Hire employees in Brazil using an Employer of Record

Brazil requires 14-month salaries, 30-day vacation minimums, and FGTS contributions that most companies don't even know exist. Miss these and you'll owe back payments plus penalties when employees find out their rights.

Your perfect Brazilian hire can't wait 6 months for entity setup. The talent market moves fast, and competitors using employer of record services are hiring in days while you're still talking to lawyers about incorporation costs.

Here's the reality: you've got three ways to hire in Brazil legally.

Option 1: Set up your own entity

• Cost: €15,000-50,000 upfront, €8,000-15,000 annual maintenance
• Timeline: 4-6 months minimum
• Complexity: CNPJ registration, labor law compliance, FGTS setup, union negotiations
• Makes sense when: Hiring 20+ people long-term, permanent market commitment

Option 2: Hire contractors

• Cost: None upfront, but major control limitations
• Timeline: Immediate
• Risks: Misclassification fines up to €25,000, back taxes, automatic employee conversion
• Makes sense when: Short projects under 6 months, specialized consulting
• Note: Hire with Columbus also handles compliant contractor agreements

Option 3: Use an employer of record (Recommended for most)

• Cost: $179/month per employee
• Timeline: 2-3 days to hire
• Complexity: Zero - we handle everything from contracts to FGTS
• Makes sense when: 1-50 employees, testing markets, multi-country expansion

If you're hiring 1-10 people, entity setup costs more than 4+ years of EOR fees ($179/month = $2,148/year per employee vs €15,000+ upfront). An EOR like Hire with Columbus handles employment contracts, 13th-month salary calculations, FGTS contributions, CLT compliance, and union requirements while you focus on growing your team.

Ready to hire in Brazil without the compliance headaches? Get started with Hire with Columbus and have your team member onboarded this week.

What employment types can you use?

You've got three ways to bring someone onboard in Brazil. Here's how the costs and risks compare.

Setting up your own entity costs €25,000-35,000 upfront and takes 4-6 months. You'll need ongoing accounting, legal compliance, and HR infrastructure. This makes sense if you're planning 20+ employees long-term and want permanent market presence.

Hiring contractors seems faster, but Brazil's labor courts don't mess around with misclassification. Fines can hit €50,000+ per worker, plus back taxes and benefits. Use this only for genuine short-term projects under 6 months.

Using an employer of record like Hire with Columbus costs $179/month per employee. We become the legal employer while you manage day-to-day work. You can hire in 2-3 days instead of months, and we handle all compliance headaches.

Hiring approach comparison

Employment contract types in Brazil

Once you decide how to hire, you'll need the right contract type. Brazil recognizes several employment arrangements, but most international companies use these three.

Permanent contracts (CLT)

This is your standard full-time employment under Brazil's Labor Code (CLT). No end date, full benefits, and the strongest worker protections. Use this for core team members you want long-term.

Employees get 30 days paid vacation, 13th-month salary bonus, and FGTS (employment fund) contributions. Termination requires notice periods from 30-90 days depending on tenure.

Fixed-term contracts

These last maximum 2 years and can't exceed 25% of your permanent workforce. They automatically convert to permanent if you extend beyond 2 years or rehire within 6 months.

Use fixed-term for seasonal work, specific projects, or temporary replacements. Same benefits as permanent employees, but easier termination at contract end.

Part-time contracts

Employees work maximum 30 hours per week with proportional benefits. They can work overtime up to 1 hour daily, unlike the old system that banned overtime entirely.

Part-time workers get the same hourly protections as full-time employees - just scaled to their hours worked.

Internship and apprenticeship programs

Brazil offers structured programs for students and young workers. Internships last 6 months to 2 years with educational requirements. Apprenticeships target workers 14-24 years old for professional training.

Both programs have specific wage requirements and educational partnerships. They're popular for developing local talent but require careful compliance with education ministry rules.

Hire with Columbus handles all contract types and ensures you're using the right employment structure for your needs. We'll draft compliant agreements, manage transitions between contract types, and handle any labor court requirements that pop up.

How does payroll and taxation work?

Your €60,000 employee actually costs €81,600 per year in Brazil. Here's the breakdown of what makes Brazilian payroll one of the more expensive in Latin America.

Brazilian employers pay hefty social contributions on top of base salaries. You're looking at roughly 36% in employer contributions, plus the employee's own deductions. And that's before we get into the 13th and 14th month salary requirements that'll catch you off guard if you're not prepared.

Income tax brackets

Brazilian employees pay progressive income tax on their monthly salary. The rates for 2025 are:

Most international hires fall into the 22.5% or 27.5% brackets. A software developer earning €60k annually (roughly BRL 32,000/month at current rates) pays 27.5% income tax.

