Employment laws and regulations in Brazil are based on the Federal Constitution, which  establishes numerous basic rights for employees, and on the Consolidação das Leis do Trabalho  or Consolidated Labour Laws (CLT), enacted in 1943. Brazilian employment law is recognized as  one of the most protective of employees. Although CLT has been amended significantly and  has been complemented by many new laws since 1943, it does not provide the flexibility  in labour relations that are needed in a modern economy. As a consequence, Brazilian  employment law still retains important limits on employees’ and employers’ freedom  to agree the terms of employment or to change or adapt these terms from time to time,  depending on the economic situation. 

Certain changes in labour conditions and policies can  only be made through collective agreements with the  involvement of the representative trade union, provided  that those agreements are made in accordance with the law. 

Labour courts also play a very important role in the  interpretation and application of Brazilian employment  law. It is important to note that in the majority of cases,  the labour courts find in favour of the employee.

Issues arising on hiring individuals 

Immigration 

Foreign nationals wanting to work in Brazil must first  obtain a valid Brazilian work visa which can either be a  permanent visa (less common and more difficult to obtain),  or a temporary visa (for up to two years). To obtain a work  visa, the employer must apply with the candidate for the  work authorisation to be issued by the Brazilian Ministry  of Labour (“Ministério do Trabalho e Emprego”) and then  the Brazilian Ministry of Justice (“Ministério da Justiça”)  will review the application. The main documents and  requirements are: (1) a work authorisation request form  (authorisation to be issued by the Brazilian Ministry of  Labour); (2) employer’s and candidate’s request form; (3)  employer’s constitutional documents duly registered; (4)  undertaking from the employer to be responsible for any  of the candidate’s medical expenses; (5) proof of payment  of the applicable fee; (6) addresses where the candidate  will work; (7) proof of the candidate’s legal authorisation to  practice their career; (8) proof of compatible professional  experience (attested by companies where the candidate  has worked for a minimum of one year in the same  profession, unless the candidate has at least a master’s  degree, in a course of over 360 hours’ duration); (9) an  employment contract for up to two years (in the case of  a temporary visa) or for an unlimited term (in the case  of a permanent visa). All documents drafted in a foreign  language must be legalised and translated by a sworn  public translator.

Employment structuring and documentation

The employment relationship is established by an employment  agreement. Although verbal employment agreements are  permitted, generally, written employment agreements are  entered into, signed by the employer and employee. 

Every employee must have an “employment book” (Carteira  de Trabalho) in which the employer must register the  employment agreement and some of the basic conditions  (date, salary, etc.), and other notes.

Fixed-term employment agreements are only permitted  when: (1) the nature of the job is temporary; (2) the  employer’s activities are temporary; or (3) in the case  of “experience contracts”, which are applicable to new  employees only. For (1) and (2), the maximum term of  the employment agreement cannot exceed two years.  “Experience contracts” may be agreed for a maximum  term of 90 days. After this, if the employment agreement  is not terminated, it will automatically be deemed to be  for an indefinite term. The main difference between such agreements is that the cost of termination where there  has been no fault by the employee in an employment  agreement for an unlimited term is generally higher  because of certain rights which are not afforded to  employees on fixed-term contracts. 

Issues arising during the employment relationship 

Wages, annual leave and working time 

The national minimum wage, which applies to any employee  working in Brazil, is established by a decree of the President  of Brazil, usually in January of each year. For 2014, it is BRL  724.00 per month, (approximately USD 310.00, EUR 225.00  or GBP 190.00). The national minimum wage includes a  Christmas bonus, payable in two instalments, one by 30  November and the other by 20 December every year, in the  amount of up to one month’s salary, depending on the time  worked in that calendar year. Therefore, if an employee works  from 1 January to 31 December, their Christmas bonus will  be one month’s salary. Employees have the right to ask their  employer, just before starting their leave period, for 50%  of their Christmas bonus (or 50% of their monthly salary),  regardless of when their leave starts. 

Employers in Brazil must make monthly deposits of 8% of  the monthly salary payable to each employee, in a fund  managed by the Federal government. Such deposits are  called “Fundo de Garantia por Tempo de Serviço” (FGTS)  (“Employee Severance Indemnity Fund”). If the employer  terminates the employee’s employment, where this is not  due to fault by the employee, they are entitled to receive  the total amount of the FGTS deposited by their employer  on their behalf. 

Brazilian employees have the right to 30 consecutive days’  annual leave. Before they take leave, the employer must  pay them a vacation bonus of 1/3 of a month’s salary.  As a general rule, the maximum working hours are eight  hours per day, 44 hours per week and 220 hours per month.  For some specific jobs or situations, working hours may  be subject to lower legal limits (for example, for jobs that  alternate day and night shifts, the limit is 36 hours per  week and 180 hours per month).

If an employee works in excess of these limits, they will  be entitled to receive a minimum additional payment of  50% of their hourly pay. Collective bargaining agreements  usually increase their additional payments to 100% or more  of the employee’s hourly pay. Employees are not permitted  to work more than two hours per day in excess of the  applicable maximum working hours limit.

Tax and social insurance 

Brazil has a social security system that grants certain  benefits to employees, such as for medical costs, payments  for accidents at work or industrial diseases, pregnancy,  unemployment insurance, retirement, etc. The social  security system is managed by the federal entity, the  National Institute of Social Security (INSS).

INSS is funded by contributions made by employers and  employees. Employers pay contributions representing  20% of their payroll; employees pay a percentage of their  monthly wage, between 8% and 11%, but limited to BRL  482.93 for 2014. Employees’ contributions are deducted  from employees’ salaries by the employer.  In addition, employers must pay other payroll costs which  may exceed 8% of the total payroll, the amount depends on  the industry in question. 

Issues arising on termination of the  employment relationship

Except in limited cases, Brazilian employers may terminate  an employment agreement without fault by the employee.  In such case, the employee will have the right to receive  the balance of their wages, accrued leave paid in lieu,  vacation and Christmas bonuses proportionate to their  period of employment, FGTS deposits and 40% over the  FGTS deposits. The employer must also pay a further  10% of FGTS deposits to the government. In addition to  these payments, if the termination is during the first year  of employment, the employee is entitled to receive one  month’s notice of termination. For each additional year of  employment, the employee is entitled to three additional  days’ notice, to a maximum of 60 days. Therefore, the total  notice period an employee may be entitled to is 90 days.  The employer may make a payment in lieu of notice. 

Collective agreements may establish additional  termination rights for employees in certain professions or  economic sectors.