Hiring employees in Brazil takes time and careful planning due to strict Brazilian labor laws that every employment agreement must follow. You’ll need to understand salary requirements, paid leave, public holidays, termination rules, income tax, social security contributions, and so on.
It may feel overwhelming at first, but it’s worth it. Brazil is home to millions of skilled professionals in industries such as tech, marketing, and finance.
With this guide, we’ll help you stay compliant and avoid legal risks. You’ll learn how to hire in Brazil the right way, whether through a business entity or by working with independent contractors.
What makes Brazilian employees a smart choice
Brazil has many benefits related to hiring remote workers as full-time employees. Here are some of them:
Skilled talent across key industries
Brazil has a large and diverse talent pool. You’ll find many professionals with experience in technology, computer science, marketing, design, and other high-demand fields. Brazilian employees are also known for their creativity, adaptability, and strong work ethic. This makes it easier to build reliable and flexible teams for global projects.
Lower employment costs
Hiring employees in Brazil can help you manage your budget more efficiently. The overall employment spending is often lower than in the U.S. or Western Europe. This makes Brazil a competitive option for businesses looking to optimize company costs.
Time zone alignment with the U.S.
If you hire in Brazil, your employee’s time zone will work well with North America. That means your team can work during overlapping hours, making communication and project management easier. Whether you’re working with remote workers or in-house employees in Brazil, real-time collaboration becomes much more manageable.
Strong infrastructure for remote work
Brazil offers good internet connectivity and a strong digital infrastructure. This makes it easy to hire and pay remote workers and keep projects running smoothly. Brazilian professionals are well-equipped to work from home or join international teams without technical issues.
Cultural diversity and innovation
Hiring employees from Brazil adds cultural richness to your team. Brazilian employees often bring fresh ideas and new ways of solving problems. Their creativity and entrepreneurial mindset can boost innovation and help your business grow.
Key legal sources for hiring employees in Brazil
When you hire employees in Brazil, your business must follow several legal frameworks. The main law is the Brazilian Labor Code (Consolidação das Leis do Trabalho or CLT), which outlines key rules for employee contracts, working hours, paid leave, severance pay, and social security contributions. Employment law in Brazil also follows the Federal Constitution, as well as decrees and rules issued by the Ministry of Labor and Employment.
In addition to federal labor laws, you also need to consider collective bargaining agreements. These are negotiated between unions and employers – or sometimes directly with employees – and often define things like annual salary increases, meal allowances, or vacation rules. CBAs are usually renewed every year and apply to specific job categories or industries.
Other sources of employment obligations include employment agreements, offer letters, and even your internal company policies. Since 2017, direct agreements between employers and employees with higher education degrees and a salary of at least twice the Social Security cap are allowed and carry the same weight as a union agreement. This gives companies more flexibility, though overall, Brazilian labor laws tend to favor the employee.
Employment costs and contributions
Hiring employees in Brazil comes with several mandatory costs that U.S. companies need to plan for. These include monthly payroll deductions, annual bonuses, and employer-paid contributions based on the employee’s salary.
Payroll deductions for Brazilian employees
Employers must deduct income tax from the employee’s monthly salary and pay it to the Brazilian government. You’re also required to deduct the employee’s share of social security contributions, which range from 7.5% to 14% depending on their salary. This amount goes to the Instituto Nacional do Seguro Social (National Institute for Social Security).
In 2025, the maximum monthly contribution an employee can make is BRL 951.63. Check the tables for 2025 INSS brackets.
Employer contributions and extra costs
In addition to paying the salary, employers cover around 35.3% of the total employment costs. These include:
- Social security contributions – 27.3% of the salary.
- Fundo de Garantia do Tempo e Serviço (FGTS) – 8% of the salary.
- Meal allowance – Around BRL 40 per working day (approx. BRL 880 per month).
- Mandatory life insurance – BRL 5.56 per month.
These contributions are calculated based on the employee’s gross monthly salary, including bonuses and allowances.
Annual employment costs
Employers must also budget for:
- 13th month salary – equal to one full month’s salary paid each year.
- Vacation bonus – one-third of the employee’s monthly salary during paid annual leave.
