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The different types of employment contract in Brazil

The different types of employment contract in Brazil

While it is common in Brazil to work without a contract, it is highly recommended to have one as an expat. You will need it in particular to obtain your visa. Brazilians are generally satisfied with a work booklet ( Carteira de Trabalho ) and consider that employment contracts ( Contrato de trabalho ) are mainly intended for executives and managers.

In this article we will review the four main employment contracts that exist in Brazil.

You’re planning to start a new business in Brazil and need advice to optimize the launching and management of your activity ? Feel free to contact our team of experts on the brazilian labour market.

Contract of indefinite duration ( Contrato por tempo indeterminado )

This is the most common employment contract model in Brazil. Its specificity is based on the fact that only the start date is fixed; termination can take place at any time provided that one of the parties (employer or employee) gives notice. The trial period is three months maximum.

This type of contract offers many advantages to workers such as:

  • A minimum wage according to the function performed and in compliance with the collective labor agreement;
  • A maximum working time of 8 hours per day, with payment of overtime at a minimum rate of 50%. These cannot exceed two hours per day
  • A 13th month, paid vacation as well as a two-day weekly rest

When there is no misconduct of the employee (just cause or mutual culpability), the dismissed employee is entitled to receive unemployment insurance as well as 40% compensation under the FGTS (Reserve Fund for Severance Pay, Fundo de Garantia do Tempo de Serviço). The Reserve Fund for Severance Payments (FGTS) was created with the aim of protecting workers made redundant without a valid reason by opening an account linked to the employment contract.

Thus, at the beginning of each month, employers deposit 8% of the salary in accounts opened with the Fund on behalf of the employees. When the resignation is requested by the employee himself, then he loses the right to notice and to his compensation of 40% on the FGTS. Thus he cannot withdraw the balance of the FGTS and loses his right to unemployment insurance.

Fixed-term contract (Contrato por tempo determinado )

This is a type of employment contract for which the end date of the assignment is fixed in advance. Be aware that the worker will not receive a notice of termination of the contract or the 40% of the Guarantee Fund (FGTS) provided for in the event of termination of service as well as unemployment insurance. The fixed-term contract cannot exceed two years. According to the CLT ( Consolidação das Leis do Trabalho ), this contract is valid when:

  • 1/The nature of the service justifies the predetermination of the duration of the contract
  • 2/ hiring is transitory in nature
  • 3/the employee is experienced

Temporary employment contract (Contrato de trabalho temporário)

The temporary employment contract is governed by Decree No. 73.841 of March 13, 1974. It is temporary work carried out by an individual, aimed at meeting a transitional need to replace staff or increase services. We can compare this type of contract with temporary contracts in France. These are contracts with a fixed term of between 3 and 9 months.

Occasional employment contract (Contrato de trabalho eventual)

This is an occasional form of work, that is to say on an absolutely temporary and exceptional basis. Although it is often confused with the temporary employment contract, the big difference lies in the fact that the occasional employment contract does not generate an employment relationship.

In other words, the casual employee carries out his activity sporadically, for a short period, but is not considered to be an employee of the contracting party. In other words, there is no direct employment relationship.

You’re planning to start a new business in Brazil and need advice to optimize the launching and management of your activity ? Feel free to contact our team of experts on the brazilian labour market.

You are looking to hire Brazilian talents without establishing an entity in Brazil ? Discover the Europortage Employer of record solution.

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