Using an employer of record in Brazil

As the largest economy in Latin America, Brazil offers a dynamic talent pool and a growing digital economy. With over 210 million people and strong representation in tech, finance, and creative sectors, Brazil is a compelling destination for companies seeking cost-effective talent in the region.

Hiring and paying employees in Brazil can be a complex process. The country’s labor laws are detailed and require strict adherence to contracts, benefits, taxes, and compliance procedures. 

For global companies seeking to rapidly expand into the Brazilian market without setting up a local entity, using an Employer of Record (EOR) is a practical and efficient solution.

A Brazil employer of record handles everything from onboarding and payroll to benefits and tax filings, helping your business stay aligned with local labor regulations while focusing on growth.

Learn more about Payoneer Workforce Management (WFM) and their employer of record services in Brazil. 

Continue reading to learn how Brazil EOR solutions can streamline hiring in one of Latin America’s largest economies.

How to hire employees in Brazil

Companies have three main options when hiring employees in Brazil:

1. Set up a local entity: Establishing a legal business presence in Brazil involves registering with federal and local authorities, filing corporate tax, and continually managing compliance. This process can take several months and requires a deep understanding of local laws.
2. Hire independent contractors: While flexible, hiring contractors or freelancers in Brazil comes with classification risks. Misclassifying an employee as a contractor can lead to retroactive tax payments and penalties.
3. Work with an employer of record: A Brazil Employer of Record allows businesses to hire full-time employees without creating a local entity. The EOR takes on the legal employer responsibilities, while you maintain day-to-day oversight of the employee’s work.

Partnering with an employer of record in Brazil

An employer of record, Brazil-based or otherwise, is a third-party organization that legally employs workers on your behalf in a country where you do not operate a legal entity. An EOR Brazil manages all the employment-related responsibilities, including:

• Drafting compliant employment contracts
• Running local payroll
• Withholding and remitting taxes
• Managing employee benefits
• Ensuring labor law alignment
• Handling terminations

Using an employer of record in Brazil simplifies the hiring process by removing the need for corporate registration and ongoing compliance monitoring. 

It allows companies to onboard talent quickly and pay employees in local currency without navigating local bureaucracy. 

This is particularly beneficial for companies scaling into Brazil as part of a broader Latin America growth strategy. With a trusted EOR Brazil handling back-office functions, businesses can focus on integration, culture, and productivity.

Payoneer WFM offers reliable Employer of Record services Brazil, designed to help startups, SMBs, and enterprises grow their teams while staying aligned with Brazil’s employment regulations.

How to onboard employees in Brazil

Once the employment contract is signed, the onboarding process for employees in Brazil typically includes:

• Registering the employee with the National Institute of Social Security (INSS) and tax authorities
• Adding them to payroll and local benefits programs
• Providing an orientation or welcome session
• Configuring IT equipment and access to work tools
• Introducing the new hire to their manager and team
• Sharing company policies, procedures, and handbooks

This onboarding process ensures employees are integrated smoothly into the company and are legally recognized by Brazil’s labor and tax systems.

Pay employees in Brazil

The payroll process in Brazil is complex and must follow national and regional regulations. Employers are expected to pay salaries either monthly or semi-monthly, with payments usually made on the 5th and 20th of each month. 

Employees in Brazil are also entitled to a 13th-month salary, known as the “Christmas bonus.” The payment is split, with an installment in November and the other by December 20th.

The Brazilian fiscal year follows the calendar year, running from January 1st to December 31st. The employer must withhold and submit several taxes and contributions on behalf of the employee, including:

• INSS (social security): Ranging from 7.5% to 14% depending on salary, this covers retirement pensions, maternity leave, and temporary disability benefits.
• IRRF (income tax): With progressive rates from 0% to 27.5%, this funds public services. The exemption threshold has increased as of 2025.
• FGTS (severance fund): Not deducted from the employee’s paycheck but funded by the employer, this accumulates in an individual account that the employee can access upon termination or other qualifying events.

Employers also contribute:

• INSS: 20% to 22.5% of the employee’s gross salary, depending on the industry
• FGTS: 8% of gross salary, paid monthly to the employee’s severance account
• RAT (Work Accident Insurance): 1% to 3%, based on the level of occupational risk
• Social taxes (Third-party entities): Roughly 5.8%, which supports public institutions such as SENAI and SEBRAE that provide professional training and development

Employers must file and pay these taxes monthly, with late submissions leading to penalties.

Given the intricate compliance requirements and volume of tax filings involved, managing payroll in Brazil can be time-consuming and costly. Using a Brazil EOR is the easiest and most reliable way to pay employees per local laws.

Employment laws in Brazil

As mentioned, the Consolidação das Leis do Trabalho (CLT) defines Brazil’s employment laws. The CLT outlines employer obligations and worker rights. Key areas of regulation include:

• Working hours: 44 hours for a standard workweek (usually 8 hours per day over 5 days plus 4 hours on Saturday)
• Overtime: Paid at a minimum of 50% above the hourly rate
• Probation period: Typically up to 90 days
• Rest days: At least 1 full rest day per week  (usually Sunday)
• Payroll frequency: Monthly or semi-monthly, with payments on the 5th and 20th

Employers must document all employment activities and maintain accurate payroll and benefits records.

Minimum wage in Brazil

Brazil’s federal minimum wage is BRL 1,518.00 per month, approximately $290, depending on the exchange rate. It equates to BRL 50.60 per day or BRL 6.87 per hour. This covers a standard 44-hour workweek.

Minimum wages also vary by region. For example, São Paulo has approved a higher state minimum of BRL 1,640. There is no legal distinction between unskilled, semi-skilled, or skilled labor when applying the minimum wage, but union agreements may set higher rates for certain sectors.