Social security contributions

This is where Brazilian payroll gets expensive. Both employer and employee contribute to multiple social programs:

Employee contributions:

• INSS (social security): 8-14% of salary (capped at BRL 7,786.02)
• FGTS: 0% (employer-only contribution)

Employer contributions:

• INSS: 20% of total payroll
• FGTS: 8% of salary
• Additional contributions: 8.5% (includes workplace accident insurance, education fund, and other mandatory programs)

Total employer burden: 36.5% on top of base salary.

Payment schedule and bonuses

Brazilian employees expect monthly salary payments by the 5th of each month. Miss this deadline and you'll face penalties starting at 10% of the delayed amount.

But here's what trips up most international companies: Brazil requires 14 monthly salary payments per year.

Required additional payments:

• 13th month salary (Christmas bonus): Paid in two installments - 50% by November 30, 50% by December 20
• Vacation bonus: 1/3 of monthly salary when employee takes vacation
• No 14th month requirement (that's some other countries)

Total employment cost breakdown

Let's say you're hiring a marketing manager at €60,000 annual salary (BRL 384,000):

Your €60k hire actually costs €91k - that's a 52% markup on base salary.

Payroll cycle and deadlines

Brazilian payroll runs on strict monthly deadlines that you can't miss:

Monthly requirements:

• Salary payment: By 5th of following month
• FGTS deposit: By 7th of following month
• INSS payment: By 20th of following month
• Income tax withholding: By 20th of following month

Annual requirements:

• RAIS (employee registry): Submit by March 31
• DIRF (income tax report): Submit by February 28
• 13th month first installment: By November 30
• 13th month second installment: By December 20

Common payroll mistakes

Most companies mess up Brazilian payroll in predictable ways. Here's what to avoid:

Miscalculating contributions: INSS has a salary cap (BRL 7,786.02 in 2025), but other contributions don't. Many payroll systems get this wrong and underpay employer taxes.

Missing the 13th month deadlines: Pay the Christmas bonus late and you'll face 10% penalties plus daily interest. The government doesn't negotiate on this.

Forgetting vacation bonuses: Every time an employee takes vacation, you owe them an extra 1/3 of monthly salary. Budget for this throughout the year.

Wrong FGTS deposits: This fund is sacred in Brazil - it's the employee's severance safety net. Deposit to the wrong account or miss deadlines and penalties compound quickly.

Setting up Brazilian payroll yourself costs:

• Local accounting firm: €800-1,200/month
• Payroll software: €300-500/month
• Tax compliance consultant: €600-900/month
• Risk of penalties: Up to €50,000 for serious violations
• HR manager salary: €35,000+ annually

With Hire with Columbus: $179/month per employee, fully compliant, zero penalty risk.

We handle all the contribution calculations, deadline management, and government filings. Your employee gets paid on time, taxes get filed correctly, and you avoid the €2,000+ monthly overhead of running Brazilian payroll yourself.

What benefits and leave are required?

Brazil employees get 30 days of paid vacation annually, and you can't just let them accumulate indefinitely. They must take at least 20 consecutive days within 12 months of earning them, or you'll pay them out at double rate. Yeah, it's that strict.

Beyond vacation, you're looking at mandatory health insurance contributions, pension payments, and a unemployment fund that adds about 38% to your base salary costs. Miss any of these and penalties start at R$4,000 per employee, escalating quickly for repeat violations.

Annual vacation

Every employee earns 30 calendar days of paid vacation after 12 months of work. They can split this into up to three periods, but one period must be at least 14 consecutive days.

Here's where it gets tricky: employees must take vacation within the "concessão period" - 12 months after they earn it. If you don't schedule it, you pay double salary for those days. Many companies get caught off guard by this automatic penalty.

Vacation pay includes a constitutional bonus of one-third of monthly salary. So if someone earns R$6,000 monthly, their vacation pay is R$8,000 (R$6,000 + R$2,000 bonus). You must pay this at least two days before vacation starts.

Sick leave

Employees can take up to 15 consecutive days of sick leave per illness episode, paid by the employer at full salary. After day 15, Brazil's social security (INSS) takes over with disability benefits.

You'll need a medical certificate for absences longer than three days, or immediately if the employee has a history of frequent sick days. The certificate must come from a licensed physician or company doctor.

Common mistake: some companies try to limit total sick days per year. Brazil doesn't cap sick leave - each illness episode gets its own 15-day clock. An employee could theoretically have multiple 15-day periods if they're dealing with different health issues.

Parental leave

Maternity leave: 120 days at 100% salary, paid by social security (you pay initially, then get reimbursed). Companies in the "Empresa Cidadã" program can extend this to 180 days with tax benefits.