- Union bonus (profit sharing) – Around BRL 330.88 per year.
Conditional or situational costs
Depending on the case, employers may also need to cover:
- Abono pecuniário – If the employee chooses to convert up to 10 days of vacation into a cash payment.
- Childcare allowance – Female employees with children under 5 may be entitled to up to BRL 290.98 per child each month.
These costs vary based on the employee’s monthly salary, working hours, and any allowances or bonuses included in their employment agreement. To stay compliant and keep accurate payroll deductions, it’s a good idea to work with local legal experts or payroll providers when you hire in Brazil.
Types and content of employment contracts
When you hire employees in Brazil, it’s important to choose the right type of employment agreement:
- Permanent contracts have no fixed end date and require a notice period and severance pay if the employee is dismissed.
- Fixed-term contracts are used for short-term employment and can last up to two years, with only one allowed renewal.
- Temporary contracts are ideal for seasonal roles or special situations. They are limited to 180 days and can be extended once.
- Part-time contracts apply to employees working 26 or 30 hours per week. These workers receive proportional benefits, including paid leave and social security contributions.
- Intermittent contracts offer flexibility by allowing you to hire in Brazil on demand. You only pay for the hours worked, but standard benefits still apply.
- Apprenticeship contracts are designed for young workers aged 14 to 24. They combine paid work with vocational training and can last up to two years.
- Freelance agreements apply when you hire independent professionals instead of employees. These workers are not covered by the same legal protections unless stated otherwise in the agreement.
If the employee will work remotely or under a fixed-term agreement, the contract must be in writing. Otherwise, Brazilian law doesn’t require a written employment contract in every case. However, written agreements are common because they reduce legal uncertainty. If there’s no written contract, the relationship will still be governed by labor laws – and interpreted by the Brazilian Labor Courts if disputes arise.
What to include in an employment contract
A Brazilian employment contract must include all key details required by the Brazilian Labor Code (CLT):
- the type of contract – whether it’s permanent, fixed-term, part-time, or intermittent,
- the names and contact details of both parties,
- the employee’s job title,
- a clear description of their duties,
- the work location,
- standard working hours,
- break times,
- the employee’s monthly salary,
- payment frequency,
- any extra compensation like overtime pay or bonuses,
- benefits such as paid annual leave, sick leave, parental leave, and social security contributions,
- other optional clauses may include confidentiality agreements or non-compete terms.
To be valid, the contract must be signed and dated by both the employer and the employee.
Non-compete agreements in Brazil
Brazilian labor laws allow for non-compete clauses, but they must be clearly written into the employment agreement. These clauses prevent employees from working for competitors or starting a competing business after leaving your company.
To be enforceable, the non-compete clause must be reasonable in terms of scope, time, and geography. If an employee violates it, you may have the right to take legal action, including requesting damages or a court order to stop the activity. However, Brazilian law often leans in favor of the worker, so the clause must be fair and clearly justified.
Intellectual property rights
In most cases, anything developed by a Brazilian employee during working hours or using company resources is considered the employer’s property. To avoid misunderstandings, your employment agreement should clearly explain how intellectual property is handled.
This is especially important in remote work setups, where personal and company tools may overlap. You should define what counts as company-owned work, how it should be used, and what happens if an employee leaves. Clear terms help protect your business and reduce legal risks around IP ownership.
Key labor laws and employment rules in Brazil
Working hours
Brazilian labor law sets clear limits on working hours. Employees can work up to eight hours per day and 44 hours per week, with one full day of rest. Some employers follow a Monday-to-Saturday schedule, with four working hours on Saturdays. Workers must get a 60-minute break for shifts over six hours and a 15-minute break for shifts between four and six hours.
Overtime and night work
Overtime is limited to two hours per day and must be paid at 150% of the regular hourly rate. For night work, defined as work between 10:00 p.m. and 5:00 a.m., employees receive an extra 20% pay per hour. Each night hour is legally considered 52 minutes and 30 seconds. Employers may adopt the 12 × 36 model (12 hours of work followed by 36 hours of rest) or use an Hour Bank system, as long as there is a written agreement.
