Labor Relations

Compensation, Labor Rights and Benefits

The rights and duties of employers and employees in Brazil are set out in the so-called “Consolidation of Brazilian Labor Laws – CLT”, the main statute that regulates labor rights in Brazil, issued in 1943. Labor rights are also regulated by collective bargaining and collective agreements.

Below are the rights that the employee receives from the company:

Working Hours, Holidays and Vacation

The normal working hours in industry are eight hours per day and forty-four hours per week. Employees are eligible for one day off per week (normally on Sunday). Employees may be required to work a maximum of two overtime hours per day with premium pay of at least 50%, plus an additional 20% premium for hours worked on night shifts. Overtime of more than two hours is permissible in an emergency, provided that a special agreement is registered with the Ministry of Labor and Social Security.

Employees are eligible for seven paid national holidays and five religious or municipal holidays. They are also eligible for three days' paid leave upon marriage, two days' paid leave for a period of mourning, and fifteen days' paid leave (annually) for illness. Paternity leave (Licença Paternidade) is paid for five days and maternity leave is paid for 120 days. For every 12 months of service provided to the company, the employee receives 30 days of paid vacation.

Vacation bonus

After full-time employment of one year, an employee is entitled to 30 days per year of vacation, plus one-third of his or her monthly salary as a vacation bonus; the employee may receive cash in lieu of vacation for up to ten days. Employers may grant collective vacation for convenience.

Christmas bonus (13th month salary)

For each 12 months of a calendar year that the employee works for a company, he/she is eligible to receive an additional one-month salary, usually paid one half in November and December of each year.

Employer's Contributions to the Severance Pay Fund (FGTS)

An employer is required to make a contribution of 8.0% of the employee's remuneration each month to a "blocked" bank account; the accumulated deposits may generally be drawn upon for retirement, purchase of real estate property or upon dismissal from the company without just cause; if the latter occurs, the employer is also required to pay a "fine" to the dismissed employee equivalent to 40% of the accumulated funds (an additional 10% is contributed to the government).

Full sick pay (Afastamento por doença)

Fifteen days’ paid leave (annually) for illness upon presentation of medical certificate. If the employee needs to be away for more than 15 days due to an illness or surgery, his/her salary from the 16th day, shall be paid by the INSS (Social Security). The employee is only eligible for INSS benefit if he/she has been contributing for more than one year.

Notice Period

Employment contracts in Brazil are subject to a trial period, which may vary depending on the employment contract. Once the trial period has passed, the employment contract may be cancelled if proper notice is given as follows:

• Up to one year of service: one month’s notice (at the end of a month).
• As of the second year of service and up to the completion of the ninth year of service: two months’ notice (at the end of a month).
• As of the tenth year of service and later: three months’ notice (at the end of the month).

Please note that your company policy might stipulate a different notice period, but it may not be less than one month.

Termination of the employment contract should be communicated via registered mail by either party. A letter notifying the intention to end the contract must reach the employer or the employee by the last working day of the month for the notice to be effective for that month.

The notice period begins after the receipt of this letter and the salary continues to be paid during the notice period according to the employment contract. The final salary payment should include a prorated 13th monthly salary (if a 13th month salary payment is part of the employment contract) and any residual vacation balance should be taken during the notice period or paid in full.

On a related note, the employment contract will automatically terminate on the last working day of the month that the employee reaches retirement age, unless a separate agreement is made between the employer and employee.

Social Security and Pensions

Brazil has an institute responsible for paying retirements, pensions due to death, illness, disability, aids, others benefits foreseen by law. Private pension plans, however, are optional.

Know more about Social Security and Pensions