Paternity leave: 5 days at full pay, extending to 20 days for Empresa Cidadã companies. Fathers must request the extended leave within two days of birth.

Adoption leave: Same as maternity - 120 days for the primary caregiver, regardless of gender. The secondary parent gets standard paternity leave.

No shared parental leave system like Nordic countries. It's pretty traditional in structure, though the Empresa Cidadã extensions are becoming more popular among tech companies.

Public holidays 2025

Brazil has 12 national public holidays, plus regional and municipal holidays that vary by location. Employees who work on public holidays earn double pay.

Regional holidays can add 3-5 more days depending on the state. São Paulo has its own founding day, Rio has São Jorge Day, and so on. You'll need to track these for each employee's location.

Mandatory benefits

FGTS (Employment Guarantee Fund): You deposit 8% of monthly salary into a government fund for each employee. They access this money when terminated, buying a house, or retiring.

Social security contributions:

13th salary: Every December, you pay an extra month's salary. It's calculated as total yearly earnings divided by 12, so bonuses and overtime count toward this calculation.

Transportation vouchers: You must provide transportation assistance if employees use public transport, covering up to 6% of their salary. Employees can opt out if they prefer.

Optional competitive benefits

Private health insurance: While not mandatory, 90% of formal employers provide private health plans beyond the public SUS system. Expect R$200-800 monthly per employee depending on coverage.

Meal vouchers: Tax-advantaged benefit where you can provide up to R$2,000 monthly in meal vouchers. Popular because it reduces taxable income for both parties.

Flexible benefits: Many companies offer flexible benefit platforms where employees choose between gym memberships, education, childcare, or additional health coverage.

Stock options: Gaining popularity in startups, though the tax treatment is still evolving. Most companies structure these as phantom equity to avoid immediate tax hits.

Common benefit mistakes

Missing regional holidays: Companies often track national holidays but miss municipal ones. In São Paulo alone, missing the city's founding day (January 25) can trigger labor court claims.

Incorrect 13th salary calculations: Including irregular bonuses but excluding regular overtime, or vice versa. The calculation should include all recurring compensation.

Late vacation payments: The one-third vacation bonus must be paid at least two days before vacation starts. Pay it late and you'll face penalties plus potential labor court claims for moral damages.

FGTS deposit delays: Deposits are due by the 7th of each month. Late payments incur 12% annual interest plus penalties that compound monthly.

Administering these benefits correctly requires local HR expertise (R$180,000+ annual salary), benefits software (R$2,000+/month), legal review (R$50,000+/year), and carries risk of errors worth R$20,000+ in potential fines per violation.

Hire with Columbus handles all benefit administration, compliance tracking, and local requirements for $179/month per employee. We maintain the FGTS deposits, calculate the 13th salary correctly, track all regional holidays, and ensure vacation payments hit the right deadlines - so you can focus on growing your team instead of managing Brazilian labor complexities.

What are the compliance requirements?

Written contracts are mandatory in Brazil. Verbal agreements don't count and expose you to claims for back pay, benefits, and penalties that can reach R$50,000 per violation.

Brazil's Consolidação das Leis do Trabalho (CLT) doesn't give you much wiggle room. Miss one mandatory contract clause and the entire employment agreement can be voided, leaving you liable for full employment benefits retroactively.

Employment contract requirements

Every employment contract in Brazil must be written in Portuguese and signed within 48 hours of the employee's start date. Digital signatures are valid as of 2025, but both parties need access to the signed document.

Your contract must include these mandatory clauses:

• Job title and detailed job description
• Monthly salary amount (cannot be below minimum wage of R$1,412 in 2025)
• Work location and any remote work arrangements
• Working hours and break periods
• Probation period length (if applicable)
• Vacation entitlement (minimum 30 days)
• Notice period requirements

Contracts don't require registration with government authorities, but you must maintain copies for labor inspections. Missing any mandatory clause makes the contract invalid under CLT Article 444.

Probation periods

Probation periods in Brazil max out at 90 days. You can structure this as a single 90-day period or split it into two periods (like 45 days + 45 days), but the total cannot exceed 90 days.

During probation, either party can terminate with just 3 days' notice instead of the standard 30 days. After probation ends, full employment protections kick in immediately.

You cannot extend probation periods beyond 90 days or restart probation for the same employee. Attempting either makes the employment relationship permanent from day one.

Working time regulations

Standard working hours are 8 hours per day, 44 hours per week, Monday through Saturday. You can work employees up to 10 hours daily with overtime compensation.

Overtime rates are 50% above regular hourly wage for the first two hours daily. Weekend work pays 100% premium unless it's part of the regular schedule.

