How to hire and pay contractors in Brazil

Brazil offers a large pool of highly educated, Portuguese-speaking professionals for businesses seeking remote contractors. However, hiring independent contractors in Brazil requires a careful approach to avoid legal risks, especially misclassification of workers.

Brazil is transitioning from a rigid, protective labor model to a more flexible one. While labor courts still stick to traditional views, the Supreme Court allows greater use of Brazil contractors, especially when workers have autonomy and fair compensation. But the legal landscape is evolving, with the final say on gig economy workers still pending. 

Here is where a global workforce management (WFM) solution like Payoneer WFM streamlines hiring independent contractors. 

In this guide, we’ll walk you through the legal and practical considerations for hiring and paying independent contractors in Brazil, and explain how platforms like Payoneer WFM make the process easy and compliant. 

How to hire contractors in Brazil

The 2017 labor reform laws allowed independent contractors to work in any business area, including core activities. However, hiring independent contractors in Brazil is distinct from hiring employees in several ways. Here’s how you should go about hiring Brazil contractors: 

1. Understand contractor vs. employee classification

Misclassifying a contractor as an employee in Brazil can result in severe penalties. The Brazilian Labour Law (CLT) uses a 4-point test to determine if someone is an employee:

• Personal service (the person must do the work themselves)
• Frequency (regular work)
• Payment (the person is paid)
• Subordination (the person is under the employer’s control)

Refer to the table below to avoid common misclassification risks:  

Criteria	Employees	Brazil Contractors
Governing Law	CLT (Consolidação das Leis do Trabalho)	Brazilian Civil Code
Relationship Nature	Continuous, exclusive, and under employer control	Project-based or non-exclusive; no subordination
Control & Subordination	You set the schedule, supervise, and dictate the method	Contractor sets own schedule and method; no subordination
Remuneration	Paid as a salary, subject to payroll deductions	Negotiated fee; paid against invoice or service receipt
Tax & Social Security	You deduct income tax and pay FGTS, INSS, and other contributions	Contractor is responsible for their own INSS and taxes
Employee Benefits	Entitled to 13th-month salary, paid vacation, FGTS, transportation voucher, etc.	Not entitled to statutory employment benefits
Termination Notice	30 days + 3 days per year (max 90 days); protection against unfair dismissal	Governed by Civil Code: 8 days (monthly), 4 days (biweekly), 1 day (weekly); negotiable
Reclassification Risk	Not applicable; already under employment protection	High, if the relationship mirrors employee conditions
Recommended Agreement	Employment contract with all statutory provisions	Detailed service contract outlining autonomy, scope, and payment

2. Understand local labor laws

Even when working with independent contractors, you must comply with several legal standards concerning Brazil independent contractor laws:

Topic	Details
Minimum Wage	Contractors set their rates. However, market rates often reflect minimum wage laws, currently set at BRL 1,412 per month.
Working Hours	Contractors are not bound to the standard working hours of 44 hours per week. Any control over hours may signal misclassification.
Termination Notice	Not required by law, but including a termination clause in contracts is recommended.  As per Brazil independent contractor laws governed by the Civil Code, you must offer: 8 days (monthly)4 days (biweekly)1 day (weekly)
Non-Discrimination	Brazilian anti-discrimination laws apply, even in contracts with contractors. Avoid biased language or practices.

3. Find independent contractors in Brazil

Brazil boasts a thriving gig economy and a vast talent pool, particularly in industries such as IT, design, customer service, and digital marketing.

The following are three sources of Brazil contractors:

• Freelance platforms such as Workana, Upwork, or Freelancer.com
• Local employment portals such as Catho and Trampos.co
• Referrals and LinkedIn—especially for niche or high-trust positions

How to pay contractors in Brazil

Independent contractor payments in Brazil involve more than just sending money—you must balance between contractual clarity, local tax compliance, and cross-border payment arrangements. To remain in compliance with Brazil’s independent contractor laws, pay attention to the following critical steps:

1. Determine how to pay 

Prior to any payment, decide how you are going to pay the contractor. This must be clearly stated in your service contract and agreed to by both parties. The most popular payment structures are:

• Per-project fee: Best for clearly defined tasks with set deliverables (e.g., designing a website, creating content).
• Hourly or daily rate: Suitable for open-ended tasks or work requiring flexible hours (e.g., IT support, consulting).
• Monthly retainer: Ideal for ongoing collaboration (e.g., digital marketing, admin support).

Make sure to define:

• Due dates or milestones
• Late payment penalties (if any)
• Payment methods (bank transfer, Payoneer, etc.)
• Currency of payment (BRL or USD)

Furthermore, always request an invoice that conforms to the contract conditions before making payments.

2. Ensure your Brazil contractors have the right tax information

Incomplete or improper tax documentation can result in penalties, audits, or the contractor being classified as an employee by Brazilian authorities. To prevent double taxation or trouble with Brazilian tax authorities:

• For Brazilian residents: Ensure that the contractor provides a valid CPF (Cadastro de Pessoa Física) or CNPJ (in the case of a registered business).
• They must also present an RPA (Recibo de Pagamento Autônomo) if they’re working as individuals, or an NF (Nota Fiscal) if registered as a company.
• Contractors pay their own INSS (social security) and income tax.
• For Foreign Contractors Working from Brazil: If they are not tax residents, determine their tax identification number (TIN) and country of residence to consider tax treaty obligations (if any).

3. Pay in Brazilian Real or US Dollars

Both BRL and USD are accepted for international payments by Brazil, but your selection impacts both your accounting and the contractor. The current exchange rate is about 1 USD = 5.53726 BRL. 

4. Maintain compliant records

Securely storing contractor records, either digitally or through a centralized payment system, is beneficial for tax filings, financial audits, and avoiding misclassification risks. These are what to keep for each Brazil contractors:

• Signed service contract clearly stating contractor status
• Duplicate copies of invoices or RPAs for each payment issued
• Evidence of payment (bank slips, Payoneer records, etc.)
• Contractor’s CPF or CNPJ number, and where necessary, tax residency certificate
• Clear proof of the scope of work and deliverables

Why Payoneer WFM is the easiest way to hire and pay contractors in Brazil

Payoneer Workforce Management (WFM) enables global businesses to manage international contractors without the need to establish a local entity.

Main Advantages:

• Easily onboard Brazilian contractors with built-in compliance
• Pay in BRL or USD with competitive FX and bulk payments
• Automated documentation, contracts, and tax forms – all in one place

With Payoneer WFM, you eliminate payroll complexity, minimize administrative overhead, and keep your workforce happy and paid on time.

FAQs on managing Brazil contractors

Do I need to register a company in Brazil to hire contractors?

No, you can hire contractors in Brazil without establishing a local entity. You can use platforms like Payoneer WFM to streamline your payments and administration of independent contractors in Brazil. 

Can a contractor become an employee over time?

Yes. If the working relationship mirrors that of full-time employment, courts may reclassify the contractor, potentially incurring fines.

Are contractor earnings taxable in Brazil?

Yes. Contractors are responsible for their own tax filings and must contribute to INSS and income taxes independently.

Can I include non-compete or confidentiality clauses in the contract?

Absolutely. These are commonly included in contractor agreements in Brazil to protect sensitive information and interests.