Paid leave and public holidays
After 12 months of service, employees are entitled to 30 days of paid vacation per year. This vacation can be taken in one block or split into up to three periods by mutual agreement. Vacation pay includes the full salary plus an extra one-third as a vacation bonus.
Brazil has 10 national public holidays.
Vacation expiration rule
Employers must schedule the employee’s 30-day vacation within 12 months after the employee’s work anniversary. If the vacation isn’t taken within this period, the employee may lose the right to some or all of the unused days, depending on the circumstances. Exceptions may apply in termination cases.
Sick leave
Employees can take up to 15 days of paid leave with a doctor’s note. After 15 days, the National Institute of Social Security (INSS) takes over and pays the employee. Sick leave also covers cases like maternity leave or care for ill family members, where applicable.
Maternity and paternity leave
Paid maternity leave is 120 days and can be extended to 180 days in some cases. Paid paternity leave is at least 5 days and may go up to 20 days, depending on company policy or CBAs. Employers pay these benefits and can seek government reimbursement.
Additional leave and job protection
Employees are also entitled to protection during labor-related illness and union leadership roles. Employees hired under CIPA (Labour Accident Prevention Committee), cooperative credit roles, and those nearing retirement may also have special protections. These are often defined by collective agreements.
Leave for caring for sick family members is also available in certain cases.
Minimum wage
As of 2025, the national minimum wage is R$1,518.00 per month. This is the legal minimum across Brazil, although collective bargaining agreements may establish higher wages based on region or industry.
13th-month salary
All employees must receive a 13th-month salary, also called the Christmas Bonus. It equals one month of regular wages and is usually paid in two installments at the end of the year. A prorated amount must be paid upon termination. The 13th-month salary isn’t included in the base salary and should be clearly stated in job offers.
Currency and legal payment
Employees must be paid in Brazilian reais (BRL). Foreign companies can only pay Brazilian workers directly if they have a business entity in Brazil or work with a local employer of record. Otherwise, they must hire through contractor agreements.
Probationary period
In Brazil, probation periods are allowed for up to 90 days. Employers often split this into two stages: an initial 45-day period followed by a 45-day extension. During probation, employees are still covered by labor protections, but termination terms are simpler than for permanent hires.
Social security and severance fund
Employers must contribute 20% of the employee’s salary to the social security system and also pay labor accident insurance. Additionally, they must deposit 8% of the employee’s salary each month into the Severance Fund (FGTS). Employees can access this fund in cases like termination without cause, serious illness, or retirement.
Termination requirements and notice periods
Employees terminated without cause must receive at least 30 days of notice in their first year. After that, the notice period increases by 3 days for each additional year of service, up to 90 days.
Notice can be worked or paid. If an employee resigns, they must also give 30 days’ notice or have the equivalent amount deducted.
Employers must update employment records within 10 days of termination so the employee can access unemployment benefits.
When an employee is required to work during their notice period, they can reduce their daily schedule by two hours or choose to take the last seven days off. If the notice period exceeds 30 days, only the first 30 days must be worked. The remaining time must be paid but not worked.
Severance and termination types
Termination payments depend on the reason for ending the employment. If the employee is dismissed without cause, they are entitled to full notice, severance, access to the FGTS fund, and a prorated 13th-month salary. In cases of resignation or mutual agreement, the severance calculation may change. Dismissals for cause follow stricter rules and offer fewer benefits.
Special protections against dismissal
Certain categories of employees have protection against dismissal. This includes pregnant employees, employees recovering from illness, union representatives, CIPA committee members, workers close to retirement, and employees with special needs. Additional protections may apply under collective bargaining agreements.
Labor compliance and non-discrimination
Employers must provide a healthy and respectful workplace. Discrimination based on race, sex, disability, religion, ideology, or political affiliation is strictly prohibited. All work environments must prevent physical, mental, or financial harm.
Collective bargaining agreements
They’re legally binding and have the same authority as labor law. They’re usually negotiated at the industry level and apply to workers within a certain region. CBAs regulate topics like wages, benefits, working conditions, and notice periods. Their terms last up to 24 months and can be renegotiated.
