11 things employers need to know about Brazilian labor and employment laws

Published

Jun 1, 2023

Labor laws in any country can be a maze of complex nuances—and Brazil is no exception. And for global companies planning to do business in Brazil, there's the added complexity of having to account for differences in labor laws between countries. The bottom line? Staying compliant with Brazilian labor and employment laws is no easy feat.

The Brazilian Labor Law, also known as the Consolidation of Labour Laws (or Consolidação das Leis do Trabalho or CLT in Portuguese) outlines most of the rules employers need to follow—but some are mandated by Brazil's constitution, and still others are covered by collective bargaining agreement with trade unions. The one common thread is that breaking labor laws and regulations can result in fines, penalties, or costly legal action.

So how do you navigate Brazilian labor rules? This guide will highlight the basics so you can expand into Brazil with confidence. Let's get started.

1. At-will employment exists in Brazil

At-will employment means that employees can be terminated at any time, with or without cause. But employees are still entitled to notice periods, severance pay, accrued benefits, and other entitlements—and the rules are different for different types of employees and reasons for their termination (more on this further down).

2. Misclassifying employees could cost you big

Brazil recognizes the existence of employees (persons who perform work for a company, organization, or individual, under the direction and supervision of an employer, in exchange for remuneration) and independent contractors (self-employed individuals who provide services to one or more clients, without any employment relationship or subordination).

Misclassifying workers in Brazil could result in fines, back wages and benefits, back taxes, legal and administrative costs, and other penalties.

3. Brazil has strong anti-discrimination protections

Anti-discrimination laws in Brazil prohibit employers from discriminating based on certain characteristics: gender, race, place of origin, marital status, color, age, family status, certain medical conditions like pregnancy, or criminal history.
The criminal history requirement is especially important for employers to know; in many countries, it's standard to run a background check on a potential new hire's criminal history, but in Brazil, this is viewed as discriminatory unless it's for a certain role (domestic employees; caregivers of minors, the elderly or the disabled; road transport drivers; employees who work in the agricultural sector handling of sharp work tools; bankers; employees who work with toxic, narcotic substances and weapons; and employees with access to confidential information).

4. Unions are very common

Employees' rights to associate with a union are protected by the federal Constitution in Brazil, and until recently, union membership was mandatory for all employees. Though union association is now optional, unions are still a big part of Brazil's employment landscape.

This means a few important things:

  • Employers cannot refuse, impose, or discriminate based on an employee's union membership status.
  • Unions negotiate collective bargaining agreements (CBAs) with employers every two years, which may dictate mandatory benefits and work standards that expand on those outlined in employment agreements and Brazil's labor laws.

5. Collective bargaining agreements (CBAs) help define working conditions

Most industries are represented by a trade union in Brazil, which will negotiate with employers on employees' behalf every two years. Some of the most common things for CBAs to define are:

  • Annual salary increases
  • Any benefits additional to those required by Brazilian law
  • Working conditions, such as how many working hours and days are allowed

6. If you fail to offer benefits, you’ll be hit with fines, penalties, and legal consequences

Employees in Brazil are entitled to a number of statutory benefits (the full list is further down). If you hire an employee in Brazil and fail to provide the mandatory minimum statutory benefits, you could face government fines. If your employees' unions have negotiated a collective bargaining agreement that requires more than the statutory minimum, those must also be provided to all employees covered by that CBA. Failure to do so could result in legal action by the union.

7. 13th month salary payments are required

One statutory benefit in Brazil that global employers may not be familiar with is the 13th month salary payment. All employees in Brazil are entitled to 13 salary payments, rather than just 12. The extra payment (equivalent to 1/12 of the employee's salary) is given at the end of the year as a Christmas bonus.

8. Non-disclosure agreements (NDAs) are legally binding in Brazil—with restrictions

In general, NDAs are enforceable in Brazil, provided they meet these requirements:

  • They must comply with Brazilian contract law, which means they should be as specific as possible, including the consequences for breaking the NDA (arbitration, indemnification, etc.).
  • If an NDA is breached, the aggrieved party needs to be able to prove damages.

9. Employers are responsible for workplace health and safety standards

The Federal Constitution, Brazilian labor legislation, and CBAs establish minimum working conditions in Brazil. For most employees, this means the working day cannot exceed 8 hours, and workers are entitled to overtime if they work more than 44 hours in a week. Rest and meal breaks are mandatory for full-time employees, and workers are entitled to a weekly rest period (usually on Sunday).

Employers are also responsible for maintaining a healthy and safe workplace, including creating and maintaining an internal Commission for Accident Prevention (CIPA). There are exceptions for remote work and other instances when employees work off-site.

10. Employees' personal data is protected by federal law

Brazil recently introduced the LGPD (General Data Protection Law or Law nº 13.709/2018), a data privacy law that governs how companies can use personal data, including for employment background checks.

Employers must now carry out a Legitimate Interest Assessment (LIA) to determine that any background checks being conducted are necessary and that they are only collecting employee data they really need. This limits employers' ability to check things like employees' social media profiles, for example.

11. Labor claims are very common in Brazil

In Brazil, labor claims are extremely common—there were around 3 million of them in 2010.

Employment-related disputes go before labor courts. The most common disputes heard by labor courts include:

  • Worker misclassification claims
  • Overtime and breaks
  • Wrongful termination (with cause)
  • Fringe benefits
  • Severance payments
  • Moral damages
  • Intentional infliction of moral distress
  • Hostile work environment
  • Harassment
  • Invasion of privacy
  • Defamation

Frequently asked questions about Brazilian labor laws

What is the minimum wage in Brazil?

