Hire in Brazil

Employment agreements in Brazil are usually set for an indefinite term. Fixed-term employment agreements are only allowed:

• for up to two years when either the temporary nature of the service justifies a pre-established term or the business activities have a temporary nature;
• during an initial 90-day probation employment period, after which the employment agreement will become for an indefinite term.

The fixed-term agreement will automatically become an indefinite term employment agreement if the agreement:

• is intended for a fixed term, but the reason to justify it is not one of the reasons permitted by law;
• does not include a clause confirming the duration of the term and the legal justification for having a fixed-term;
• is extended more than once;
• the maximum term of the fixed-term agreement is exceeded;
• any renewal is not agreed upon by both parties in writing;
• if successive fixed-term employment agreements are used without observing the legally mandated 6-month break.

Brazilian law restricts what type of information can be asked from employees by employers and checked during the recruitment process.

Criminal records and drug tests are possible only for specific job positions; in which case the candidate must grant specific consent. Pregnancy tests are prohibited by law, in any case. Immigration checks are generally required for foreign workers (expatriates).

An applicant is obligated to submit to a medical examination. Depending on the employee’s line of work, there can be other mandatory test requirements. If the test results are not satisfactory, the employer has the right to prevent future labor claims. This means they can terminate the recruitment process following the test. However, companies must have justifiable reasons in order to prevent being sued for discrimination.

The regular working period cannot exceed eight hours per day and 40 hours per week. Employees who work more than six hours a day are entitled to at least a one-hour break. There must be a minimum rest period of 11 hours between the completion of a working day and the beginning of another. Employees are entitled to a paid rest period each week, preferably on Sundays. Some specific categories allow for a different work shift.

Day hours are considered from 5 am to 10 pm. Night hours are considered from 10 pm to 5 am, and must be paid with an additional 20% of the day-hour rate.

Employers with 20 or more employees must keep a record of their employees’ working hours, including those who work from home. Some legal exceptions might apply, such as employees in a position of trust (those who have direct reports, manage a department, have the authority to sign on behalf of their employer, or are involved in hiring and firing employees).

Most employees are entitled to receive a statutory Christmas bonus each year, equivalent to one monthly salary. Typically, 50% of the Christmas bonus must be paid by November 30 and the remaining 50% on or before December 20.

It is common practice in Brazil to reward employees through bonus payments, which may be contractual or discretionary. All bonuses must be provided on an equal opportunity basis to all employees at similar levels.

Bonus terms and conditions are generally agreed upon at will between the employer and the employee. However, employers should note that if a bonus is paid regularly it might be considered as part of the employment contract. In this case, it becomes subject to regulations. For example, after establishing the regular payment of a bonus, it may not be altered to the detriment of the employee.

To ensure the bonus received by the employee is not considered part of his or her contractual remuneration, the following considerations must be met:

• The bonus payment must be offered at the employer’s discretion.
• The bonus payment must not be paid out on a regular basis.
• The bonus payment must be related to the employee’s performance being “above the usual expected.”

Grounds

Under Brazil’s labor legislation, there are five distinct types of termination.

1. Termination without cause: the employer is not required to disclose the reason
2. Resignation by the employee
3. Indirect termination: this type of termination is characterized by serious misconduct the employer commits against the employee
4. Termination by mutual consent: both parties mutually agree to terminate employment
5. Termination for cause: must be grounded in one of the situations:

• an act of dishonesty
• intemperance of conduct (related to inappropriate sexual behavior) or misconduct
• habitual trading on the employee’s own account without permission from the employer or when such an act constitutes as competition to the employer or is harmful to the business;
• criminal conviction of the employee (if there has been no suspension of the sentence)
• negligent performance of duties
• habitual drunkenness in the workplace
• breach of company secrets
• an act of indiscipline or insubordination
• abandonment of employment
• physical violence or acts against someone’s honor or name during work (except in the case of self-defense or defense of third parties)
• customary practice of gambling in the workplace

Payment of termination costs must be made within 10 calendar days after the end date.

Pregnant women cannot be terminated by the employer during pregnancy or for a period of 60 days after the end of maternity leave. Employees under sick leave (work-related or not) cannot be terminated without cause.

An employee cannot be terminated without legal just cause within 30 days prior to the Union base date. If termination happens within this period, additional severance is due, and it is equivalent to one additional monthly salary.

By Employer

Notice of termination must be given prior to dismissal in the event of a termination without cause and at the employer’s initiative. In the event of termination of the employment agreement for an indefinite term the prior notice period is at least 30 days, with three days added per year of work, limited to 90 days in total. During this 30-day notice period, as per the law, employees are entitled to choose between reducing their notice by 2 hours per day or by 7 days.

