How To Pay Your Employees In Brazil

Reforms to Brazil's labour laws were put in place at the end of 2017 and were designed to promote employers to create new jobs and to make it somewhat easier to pay your employees in Brazil.

The labour reform hoped to create a more business-friendly environment in the country but it is still a very complex system. Employment in Brazil is governed by the Federal Constitution and the Consolidated Labour Laws (CLT), which guarantee specific rights to every Brazilian employee.

Payroll

New employees will have their salary set by their employment contract along with collective agreements and they will be paid monthly. There are 12 pay cycles with 12 regular pay cycles and a 13th mandatory cycle as a Christmas bonus, paid in two parcels, the first parcel must be paid by 20 November and the second parcel in December. The federal minimum monthly wage in Brazil is BRL 998, which is equivalent to 226 Euros.

Social security and income tax

Both employers and employees pay into the local social security contributions which range from 8 to 11 percent (depending on the salary amount, limited to a salary of R$ 5.645,80) by employees and 20% to 22.5%, depending on the industry's sector, by the employer. Employers are responsible for deducting the local social security contributions from the employees pay and passing it along to the relevant authorities.

Employees in Brazil are taxed at a progressive rate of 7.5 - 27.5% depending on their salary amount. Residency status is relevant to income tax in Brazil meaning that residents of Brazil are taxed on all worldwide income, while no residents are taxed only on income sourced from within the country.

Benefits

With almost all companies operating under different unions in Brazil, the union agreements can affect the types of benefits offered. Employees can have the options of meal cards, supermarket cards, health insurance and life insurances taken out of their payroll. A minimum amount is taken out of the pay check with the rest covered by the employers to provide these benefits.

Another benefit for employees offered by most companies in Brazil is a profit sharing plan that gives a percentage of earnings to employees once a year.

Vacation, maternity and paternity leave

For every year of employment after the first 12 months, each employee is entitled to 30 days of vacation. In addition, the employee must be paid 1/3rd of a month's salary as a holiday bonus.

The employees can divide the 30 days in three parts and...