the employment agreement specifies otherwise.
• You are expected to pay for the first 15 days of employee sick leave up to 100% of regular wage, but employees are expected to submit a valid doctor’s note to claim this bonus. 
• All qualifying females are entitled to 120 days of paid maternity leave if they are registered under Brazil’s social security organization INSS, which can be extended up to 180 days if the mother participates in a government program. On the other hand, qualifying fathers are also entitled to 5 days of paid leave. Paternity leave can also be increased to 20 days if they sign up for a suitable government program. 
• Employers in Brazil pay a total employment cost between 28% to 30.5%. You’re also expected to pay WHT at 15%. However, it’s also possible to deduct this WHT from Corporate Income Tax at a rate of 35%. 
• Employees in Brazil are entitled to a 13th month salary which is to be paid at the end of each year. 
• All employees with indefinite contracts are also expected to undergo a probationary period of 45 days. However, this probationary period can be increased to 90 days. 
• After one year of service, the notice period to terminate employment is 30 days. For employees with more than one year of service, the notice period is 30 days plus three days for each year of service. However, there’s a maximum limit of 60 days. 
• If an employee is terminated without cause, they are entitled to severance pay which is equal to 40% of the amount accumulated in the Unemployment Guarantee Fund. In a scenario where the termination occurs within 30 days from the date stated in the collective bargaining agreement, additional payments are owed to the employee, such as a one-month salary, accrued vacation time and one-third of the vacation bonus, a 13-month pay period, and other payments stipulated by the collective bargaining agreement. 
• There are several official national holidays in Brazil including New Year’s Day, Easter, Carnival Day, Labor Day, Martyrdom of Tiradentes, Corpus Christi, Catholic Holiday, Independence Day, Catholic Saint, Day of the Dead, Republic Day, and Christmas Day. Brazil also has regional holidays, including State Rebellion Day, Black Awareness Day, Sao Paulo Anniversary, as well as public holidays in Rio De Janeiro. 
• Other leave entitlements available which you must offer on remote jobs in Brazil include bereavement and family leave. The bereavement leave offers employees 5 days off work when they lose an immediate family member, while the family leave offers up to 30 days off work to care for a family member under the age of 12, and 15 days to care for an older relative. 

How Can Budgeting Tools Help You Plan Compensation For Brazilian Remote Employees?

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. 

Using a cost-of-living comparison tool like Expatistan can help you estimate fair compensation for Brazilian remote workers by adjusting salaries to the cost of living differences between Brazil and other countries. Here’s a step-by-step guide on how to use Expatistan and a sample calculation for a Brazilian remote worker’s salary:

• Understand the Reference Salary: The first thing to do is to identify the salary range for a similar role in the employer’s country. This serves as a baseline. For example, if a software engineer in the U.S. earns $80,000 annually, this will be the starting figure for comparison.
• Go to Expatistan: Visit Expatisan’s official website. The tool allows you to compare the cost of living between two cities or countries.
• Select Countries or Cities for Comparison: In the first field, input the city or country where the company is based (e.g., San Francisco, United States). In the second field, input the city or country where the remote worker resides (e.g., São Paulo, Brazil). This comparison will give you a cost-of-living index for both places.
• Analyze the Cost-of-Living Difference: The tool will provide a percentage difference. For example, if the cost of living in São Paulo is 60% of that in San Francisco, this suggests that living costs in São Paulo are 40% lower.
• Adjust the Salary: Using the cost-of-living ratio, adjust the salary. 
• Consider Other Factors: Adjustments may need to be made for:

1. Taxes: Taxation policies in the home country vs. Brazil.
2. Market Demand: Salaries might differ due to local job market demand.
3. Experience and Skill Level: Adjust based on the worker’s specific qualifications.
4. Benefits: If the worker receives additional benefits, this should also be factored into the salary.

Now, let’s calculate a fair salary for a remote worker in Rio de Janeiro when the reference salary for a similar role in London, UK is £50,000 per year.

• Enter the Comparison on Expatistan: Compare the cost of living in London with Rio de Janeiro.
• Review the Result: Expatistan may show that the cost of living in Rio de Janeiro is 50% of the cost of living in London.
• Adjust Salary: The adjusted salary for Rio de Janeiro:

Adjusted Salary = 50,000 * 0.50 = 25,000

So, a fair salary for a similar role in Rio de Janeiro would be £25,000 annually.

• Refinement: This is a basic calculation. You may want to refine the salary based on factors such as income taxes in Brazil, benefits provided by the company, and competitive wages in Brazil’s tech or other sectors.

How Can You Streamline the Hiring Process 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 Employer of Records connect clients to the best talent while staying up to date with 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 is one of the most reliable third-party service providers that simplifies hiring processes for remote companies interested in Brazilian talent. With a major focus on US companies, this hiring partner helps you avoid the pitfalls of hiring from another region. Globy can help you hire for different software developer, tech, product, sales and marketing roles for as low as $100/month. This agency is available in 3 continents and several timezones, and as a reliable EOR in Brazil, it is equipped with the resources to help you find, validate and recruit A-list candidates. 

Remofirst is another service provider committed to helping you in hiring remote international employees. Their EOR services are available in about 180 countries and ensure that you stay compliant with Brazil’s employment laws. At $199/month, Remofirst also offers employers access to all compliance documents with one click of a button, while helping them handle international payroll and bonuses. 

Furthermore, Skuad is a global HR platform that handles hiring, payroll and HR management for remote employers. With reach into over 160 countries, including Brazil, they eliminate the need to establish a local entity. Aside from HR responsibilities like helping you create employment agreements and other legal documents, Skuad also handles tax compliance, time-off tracking and employee benefits. 

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Article author

Vit Koval

Co-founder at Globy

A top Global Hiring voice on LinkedIn, co-founder of Globy, and host of Default Global. Using deep expertise in global hiring, remote work, and global business expansion to help companies excel worldwide with innovative strategies.