How to hire employees in Brazil through an Employer of Record (EOR) [2023 Guide]

Brazil is home to a young, diverse, and highly skilled workforce. It's no wonder so many global companies are hiring in Brazil. But hiring full-time employees in a foreign country is no easy feat—you need to either establish a legal entity or hire through an "Employer of Record" (EOR).

Establishing your own legal entity in Brazil can take months—and it requires expertise in Brazilian employment laws and regulations. Any missteps risk fines or legal action from Brazilian tax authorities.

Alternatively, an Employer of Record service can help streamline the process by handling payroll, tax, and compliance so you don't have to.

Ready to hire through an EOR in Brazil? Here's a step-by-step guide.

Step by step: How to hire through an Employer of Record in Brazil

Step #1: Decide between a Brazilian EOR and a legal entity

Whether you hire Brazilian employees through an EOR or set up your own legal entity depends on your company—and more specifically, its size, resources, and plans to scale.

• Legal entity in Brazil. Setting up a legal entity in Brazil requires appointing a local legal representative, submitting notarized business documents (in Portuguese) to the State Board of Commerce (Junta Comercial) or the National Companies Registry Office (Cartorio de Registro de Pessoa Juridica), registering with the local state and National Institute of Social Security (INSS), opening a local bank account, and more.
• Brazilian EOR. An EOR is a third-party service that operates as a local Brazilian employer on your behalf. A Brazilian EOR will handle all the legal requirements, payroll, contracts, benefits compliance, and other considerations to ensure you hire Brazilian employees in accordance with all local labor laws.

Step #2: How to choose the best EOR for your business

Before you choose a platform, you should consider the services you will need, and how much you plan to grow your global hiring presence.

• Is the EOR active in the countries in which you need to hire? The first, and perhaps most obvious consideration when choosing an EOR for global expansion.
• Does the EOR own its entities in the countries it services? If the EOR does not own the entities, it means they are partnering with a local or third-party provider.
• How does the EOR protect your sensitive and confidential information? It is vital that your EOR has the appropriate data protections in place, as well as secure technology that eliminates potential disclosures of private information.
• Does the EOR offer automated solutions? You may want to look for an EOR that automates the busy work like onboarding and benefits enrollment and other common HR and IT tasks.
• What is the EOR’s support model? It’s essential that your EOR has support staff that are both easy to contact and experts in the regulations of the countries in which you are hiring.

Get the full checklist in our guide: What is an EOR?

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With Rippling, you can manage your global team in one system, easily localize onboarding flows, and manage compliance policies for your international employees. See Rippling. 

Step #3: How to hire and onboard your Brazilian employees

Once you’ve picked an EOR that works in Brazil, you can begin the onboarding process by collecting the following information from your new employees:

• Their full name
• Their permanent address in Brazil
• Their Individual Tax Registration (CPF) number
• A copy of their employment agreement or collective bargaining agreement
• Their bank account information

When you create an employment agreement for a new hire in Brazil, it needs to include:

• Their position (job title), job description, start date, and probation period
• Their working hours
• Details about their compensation, including salary, equity compensation, and benefits
• Termination terms and notice period
• Working conditions
• Confidentiality, non-disclosure, non-compete, and non-solicit clauses, if applicable
• Contact information for both the employer and the employee

Example: Let's say you hire two employees in Brazil who are covered by separate collective bargaining agreements (CBAs). When you use an EOR in Brazil, it can generate separate, tailored employment agreements that account for different CBA requirements, all while staying compliant with Brazilian labor laws.

You can onboard new hires anywhere, end to end, with Rippling. Request a demo today.

Step #4: Run payroll

For the A-to-Z on global payroll, read our comprehensive guide to running international payroll for employees in Brazil.

Once you've executed the employment agreement and collected the necessary information from your new hire, an EOR will pay them in Brazilian Real (BRL), while withholding the necessary, legally required income taxes from each Brazilian employee's salary. In Brazil, this includes:

• Public pension fund (INSS)
• Severance fund (FGTS)
• Additional social security contributions
• Accident insurance

Frequently asked questions about hiring through an EOR in Brazil

How much does an EOR cost?

There are two typical pricing structures for an EOR. You will either pay:

• A fixed monthly fee per employee
• A percentage of payroll plus applicable taxes

With either structure, it's important to keep in mind that there may be additional costs: administrative fees, onboarding charges, costs for supplemental features, and other fees.

Keep in mind also that you don't have to use an EOR for your entire workforce—and if you choose to segment its use, you'll only be charged for the employees you employ through the EOR, which can help you save on costs.

What is the difference between an EOR and PEO?

A Professional Employer Organization (PEO) co-employs a company’s workforce and provides administrative services like paying employees, handling compliance, and filing payroll taxes. In this case, the employer company and the PEO are jointly responsible for the workforce. A PEO does not, however, allow you to hire in other countries where you haven’t set up a local entity—so it's not a 1:1 replacement for an EOR, even though it handles many of the same administrative and compliance services.

An EOR, on the other hand, is the sole employer of the portion of your workforce you use it for, assuming all the associated liabilities. An EOR allows companies to work with employees in other countries without setting up a legal entity of their own.

Does an EOR protect your sensitive and confidential information?

There are many benefits to outsourcing payroll management to an EOR—like sparing your company from time and compliance risk. But on the other hand, it can open you up to other types of risk. Any time you share data with a third-party company (or a company that uses third-party vendors), it can be exposed to breaches. 

With that in mind, look for an EOR provider that prioritizes data protection. Your EOR should:

• Comply with industry-standard privacy regulations in all countries where it does business.
• Have secure infrastructure with round-the-clock maintenance and monitoring.
• Carefully vet its personnel.

You should also establish a Data Processing Agreement (DPA) with any payroll service you use to mandate sound privacy practices and provide legal protection in the event of a breach.

Does an EOR help with Brazilian tax compliance?

In Brazil, employers must keep payroll records for a minimum of five years, including:

• Each employee's full name and address
• Their dates of employment and rate of pay
• Total regular and overtime pay
• Net employee pay
• Frequency of pay
• Deductions
• A copy of the employment agreement and/or collective bargaining agreements
• Leave taken 

An EOR can help collect and properly store payroll data to ensure your company's compliance with Brazilian law.

What are the mandatory benefits for Brazilian employees?

Brazil’s employment regulations require a number of statutory benefits for all employees in the country. These include:

• Minimum wage
• Social Security and pensions
• Severance pay
• Overtime pay
• Annual leave, paid vacation, and a holiday bonus
• Sick leave
• Bereavement leave
• Marriage leave
• Maternity leave/paternity leave
• Paid time off for voluntary blood donation
• Paid time off for electoral registration
• Paid leave for military service
• Paid leave for time off to take university admissions exams
• Paid time off for court proceedings
• Public holidays
• 13th month's salary/Christmas bonus

Other employee benefits are required in certain cases, such as:

• Transportation vouchers: required if employees commute to work and their transportation costs exceed 6% of their monthly wages
• Daycare assistance: required for companies that have more than 30 female employees

What are the employer costs for full-time employees in Brazil?

Employers must make certain deductions from Brazilian employees' salaries. These include:

Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.