Background information on applicants

Background checks

Are there any restrictions or prohibitions against background checks on applicants? Does it make a difference if an employer conducts its own checks or hires a third party?

There are no restrictions on or prohibitions against background checks on applicants; however, prior authorisation by the applicant must be obtained. Furthermore, it cannot be used as a mechanism to discriminate. There is no difference between whether the employer conducts the background check itself or with a third party. There are specialised agencies in background checking.

Medical examinations

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?

No. It is mandatory to require a medical examination before starting a labour contract. An employer can refuse to hire an applicant that does not take the examination. Notwithstanding the foregoing, it is prohibited to request for HIV tests and pregnancy tests unless the condition may constitute a risk to the health of the applicant, given the functions to perform.

Drug and alcohol testing

Are there any restrictions or prohibitions against drug and alcohol testing of applicants?

There are no restrictions on or prohibitions against drug and alcohol testing of applicants. Nevertheless, the consumption of drugs or alcohol cannot be the sole reason for refusing to hire an applicant. The rejection of an applicant based on his or her consumption of those substances must relate to it affecting his or her employment performance or representing a risk of accidents.

Hiring of employees

Preference and discrimination

Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?

There are no legal requirements to give preference in hiring to or not to discriminate against particular people or groups of people. However, there are tax benefits or incentives for hiring people from vulnerable groups; that is, people in a situation of displacement, in the process of reintegration or having a disability, employees under 28 years of age and women over 40 years of age with more than one year of unemployment (article 31 of Law No. 361 of 1997, and Law No. 1429 of 2010).

Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?

No. Written employment contracts are not mandatory according to the de facto rule that when the elements of an employment relationship are gathered, the existence of an employment contract is understood. However, the following terms require written evidence: probationary period, fixed-term contract and ‘integral salary’, as well as non-salary payments.

To what extent are fixed-term employment contracts permissible?

Fixed-term employment contracts are permissible and can be extended indefinitely. Notwithstanding the foregoing, after the third extension of a fixed-term contract of less than one year, it is understood that the contract has been renewed for one year.

Probationary period

What is the maximum probationary period permitted by law?

The maximum probationary period permitted by law is two months for indefinite term contracts and one-fifth of the duration of the contract for fixed-term contracts. Parties can agree a shorter probationary period, in which case it can be extended by mutual agreement up to the legal limits. The probationary period cannot be extended at the discretion of the employer.

Classification as contractor or employee

What are the primary factors that distinguish an independent contractor from an employee?

From an execution point of view, the primary factors that distinguish an independent contractor from an employee are the purpose of the contract and subordination. When a company hires an employee, it hires a person and can give him or her orders and instructions; the employer also has disciplinary powers over the employee. By contrast, when a company hires an independent contractor, it hires a service; therefore, the hiring party cannot give orders to or sanction an independent contractor.

The employer is obliged to pay the social security contributions and other payroll-related taxes of its employees. On the contrary, an independent contractor must pay for social security contributions in health, pension and labour risks, unless classified under risks IV and V, in which case the contracting party will assume 100 per cent of the contribution to the labour risk system.

Likewise, an independent contractor is not entitled to receive social benefits or indemnification on the termination of the contract, while an employee has the right to receive social benefits as well as indemnification unless the contract is terminated with cause.

Temporary agency staffing

Is there any legislation governing temporary staffing through recruitment agencies?

Temporary staffing is regulated by Law No. 50 of 1990 and Decree 4369 of 2006. Only temporary staffing agencies authorised by the Ministry of Labour are allowed to provide those services. Employees hired by a temporary staffing agency are called ‘employees in mission’ and can be hired for specific circumstances provided by law, as follows:

  • in the case of occasional, accidental or transitory tasks;
  • when necessary to replace personnel on vacation, on leave, sick leave or maternity; and
  • to attend to increases in production, transportation, sales of products or merchandise, seasonal periods of harvests and in the provision of services, for a term of six months, extendable for up to six months.