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BRAZIL PEO : Your EMPLOYER OF RECORD based in Rio de Janeiro and São PauloPosted 14/11/2019
As a business owner or foreign investor, you might have the opportunity to grow your activity in an exciting commercial territory, such as Brazil.
Setting-up a new business on the brazilian floor requires above all to conform to local labour laws.
Employment contracts, employees benefits and rights represent potential administrative barriers, that can delay your business development.
Our Employer of Record Service allows our customers to delegate all the administrative and financial questions to a local entity led by experts, and to save time to get focused on their business goals.
Hiring staff in Brazil – The specificities of the Brazilian labour laws
The brazilian work card
The Brazilian work card is a mandatory document for anyone who wants to start working in a company here in Brazil. This document guarantees the professional registration of all the information of his working life, giving him access to his legal rights. This card contains detailed information about each professional experience of the document owner, like the key dates and the income specific to each work position.
Income Tax and INSS (National Institute of Social Security)
In Brazil, the individual income tax is deducted at source. The amount of this income tax (IR) is determined gradually according to the value of the salary. More specifically, we’re talking about a progressive personal taxation system under which individuals are taxed up to a maximum of 27.5% of their income. The rate is progressive from 0% to 27.5% and shared out into three brackets.
The contribution to the National Institute of Social Security (INSS – instituto nacional de la seguridad social) is a compulsory social contribution, paid by both employer and employee. The employee is subject to a progressive rate based on the value of the salary paid, with a maximum rate of 11% of the amount of salary and a ceiling set annually by law. On the other hand, the amount paid for the INSS by the employer is 20% of the total salary, without limitation.
Working day, and overtime work
The maximum regular working time allowed by the Brazilian labour law is 45 hours weekly. This is nine hours per day (excluding a lunch break) if the employee works a five-day week, and eight hours per day (excluding a lunch break) if the employee works more than 5 days per week.
Overtime work must be paid with a minimum additional of 50 percent (100 percent on Sundays or holidays).
The 13th month in Brazil
This is an advantage provided by the Federal Constitution, guaranteed for each worker and consisting of an additional salary at the end of each year. This extra salary is usually paid in two separate instalments.
Brazilian paid vacation
After one year of work, each employee is entitled to a 30-day paid leave. He has also the right to get an additional bonus, equal to one third of his regular wage.
The Fundo de Garantia do Tempo e Serviço, also known as FGTS
The FGTS is a mandatory monthly deposit that the employer must make with the bank Caixa Econômica Federal, on behalf of the employee, to guarantee any unemployment benefits. Each month, a percentage of 8% of salary must be deposited in the account on behalf of the employee.
Brazil PEO : an efficient way to widen your foreign business
Using a Brazil PEO (Professional Employer Organization) is a solution that enables companies to hire employees on the Brazilian floor, freeing yourself from administrative and financial constraints.
There are several situations that should lead you to make use of an Employer of record Service in Brazil :
- You have a contractor overseas and you want to convert them to an employee
- Your company is in a non-compliant relationship with your contractor
- Your company wants to invest in these resources and show your commitment to them by converting to employees
- Your contractors themselves are asking for an improved status afforded to full time employees
- You are looking for a cost effective solution to convert your international contractors to employees
- You need to convert your contractors to employees without setting up a legal entity
- The costs and risk of maintaining a foreign corporate entity from a compliance and financial perspective is too high for the potential benefit or does not align with long term goals
- You need to hire today, but in need of an interim solution while setting up your foreign entity
The benefits of using our Employer of record Service
Using a Brazil PEO should be seen as a tremendous gain of time and serenity. If you plan to settle a business in Rio de Janeiro, São Paulo, or anywhere else in Brazil, using our Employer of record service will allow you to hire local ressources much more easily ; in a compliant way, avoiding the burden of establishing a foreign legal entity.
A cost-effective alternative for expanding your business overseas
Using an Employer of Record service is much more profitable than settle and manage your own business abroad. By delegating the recruitment to our entity, you can easily hire local employees in a fully compliant way while saving budget for other strategic levers.
A flexible solution to hire employees abroad
You need to hire staff in Brazil as soon as possible ? Our brazilian PEO is a great option for hiring brazilian employees compliantly, while avoiding all the administrative constraints that you should manager as a “normal” employer.
If you need to terminate an employee, our employer of Record service will make sure the process is handled in a professional and proper way.
A simpler way to test a new foreign market
Using our PEO service is also a way to test the potential of your business on the brazilian market, while limiting the economic risks for your entity.
You can easily hire staff for a limited time, and keep flexibility to adjust your strategy according to your first economic records.
In a few words, our Employer of record Service allows you to :
-> Simplify the human resources processes, thanks to our in-house team that manages compliance, payroll, and international invoicing.
How does our Brazilian PEO solution works ?
While we manage the recruitment of local resources, you can focus on running your business in Brazil.
In practical terms, we hire employees in-country directly on your behalf, by having them sign locally-compliant employment contracts. We then become their legal Employer of record.
On your side, you maintain day-to-day control on your employees. On ours, we handle all risk mitigation, compliance, payroll, and benefits.
If you’re planning to develop your own business in Brazil and need to delegate the whole recruiting process, feel free to contact our team of experts. We will provide customised service to suit your business requirements.
More broadly, we’re able to assist you in all the business establishment steps required for entering the brazilian market : working visas, bookkeeping, tax optimization, human resources, and financial management.Author's post: Europartner Accounting