Employees get a minimum 1-hour lunch break (unpaid) and 15-minute rest breaks for every 4 hours worked. You must track all working time - manual timesheets are acceptable, but digital systems reduce compliance risks.

Notice periods

Notice periods depend on length of service and who initiates termination:

Brazil keeps notice periods simple - it's 30 days regardless of tenure. However, employees can work the notice period or receive payment in lieu of notice.

During notice periods, employees get 2 hours daily (or 7 consecutive days) to search for new employment while maintaining full pay.

Termination process

Termination in Brazil requires specific procedures depending on the reason. Without just cause, you must provide 30 days' notice and pay severance (FGTS withdrawal + 40% penalty).

Just cause termination requires documented evidence of serious misconduct like theft, insubordination, or abandonment (15+ consecutive days absent). You must terminate immediately once you discover just cause - waiting weakens your legal position.

For economic layoffs affecting 10+ employees, you need union consultation. Mass layoffs (20+ employees within 90 days) require 30-day advance notice to unions and government authorities.

Severance pay calculations

Severance in Brazil involves multiple components that vary by termination type:

FGTS (Fundo de Garantia) accumulates at 8% of monthly salary throughout employment. The 40% penalty on termination without cause often surprises employers - it's paid directly to the employee, not the government.

Data protection

Brazil follows LGPD (Lei Geral de Proteção de Dados), similar to GDPR. Employee data collection requires explicit consent and documented legitimate business purposes.

You must appoint a Data Protection Officer for companies processing large volumes of personal data. Employees have rights to access, correct, or delete their personal information.

Data breach notifications must be made within 72 hours to authorities and affected individuals. Fines reach up to R$50 million or 2% of company revenue for serious violations.

Common compliance mistakes

Invalid employment contracts top the list of Brazilian compliance failures. Using generic templates without mandatory CLT clauses voids the entire agreement.

Wrong termination processes cost even more. Firing someone for cause without proper documentation converts it to termination without cause - meaning you pay full severance plus legal fees.

Missing wage payments trigger automatic penalties of 100% of the delayed amount. Late 13th salary payments (due by December 20th) incur the same penalty.

Improper overtime calculations generate back-pay claims averaging R$25,000-R$75,000 per employee. Brazilian labor courts favor employees heavily in wage disputes.

Penalties for violations

Common compliance failures in Brazil carry steep penalties:

• Invalid employment contract: R$50,000 fine + contract deemed permanent employment
• Wrong termination process: Full severance + 40% FGTS penalty + legal fees averaging R$15,000
• Missing mandatory clauses: Contract voided, all benefits owed retroactively
• Improper dismissal: R$30,000-R$100,000 compensation + potential reinstatement order
• Late wage payments: 100% penalty on delayed amounts + interest
• Overtime violations: Back pay + 50% penalty + legal costs

Labor court proceedings in Brazil take 18-36 months and favor employees in 80% of cases. Legal fees alone average R$25,000 per dispute, regardless of outcome.

Hire with Columbus ensures every contract and termination follows Brazilian CLT requirements exactly. Our legal team handles all compliance documentation, from mandatory contract clauses to proper termination procedures, eliminating these costly violations entirely.

What has changed recently?

Brazil bumped up the minimum wage to R$1,518 per month in early 2025 (up from R$1,412 in 2024). That's a 7.5% jump that affects salary calculations across the board and pushes up benefit calculations tied to minimum wage multiples.

The bigger headache started in March 2025 with new remote work rules. Brazil now requires written agreements for any remote work arrangement, plus companies must provide at least R$300 monthly for home office expenses. You can't just let someone work from home anymore without formal paperwork and financial support.

Tax changes that kicked in April 2025:

• INSS contribution rates went up 0.5% across all brackets
• New 2% digital services tax hits international companies providing software or digital services to Brazilian employees
• Simples Nacional tax regime expanded to cover more service categories

The Labor Ministry also cracked down on contractor classification in June 2025. They're doing monthly audits of companies using independent contractors, with fines starting at R$50,000 per misclassified worker. The new guidelines are much stricter about exclusivity arrangements and management control.

Holiday calendar updates for 2025:

Brazil added Zumbi dos Palmares Day (November 20) as a national holiday, bringing the total to 13 federal holidays. Some states are pushing for additional regional holidays, so you'll need to track local variations more carefully.

What this means for international hiring:

These changes make compliance more complex and expensive. The remote work stipend alone adds R$3,600 per employee annually. The new contractor audit system means misclassification risks are higher than they've ever been.

An EOR handles all these regulatory updates automatically. While you're scrambling to track minimum wage adjustments and remote work stipend requirements, we're already implementing the changes and keeping your Brazilian employees compliant with the latest rules.