Remote work
Remote employees have the same rights as in-office staff. They are entitled to paid vacation, the 13th-month salary, sick leave, and social protection.
Employers must create a remote work policy that defines expectations, working hours, communication tools, equipment, data security, and expense reimbursements.
Employees are responsible for maintaining a safe and productive home workspace.
Employee categories and hour tracking
Not all employees are subject to work-hour control. Managers, directors, and field workers often do not track hours and are not entitled to overtime pay. However, they are still covered by other employment protections.
Read more about 2025’s employment and labor laws and regulations in Brazil.
How income tax works for employers in Brazil
Brazil uses a progressive tax system. That means employees pay a higher tax rate as their income increases. The individual income tax ranges from 0% to 27.5%, based on monthly earnings in BRL:
- Up to R$1,903.98 – 0%
- R$1,903.99 to R$2,826.65 – 7.5%
- R$2,826.66 to R$3,751.05 – 15%
- R$3,751.06 to R$4,664.68 – 22.5%
- Above R$4,664.68 – 27.5%
Local employers must withhold the tax from the employee’s monthly salary and pay it to the government. These withholdings count as a credit toward the employee’s annual tax return. Factors like marital status and total yearly income may affect the final tax owed.
What income is fully taxed?
In Brazil, residents are taxed on their global income, not just income earned within the country. The following types of earnings are fully subject to tax and social security contributions:
- base salary,
- overtime pay,
- bonuses and commissions,
- hazard pay.
As an employer, you’re required to deduct these taxes from payroll every month.
What income is partially taxed or exempt?
Not all benefits are fully taxed. Some are partially or fully exempt from income tax and social security.
1. Tax-exempt benefits
- transportation,
- housing,
- work clothing or uniforms,
- meal vouchers,
- Life insurance,
- health and dental coverage.
2. Private pension plans
These can be offered as part of total compensation. However, at least 30% of the salary must be paid in cash, not just in benefits.
- Per diem allowances (e.g. for meals or travel) are also tax-exempt.
- Reimbursements for work-related expenses (like travel or materials) are not considered salary and are not taxed.
- Some personal medical and education expenses (such as medication, glasses, school fees, and textbooks) may also be reimbursed tax-free if paid directly or through a health plan.
Differences between employees and contractors in Brazil
When you hire remote employees in Brazil, it’s essential to classify them correctly. Brazilian labor law makes a clear distinction between employees and independent contractors – and misclassification can lead to serious penalties.
How Brazil defines an employee
An employee in Brazil is someone who:
- works under the direction of an employer;
- provides services on a permanent basis;
- receives a regular wage;
- does not control their working hours or location.
If your contractor is expected to follow your schedule or report to a specific location, Brazilian authorities may classify them as an employee.
What happens if you misclassify a contractor
Misclassifying a contractor as an independent worker – when they meet the definition of an employee – can result in:
- A fine for incorrect classification, doubled for repeat offenses.
- Back pay for wages, benefits, and social security contributions, plus interest penalties between 22% and 75%.
- Unlimited compensation for moral and material damages, as decided by a labor court.
- A fine per employee for missing FGTS contributions.
- A fine for not registering employees correctly.
To avoid these risks, make sure your contracts, job setup, and expectations align with local laws. If in doubt, it’s safer to treat workers as employees or work with a legal partner who understands the Brazilian setting.
Paying independent contractors in Brazil
Popular ways to pay Brazilian contractors include:
- digital platforms,
- bank transfers,
- checks or money orders,
- wire transfers.
Employers and contractors should agree on the preferred method and timeline in advance. Payments are typically made 14 to 28 days after the invoice is issued. Employers should also account for exchange rates and international transfer fees, which can affect the final cost.
Learn more on how to manage freelancers.
Tax and compliance responsibilities
U.S. companies hiring contractors in Brazil need to follow both local tax rules and IRS regulations. In the case of the United States, Brazilian authorities have officially recognized tax reciprocity. This means the tax paid in those countries can be credited against the tax owed in Brazil on the same income.
If you’re a U.S. employer:
- Collect Form W-8BEN from individual contractors based in Brazil.
- Use Form W-8BEN-E if the contractor operates through a legal entity.
