Payroll & Employment Guide Brazil

Employment contracts in Brazil must be in writing and can be fixed-term or indefinite. All contracts must align with the Consolidation of Labour Laws (CLT) and clearly state roles, compensation, and benefits.

Notice periods: 30 days, extendable by 3 days per year of service (up to 90 days).
Termination of employment: Termination rules depend on the type of dismissal – with cause, without cause, or mutual agreement.

Brazilian labour law mandates a comprehensive range of benefits. Companies must comply with these, and many offer additional perks to stay competitive.

Mandatory benefits: 13th salary, paid vacation, FGTS (Fundo de Garantia do Tempo de Serviço, and social security (INSS).
Common perks: Health insurance, meal vouchers, transportation allowance, daycare assistance, performance bonuses, flexible work arrangements, and professional development.
Leave policies: Annual leave, sick leave, maternity leave, paternity leave, bereavement leave, marriage leave.

Brazil’s tax structure is one of the most intricate in the world. Employers must handle income tax withholdings and social security contributions very carefully.

• Income Tax (IRRF): In Brazil, individual income tax is applied progressively based on monthly earnings. Income up to BRL 1,903.98 is exempt from taxation. Earnings between BRL 1,903.99 and BRL 2,826.65 are taxed at 7.5%, while income from BRL 2,826.66 to BRL 3,751.05 is taxed at 15%. For amounts between BRL 3,751.06 and BRL 4,664.68, the tax rate increases to 22.5%, and any income above BRL 4,664.68 is taxed at 27.5%. Employers are responsible for withholding these taxes directly from employees’ monthly salaries.
• Social Security Contributions (INSS): Employees contribute 7.5% to 14% of their salary, while employers contribute around 20%.
• FGTS (Fundo de Garantia do Tempo de Serviço): 8% of the employee's salary.
• VAT: 17%
• Employer Taxes: Include additional contributions for social security and other funds, such as the Environmental Risk and Third Party INSS.

Salaries must be paid monthly, no later than the fifth business day of the following month. Payroll processes include multiple mandatory payments, including the 13th-month salary.

Salary payment deadline: 5th business day of the next month.
Taxes and contributions payment deadline: Last business day of May of the following year.
Payroll declarations deadline: Monthly or bi-monthly, depending on the company schedule.
Payroll currency: Brazilian Real (BRL).

Brazil’s employment law is governed by the CLT and offers high protection to employees. Understanding local laws is essential to remain compliant.

Total employment cost:

• Employer’s social security contributions: 20%
• Employer’s health insurance costs: In Brazil, employer-provided health insurance is optional and not mandated by law
• Employees’ social security contributions: 7.5% - 14%
• Employee’s health insurance costs: Not mandated by law, so the specific cost to the employee will depend on the terms negotiated between the employer and the insurance provider.

Minimum wage: BRL 1,518/month
Probation period: Up to 90 days

Foreigners looking to work in Brazil need a valid employment contract and work visa. Work permits are typically linked to a sponsoring company.

Types of permits: Work and residence permit with employment relationship (VITEM V)
Process length: Four months
Process cost: Starts at* 2200 EUR

*Please note that additional costs may apply after reviewing individual use cases.

Using EOR services in Brazil allows you to legally employ individuals in the country without opening legal entities there. The EOR takes over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

Using PEO services in Brazil provides HR and administrative support, while you remain the legal employer. PEO services are ideal for employers who already have legal entities in Brazil but need support to manage their workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator adjusted per Brazil’s labour laws. Estimate gross-to-net salaries, tax withholdings, and employer costs in Brazil with our localised calculator. Designed to meet all payroll and compliance requirements.