The employer may opt to provide a pay in lieu of notice and release the employee from working in this period. Dismissal without notice is accepted in terminations for cause, in which case the communication of the termination is immediate and no payment in lieu is due.

By Employee

When an employee initiates the termination of an indefinite term without cause, it is called a resignation. The employee must offer a prior notice to the employer of 30 days or request to be released from working during the prior notice period.

In the event of a termination by mutual consent, the required prior notice period will be cut in half.

Fixed-term Contract

No notice is needed to terminate the fixed-term contract, but severance is still due.

Under the five distinct types of termination, severance pay guidelines are as follows:

1. Termination without cause by the employer: payment of salary balance, accrued vacation plus one-third bonus, proportional vacation plus one-third bonus, proportional 13th salary, 40 percent severance fund (FGTS) fine over the balance of the employee’s individual account. The employee is also entitled to withdraw the FGTS balance and receive unemployment insurance.
   For early termination of fixed-term contracts (including the probationary period), additional severance is due and it is equivalent to 50% of salaries up to the end of the original contract tenure.
2. Resignation by the employee: payment of salary balance, proportional 13th-month salary, accrued vacation plus one-third bonus, and proportional vacation plus one-third bonus.
3. Indirect termination: same payments due as in a termination without cause.
4. Termination by mutual consent: half of the payment of the prior notice and the FGTS fine (employee’s part) and, in full, other labor allowances due in a termination without cause. In this type of termination, the employee will be able to withdraw up to 80%t of the FGTS balance and will not be entitled to receive unemployment insurance.
5. Termination for cause: payment of salary balance and accrued vacation plus one-third.

After a qualifying period of 12 months, employees are entitled to 30 calendar days of paid vacation. This should be taken within the subsequent period of 12 months, at times most convenient for the employer. The vacation period can be split into periods, provided the employee agrees to this. The vacation leave can be taken in up to three periods, one of which cannot be for less than 14 days. The other periods must not be less than five days each. Additionally, the employee may trade up to 10 days of their vacation period for the equivalent salary compensation. The vacation remuneration corresponds to the monthly salary plus one-third of the employee’s monthly salary. This is regarded as a vacation bonus. Payment of the vacation bonus must happen at least 2 days prior to the vacation start date.

Note: Vacations must be approved at least 30 days in advance.

Carry over rules

If the vacation it is not taken within the year, employers must pay double the salary for the vacation period, as well as allow the employee to carry over the right to take the vacation to the next year and they must be scheduled right away to allow the employee to rest.

With the presentation of an appropriate medical certificate, an employer is responsible for an employee’s salary during the first fifteen days of sick leave. After the fifteenth day of absence due to sickness, the Social Security Agency (INSS) will pay a sick leave benefit to the employee. This benefit does not substitute the actual salary. It is based on INSS calculations of the last contributions and is capped at approximately BRL 7,786.02. The INSS-supported leave will last for as long as the employee needs to make a full recovery. This time is compensated without any legal limitation.

During medical leave, the employment contract is suspended. However, it may not be terminated.

According to the Labour Code, an employee may be absent from work, without any prejudice to his or her salary, in the following situations:

• marriage: three consecutive days (the employee has the right to take vacation time off immediately before or after marriage leave. It is mandatory that the employee informs the employee at least 60 days in advance.);
• certified voluntary blood donation: one day each 12-month period;
• electoral enlistment: up to two days, consecutive or not;
• military or any other public service: for the necessary period (the employer must continue paying salaries during the first 90 days);
• university admission tests: on the dates of the exams;
• participation in court proceedings: for the necessary period required by the authorities;
• union officers: for the necessary period to meet the duties related to the mandate;
• accompanying a spouse or partner to medical appointments and follow-up examinations during their pregnancy: up to 6 medical appointments;
• accompanying a child of up to six years to a medical consultation: one day per year (if the employee needs to care for his/her sick minor child, the absence shall be considered excused and without pay for the day not worked. The absence cannot substitute the day of rest);
• certified cancer preventive exams: three days each 12-month period;
• legal abortion: two weeks;

Collective bargaining agreements may also provide other types of paid leave that must be observed by the company.

The employer can choose to grant unpaid leave if employees request. During this period, the contract is suspended for all legal means.

All female employees are eligible for maternity benefits. The maternity benefit is subsidised by the INSS to the employee for 120 days. This period may commence up to 28 days before the expected birth date. The employer is responsible for paying this benefit. They can then deduct the relevant amount from the social security contributions due to the INSS.

Male employees in Brazil are entitled to five consecutive days of paid paternity leave.

Under certain circumstances, the maternity leave may be extended to 180 days. Paternity leave can be extended up to 20 days. In these cases, the requirements established by the government program must be observed.

Adoptive parents are also entitled to the same 120 days for female employees and five consecutive days for male employees.