As of January 1, 2023, Brazil's minimum wage is R$1,302 per month.

Keep in mind that by law, employees are entitled to 13 installments of their monthly salary, not 12.

What are the overtime laws in Brazil?

Brazil's labor laws say that employees are entitled to overtime pay if they work more than 40 hours in a five-day workweek, or 44 hours in a six-day workweek. Overtime must be paid at 150% of their usual pay or 200% on holidays and weekends. No employee may work more than two hours of overtime per day.

What are the required benefits in Brazil?

All full-time Brazilian employees are entitled to the following statutory benefits:

  • Social security
  • Pension
  • Severance fund (Fundo de Garantia do Tempo de Serviço or FGTS)
  • Overtime pay
  • Paid vacation leave and vacation bonus
  • Sick leave
  • Bereavement leave
  • Marriage leave
  • Maternity leave
  • Paternity leave
  • Leave for voluntary blood donation, electoral registration, military service, university admissions exams, court proceedings
  • Statutory holidays
  • 13th month salary (Christmas bonus)

Some other benefits may be mandatory for certain employees, depending on work conditions, the number of employees, and other factors:

  • Transportation vouchers
  • Daycare assistance

For more information on mandatory benefits in Brazil, read our complete guide.

How do I terminate employees in Brazil?

While terminating Brazilian employees might be far from your mind, it’s important to know what to expect from Brazil's labor laws before that time comes.

Brazil recognizes at-will employment, which means employees can be terminated at any time and for any reason. However, most terminated employees are entitled to notice periods (or payment in lieu), severance pay, and accrued benefits. Employees who are terminated (with or without cause) must be given notice in writing.

Some employees are protected from termination. These include:

  • Pregnant employees, from when their pregnancy is confirmed until five months after the birth
  • Employees who had a work-related illness or injury that required them to be away from work for 15 days or more and receive social security benefits, for one year from recovery
  • Union leaders leaving their post, for one year
  • Employees elected as In-House Accident Prevention Commission members leaving their post, for one year
  • Employees who are one year or less away from retirement

Here's what to expect from different types of termination of an employment contract.

Resignation

Notice Period

90 days

Severance Pay

None

Paid for unused vacation?

Yes, employees are entitled to pay for any unused vested vacation and proportional vacation for the current year

Paid for unpaid vacation bonus?

Yes

Paid for 13th month salary?

Yes, employees are entitled to 1/12 of their 13th month salary per month of work during the current year

Termination by mutual agreement

Notice Period

15 days

Severance Pay

20% of the funds in their FGTS account

Paid for unused vacation?

Yes, employees are entitled to pay for any unused vested vacation and proportional vacation for the current year

Paid for unpaid vacation bonus?

Yes

Paid for 13th month salary?

Yes, employees are entitled to 1/12 of their 13th month salary per month of work during the current year

Termination without cause

Notice Period

15 days

Severance Pay

20% of the funds in their FGTS account

Paid for unused vacation?

Yes, employees are entitled to pay for any unused vested vacation and proportional vacation for the current year

Paid for unpaid vacation bonus?

Yes

Paid for 13th month salary?

Yes, employees are entitled to 1/12 of their 13th month salary per month of work during the current year

Termination without cause

Notice Period

Minimum of 30 days, with 3 days added for each year of service up to a maximum of 90 days' notice.

Severance Pay

40% of the funds in their FGTS account

Paid for unused vacation?

Yes, employees are entitled to pay for any unused vested vacation and proportional vacation for the current year

Paid for unpaid vacation bonus?

Yes

Paid for 13th month salary?

Yes, employees are entitled to 1/12 of their 13th month salary per month of work during the current year

Termination with cause

Notice Period

None

Severance Pay

None

Paid for unused vacation?

No

Paid for unpaid vacation bonus?

No

Paid for 13th month salary?

No

Terminating an employee with cause requires serious misconduct, and the onus is on the employer to prove the reason for termination—if they can't prove it, terminated employees can sue for reinstatement, back pay, and other penalties. Some potential reasons include:

  • Breach of a trade secret (but the employer must prove that the employee did it knowingly and that the company was financially impacted by it)
  • Insubordination, such as breach of a company policy or employment agreement
  • Inappropriate behavior, including harassment, sexual harassment, psychological bullying, racism, or sexism
  • Dishonesty, theft, or fraud
  • Low productivity or negligence, including failure to show up to work or repeatedly missing deadlines (the employer must show that a disciplinary procedure was followed and the employee had at least three strikes)
  • Ongoing drunkenness or drug abuse not because of alcoholism or drug dependency
  • Physical violence
  • Gambling at work
  • Serious conflict of interest, such as working on the side for a competitor
  • Criminal conviction
  • Gross negligence
  • Abandonment of the job
  • Acts detrimental to national security

In Brazil, the concept of redundancy doesn't exist, so if a company must lay off workers, it's considered termination without cause.

For all the info on Brazilian termination requirements—including notice periods and wrongful dismissal claims—consult our guide.

Hire and onboard Brazilian employees with Rippling

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Rippling and its affiliates do not provide tax, accounting, or legal 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.

last edited: July 13, 2023

The Author

Christina Marfice

Christina is a writer, editor, and content strategist based in Chicago. Having lived and worked in Argentina, Colombia, Mexico, and Peru, she’s bringing her expertise on hiring in Latin America to Rippling.

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