Federal and state governments regularly review minimum wage rates to keep up with inflation and the cost of living. Businesses are advised to keep track of local changes. Using a Brazil EOR helps companies navigate these regional variations and stay compliant.

Failing to pay at least the applicable minimum wage can result in legal claims, fines, and reputational damage. Because rates may differ based on regional regulations or union-negotiated terms, working with a Brazil EOR ensures that all employees are compensated fairly and lawfully, based on where they live and work.

Employment contracts in Brazil

Employment contracts in Brazil can be oral agreements, but having a written contract is strongly recommended. Written contracts reduce ambiguity and help both parties understand their rights and obligations.

Key components of a Brazilian employment contract include:

• Contract type (indefinite or fixed term)
• Start date
• Compensation and benefits
• Working hours and allocated leave
• Eligibility for bonus payments
• Probation period details
• Notice period and termination terms

Fixed-term contracts, which may not exceed 2 years, are typically used for temporary or project-specific roles. In many industries, collective bargaining agreements negotiated by labor unions may influence standard contract provisions, including notice periods, vacation entitlements, and benefits, so it’s important to assess applicable CBA terms before finalizing employment agreements.

While fixed-term contracts are permitted, most employees are hired on an indefinite basis. Including clear probation and termination clauses helps avoid disputes and ensures alignment with the Consolidação das Leis do Trabalho (CLT), Brazil’s primary labor code.

Leave policy in Brazil

Brazilian labor law guarantees several types of employee leave:

• Vacation leave: Employees get 30 days of paid vacation per year after 12 months of service.
• Public holidays: Brazil recognizes 12 national holidays, with additional regional ones.
• Sick leave: The first 15 days are paid by the employer, with INSS covering any longer duration.
• Parental leave: Mothers receive 120 days of paid leave; fathers receive 5 days. Some companies offer extended leave.
• Other leave: Employees may be entitled to leave for marriage, bereavement, or jury duty.

Managing time off by national law and collective bargaining agreements is an essential part of local compliance. An Employer of Record in Brazil helps automate and track leave policies across jurisdictions.

Work permit in Brazil

Foreign nationals need a valid work permit to be employed in Brazil. Types include:

• Temporary work visas for up to 2 years
• Permanent work visas for specialized positions
• Tech visas for professionals in innovation sectors

Applications typically require sponsorship by a Brazilian company and approval by the Ministry of Labor. Processing times range from 2 to 4 months.

Background check in Brazil

In Brazil, background checks are not legally required, but they are common practice. Most companies run checks after making a conditional offer of employment.

Common types of background checks include:

• Criminal history (where permitted)
• Employment history
• Educational qualifications
• Credit history (for roles involving financial responsibility)

However, employers must comply with Brazil’s General Data Protection Law (LGPD) when collecting and storing personal data. Some types of checks, such as medical testing or political affiliation, are restricted unless job-relevant.

Employment termination in Brazil

Termination of employment in Brazil must follow the guidelines outlined in the CLT. There are two primary types:

• With cause: This refers to dismissal due to serious misconduct. No severance is paid, and employees lose access to FGTS.
• Without cause: More common, this requires notice and severance payments.

Notice periods depend on the length of service. The employee needs to be given 30 days minimum, plus 3 days for every year of service, up to a maximum of 90 days.

Severance includes:

• FGTS balance + 40% penalty paid by the employer
• Accrued vacation pay
• Pro-rated 13th-month salary
• Potential additional compensation if dismissed without cause

Employers must document terminations carefully to avoid disputes.

Company registration in Brazil

To operate directly in Brazil, businesses must register with:

• The Board of Trade in the state of operation
• The Federal Revenue Service (Receita Federal)
• The Municipal Tax Authority

Registration includes obtaining a Cadastro Nacional da Pessoa Jurídica (CNPJ), which translates to National Registry of Legal Entities and is the Brazilian tax ID. It also entails setting up corporate bank accounts and adhering to annual tax filings.

For full details, visit the Brazilian government site. However, using a Brazil EOR is a much simpler and easier option for most U.S.-based companies.

PEO in Brazil

A Professional Employer Organization (PEO) offers HR support to businesses that already have an entity in-country. A Brazil EOR, by contrast, allows companies to hire without setting up a local company.

The EOR Brazil acts as the legal employer, reducing the administrative burden and helping mitigate risks associated with labor law violations. For companies scaling globally, EORs provide a faster and more flexible alternative to incorporation.

Payoneer WFM: Leading employer of record services in Brazil

Payoneer WFM helps companies hire, onboard, and pay employees in Brazil quickly and efficiently. With our Employer of Record services in Brazil, your business can:

• Hire employees without establishing a local entity
• Manage payroll and tax filings
• Provide localized benefits like 13th-month bonuses
• Navigate employment law with expert guidance

With deep expertise in Latin American employment practices, Payoneer WFM supports companies building distributed teams without the administrative complexity.

FAQs about employer of record Brazil 

1) What is an employer of record in Brazil?

An Employer of Record in Brazil is a third-party service provider that legally employs workers on your behalf and manages compliance, payroll, taxes, and HR functions while you maintain operational control over the employees’ work.

2) What is the employee tax in Brazil?

Employee contributions in Brazil include:

• INSS: 7.5% to 14% for social security
• IRRF: Up to 27.5% income tax
• FGTS: Funded by the employer, not deducted from salary

3) What is the 13th salary in Brazil?

The 13th salary is a mandatory annual bonus paid in 2 installments in November and December. It is equivalent to 1 month’s salary and applies to all formal employees.