Opening A Business In Brazil

• Published date: 16 June 2023
• Subject Matter: Corporate/Commercial Law, Employment and HR, Tax, Corporate and Company Law, Health & Safety, Employee Rights/ Labour Relations, Tax Authorities
• Law Firm: L&E Global
• Author: TozziniFreire Advogados and Gabriela Lima (TozziniFreire Advogados)

1. INTRODUCTION

It is not difficult to incorporate a company in Brazil, as, during the last few years, Brazilian Public Authorities have enacted several rulings aiming to simplify and expedite such procedures. However, there are still several measures that must be observed to have the company fully qualified to start doing business in Brazil. Labour and employment law is known to be severe and very specific, therefore, it is an important aspect to be aware when expanding to Brazil.

TozziniFreireAdvogados is a full-service law firm acting in 47 areas of corporate law. We offer a unique structure with industry groups and international desks staffed by lawyers who are considered experts by the market and key national and international guides.

Our labour and employment team is highly experienced in advising foreign corporations entering Brazil. The group is prepared to provide advice on any labour and employment aspect including but not limited to hiring structures, employment and service agreements, mandatory employment rights, profit-sharing plans, stock options, flexible benefits, variable compensation, executive compensation, internal policies, health and safety matters, terminations and severance packages, collective bargaining agreements, union relationships and expatriates.

2. LABOUR AND EMPLOYMENT LAW REQUIREMENTS

a) Employer Policy Requirements

In Brazil, labour relations are a matter of Federal law, so the States and Municipalities have no power to legislate over labour matters. Therefore, labour rights are nationally standardised, and the same labour costs and consequences will apply regardless of an employer's place of business or place of incorporation.

The basic principles concerning labour relations in Brazil are contained in the Labour Code, the so-called "CLT", enacted on May 1, 1943, and amended over the years by scattered statutes. The most important change in the Labour Code occurred in November 2017, when the Labour Reform became effective changing more than 100 articles of the CLT.

The Federal Constitution of 1988 also establishes rights for urban and rural workers and there are also regulations of the Ministry of Labour that must be observed when hiring workers in Brazil.

The Labour Code and Federal Constitution establishes several mandatory rights that must be observed by employers such as: minimum wage, annual vacation, 13 salaries per year, deposits in the "severance fund", severance package, maximum working hours per day and week, among others.

Considering that the mandatory rights are non-negotiable and already established by law, it is not necessary to have employer's policies and/or employment handbooks related to the matter. Nevertheless, employers may provide additional rights to the ones established by law and may also implement their internal policies in Brazil as long as they are not in conflict with the Brazilian law.

Several international companies that incorporate subsidiaries in Brazil opt to have written internal policies, even if they repeat some rights already established by law, to have all employees and even foreign executives responsible for the Brazilian subsidiary aware of the applicable rights and conditions of the relationship. The code of conduct and employee handbook are the most common policies usually implemented in Brazilian subsidiaries.

In what regards health and safety at the workplace, the main programs Brazilian companies must implement are the ones below, and their conditions may vary depending on the number of employees and risk factor of the companies:

• Occupational health and...