By Ana Vizzotto
Brazil is the largest and most populous country in South America at 3.3 million square miles and with a population of 212.7 million people. Brazil’s name comes from the pau-brasil, Portuguese for Brazil tree – it is a natural resource that has played an important role in the economic development of the nation.
Brazilian employment law and courts are protective of employees; however, it has been going through substantial reform since 2017 with the goal of changing traditional views and approaches on employment. This includes permitting outsourcing under certain conditions and employment on demand (or intermittent work).
Why Brazil?
- The rapidly expanding service sector, composed of private and government services, is Brazil’s largest employer, accounting for more than half of the labor force. Employment is growing most rapidly in the field of information technology. The Brazilian IT services sector is expected to reach US $45.76 billion by 2022, market growth of 20.4%, since 2016.
- Brazil’s first unicorn, the transportation app 99, emerged in 2018. In 2021, there were a record-breaking 10 new unicorns in e-commerce, media, fintech, security, and logistics.
- VC funding reached a record $6.4 billion by the end of Q3 2021, tripling the amount raised in all of pre-pandemic 2019 according to the Wall Street Journal, and there are over 13,000 registered startups. Approximately 8.3% of startups are in Edtech, and 5.6% in Fintech. Growth forecasts estimate that the IT sector will create 797,000 jobs by 2025, or 159,000 per year.
- As part of the agenda for economic reform, the government has proposed a legal framework for startups to create a more secure environment for entrepreneurs and potential investors. There is also a push to produce more STEM professionals and graduates to ensure growth of the talent pool to match the growing demand.
- Almost 44% of the population is of prime working age in the 25-54 age group. This high percentage of potential workers is sufficient to meet current and potential employment demands.
What are some employment provisions companies need to keep in mind when hiring in Brazil for the first time?
In Brazil, employees are entitled to a “13th Month” Payment, also known as the “Christmas Bonus.” This is paid in two installments (November and December). There are also 30 days of paid vacation leave every year, which are granted to employees who have completed 12 months of service with their employers. There is no concept of redundancy in Brazil. Employees can be dismissed without cause at any time during the period of employment, subject to notice period and severance pay.
Employers are required to pay the equivalent of 8% of employees’ monthly pay into the Brazilian Indemnity Severance Fund (FGTS) each month, from which the employee may withdraw as severance in specific circumstances. This is in addition to employers’ contributions to social security which range from 20-28.8% of total payroll, depending on the industry sector. Employers with 100 or more employees are also required to employ a minimum quota of staff with disabilities or who have undergone rehabilitation by the Social Security Authorities.
What makes GoGlobal Employer of Record services in Brazil so unique?
Companies seeking to enter the Brazilian market should be prepared to identify local partners who can help navigate Brazil’s complex legal and regulatory system, and this is where GoGlobal can support you. GoGlobal has a local team on the ground, with knowledge and experience of the local environment, and who understand the high direct and indirect costs of employment in Brazil.
Our local team will be your single point of contact and will guide you through setup as well as both recurring routine processes and unique one-time events, ensuring that all costs relating to employment are transparent and that you and your talent are thrilled with the experience.
About GoGlobal
GoGlobal is the world’s fastest growing, privately owned Global Employer of Record (EOR) service provider, with a globally distributed and remote workforce. GoGlobal’s technology-enabled EOR solution allows businesses of all sizes and geographies to hire staff globally without the need to set up a local entity, opening new doors to rapid expansion and growth. GoGlobal clients can hire top talent anywhere in the world – quickly, cost effectively and compliantly.