Following these steps helps you stay tax-compliant while working with Brazilian freelancers or contractors.
Hiring options for U.S. businesses in Brazil
You typically have four options to hire in Brazil:
- Set up a legal entity.
- Work with an employer of record (EOR).
- Hire independent contractors.
- Use an intermediate platform like Useme to handle compliance and payments without opening a local entity.
Open a legal entity in Brazil
Opening a local entity allows your company to hire employees directly, manage payroll, and run HR operations internally. However, this process is time-consuming and expensive. You’ll need a local office, a registered address, a bank account, and full compliance with Brazilian payroll, tax, and labor laws.
Brazil is known for having one of the most complex regulatory systems in the world, which makes setting up an entity a long-term investment rather than a quick fix.
Use an employer of record (EOR)
Partnering with an EOR is a fast and compliant way to hire full-time employees in Brazil without establishing your own entity. The EOR becomes the legal employer on your behalf and takes care of payroll, taxes, benefits, contracts, and compliance. This setup is ideal for companies that want to test the Brazilian market or expand without dealing with local bureaucracy.
However, EORs can be expensive – monthly fees add up quickly, especially if you’re hiring more than one employee. You also lose some control over the employment relationship since the EOR is the legal employer. On top of that, EOR services are designed for long-term, full-time hires – not short-term projects or flexible collaborations.
Hire contractors
If you don’t want to open an entity or use an EOR, you can hire Brazilian workers as independent contractors. This option offers flexibility and lower costs since you’re not responsible for employment taxes or benefits.
Contractors manage their own schedules and tools, and you’re free to set custom terms. But there’s a risk: if the working relationship looks like employment (for example, you control the contractor’s hours or work location), Brazilian authorities may reclassify the contractor as an employee. That can lead to high penalties, back pay, and legal issues.
Here’s a more detailed guide on how to hire freelancers internationally.
Useme – a safe and flexible way to pay Brazilian contractors
Useme gives U.S. companies a simple way to legally hire and pay international contractors in Brazil without opening a local entity or risking misclassification. It acts as an intermediary. Your Brazilian contractor signs a contract with Useme, and you receive a clean invoice in English and USD.
After you pay, Useme transfers the payout in your contractor’s chosen currency and handles the invoicing process. This helps you avoid legal risks and administrative hassle while staying fully compliant with Brazilian law.
Useme is a great fit whether you’re working on a short-term project or building long-term collaborations. You can also go global with your business and hire international contractors from multiple countries and settle all deals through Useme. Instead of juggling local laws and tax rules, you get one consistent process and one invoice source from a single European company.
That means no surprises, less admin, and more clarity across all your contractor relationships. See it for yourself! 
How to hire and pay employees in Brazil in a nutshell
- Minimum salary: As of 2025, the minimum wage in Brazil is R$1,518.00 per month – this is the baseline for all employees in Brazil unless a higher amount is set by a collective agreement.
- Employment types: You can hire in Brazil through permanent, fixed-term, part-time, or intermittent contracts – all must comply with Brazil’s strict labor laws.
- Localized employment contracts: Every employee should have a contract that specifies job duties, salary, benefits, and termination rules based on Brazilian labor law (CLT).
- Payroll deductions: You must withhold income tax and the employee’s share of social security (INSS), which ranges from 7.5% to 14%, depending on salary.
- Employer contributions: On top of wages, plan for around 35.3% in annual costs, including social security, FGTS (severance fund), and mandatory benefits like meal allowance and life insurance.
- Bonuses and extras: Budget for a 13th-month salary, a vacation bonus, and possibly a union profit-sharing bonus – all legally required for full-time employees in Brazil.
- Remote setup: If you’re hiring remote staff, make sure your employment contract includes rules for equipment, hours, and expense reimbursements – remote employees in Brazil have the same rights as in-office workers.
- International contractors: If you’re not ready to hire full-time staff, you can work with international contractors instead – but be careful not to misclassify them, or you risk legal fees and other penalties.
- Fast-track option: Want to skip the red tape? Platforms like Useme help you hire in Brazil and pay employees or contractors legally without setting up a local entity and bearing misclassification risk.
