Cynthia Fujikawa Nes

Cynthia Fujikawa Nes

Co-Founder
The Brazil Business

Updated

Brazilian Employment Law in a Nutshell

Cynthia Fujikawa Nes

Cynthia Fujikawa Nes

Co-Founder
The Brazil Business

Updated

Foreigners often refer to Brazil as a country with very strict labour laws and too many benefits for its employees. In this article we will learn more about the Brazilian labour laws and its reflections on the behavior of Brazilian professionals.

It is no secret that hiring in Brazil is not cheap. Costs with health insurance, meals, transportation, contribution to the social security department and other taxes paid to the government significantly increase the cost of an employee in Brazil. What is not talked about as often is that it has not always been like this.

The Brazilian consolidation of labour laws known in Brazil as Consolidação das Leis do Trabalho or simply CLT is the major legislation regulating labour activities in the country. It was created in 1943 and approved by president Getúlio Vargas.

Employment schemes

The Brazilian constitution considers an employee as any individual providing services, depending on and receiving a salary to an employer on a regular basis.

Brazilian labour laws recognises the following types of employment schemes:

Celetista or CLT

Celetista is the Portuguese word for employees working under the CLT regulation. In this case the employee has all the information logged in the CTPS, which is short for Carteira de Trabalho e Previdência Social, where basic employment data like salary, employer, job description and others is recorded. It is considered to be the formal employment scheme.

Trabalhador cooperado

Trabalhador Cooperado corresponds to workers associated to a cooperative. Once a worker joins the cooperative, they are not considered to be CLT, as cooperatives have their own statute. It means that there is an employment scheme among the members of a cooperative, even though many of them work more like employees than as partners.

Self-employed

A self-employed individual is a worker that performs their jobs without having an employment relation as an intermediate. SEBRAE defines a self-employed individual as a private person that provides services to one or more companies, without employment relations.

It means that the service being provided is sporadic, there is no hierarchical subordination and there is no monthly salary. As a self-employed individual provides services at their own costs and risks, without fixed working hours or subordination, they have no rights to regular benefits, such as paid vacations, 13th salary, meals or transportation.

Legally speaking, self-employed professionals are supposed to work as legal entities, as they are expected to pay taxes related to the services they provide, but in most cases, they work as mere freelancers, as this way they would get rid of taxes.

Interns

The term intern refers to students registered in private or public educational institutions (high school, technical or higher education) and taking a part time job. These students can only work up to six hours a day and their job routine must be related to the course they are taking.

Interns do not work under CLT regime, so with the exception of paid vacations and transportation, they have no other rights. Internships contracts are often signed between companies and universities or schools, and most of the internship contracts require companies to pay for a basic life insurance for each of their interns.

Domestic employee

Domestic employees are those providing domestic services to an individual or a household. In case the employee works more than two days a week, the employer will need to register as a formal employee, under the CLT regime, otherwise, the domestic employee could be considered as self employed or a freelancer.

Employee’s rights

As mentioned in our article “Common Benefits in Brazil”, Brazilian employees are used to several benefits and in many cases these benefits define whether they are staying with your company or looking for another job.

Here are the rights guaranteed by law in Brazil:

Established working hours

According to the Federal Constitution, working hours in Brazil should not exceed 44 hours a week and preferentially, 8 hours a day. In this case, the employee would have to work 4 hours on Saturday, so what happens in many companies is that employees would work an extra 48 min every day in order to take Saturday off.

Depending on the job, there are sometimes conventions between companies and unions, and then employees will work more than 8 hours a day. This is the case for nurses, guards and other professionals whose job is essential to society.

Despite legal determinations, establishing that working hours cannot exceed 44 hours a week and overtime cannot surpass 2 hours a day, is not uncommon to hear of people who work 10, 12, 14 or even 16 hours a day. Supervision is not very strict when it comes to this and in some cases, workers choose to accept such working conditions and then sue the company once they leave.

Paid vacations

Every employee working under the CLT regulation has the right to a 30-day rest for every 12 months of work. If by the time an employee is dismissed they have not taken their vacation, then the employer is obliged to pay them a 1/3 extra of the total vacation value.

13th salary

The 13th salary is a gratification equivalent to a months salary and paid in two installments. In Brazil, it is paid in November and December. It is the equivalent to a Christmas bonus in countries like Germany, Argentina and Portugal.

FGTS – Fundo de garantia por tempo de service

As previously explained in our article “Dismissing in Brazil", every month, 20% of the employee’s salary is deducted by FGTS. This percentage is split between the employee and the employer and varies according to the salary. The percentage paid by the employee goes from 8% (for those who earn up to BRL 1.106,90) to 11% (for those who earn from BRL 1.106,91 to BRL 3.689,66). Those who earn more than BRL 3.689,66 pay a fixed amount of BRL 405, 86. The rest is undertaken by the employer.

Aviso prévio

Aviso prévio is a notification that must be given by both the employee and employer when the employee is fired. This notification must be given one month prior to the dismissal.

What happens in many companies is a practice called aviso indenizado, meaning that the company would rather pay the employee an extra 30 days of work without having them as an employee rather than having them working for 30 days, aware that they are going to be fired.

This measure is adopted because employees who are aware that they will be fired within 30 days can cause several problems for the company and be a negative influence among other workers. By law, an employee that resigns should also reimburse the company for their vacation, but this is rarely charged by employers.

Leave

The Federal Constitution establishes that pregnant women can take 120 days leave. Also, with the exception of those working on a trial period, they cannot be fired once the pregnancy has been disclosed and five months after the baby is born. Fathers also have the right to take five days off when their children are born.

Transportation and meals

Brazilian employers are obliged to cover its employees’ transportation costs and provide a meal for those working 8 hours a day. However, just like it happens with working hours, supervision is not very efficient and many companies do not offer any meal for its employees, and in some cases, the space provided for them to prepare/heat their meals is precarious.

I will sue you!

As previously mentioned in this article, Brazilians love to sue their employers. It is a cultural behavior, a way to make “easy money”. Aware of this, many companies decide to operate illegally and wait to see if the employee is going to sue them or not. In many cases, this practice is a lot cheaper than working under proper regulations.

Brazil is said to be the country with the highest number of labour claims in the world. In 2010, this was almost 3 million claims. Specialists point out that one of the major reasons why there are so many labour claims going on in Brazil is that Brazilian laws are outdated and protects the employee.

Also, Brazilian regulations are so extensive and confusing that it is hard to keep up with all the requirements. Employers must be very careful about their work policy or employees will definitely find a reason to sue them (and will probably win).