How to hire in Brazil through an EOR

Brazil defaults to indefinite-term contracts. They're the most common contract type because they suit ongoing roles and give employees full protections under the CLT labor code.

Contract types

For most hires, indefinite-term is the right call. Fixed-term contracts come with strict rules and can convert to indefinite if you misuse them. Part-time works for reduced hours but keeps all rights proportionally intact.

What has to be in the contract

Written contracts aren't legally required in Brazil, but use one anyway. Verbal agreements count, but they leave too much room for disputes down the line. Register key terms in the employee's CTPS work card.

At a minimum, include the start date, job duties, salary, working hours (max 8/day), overtime rules, vacation entitlement, and termination conditions. Portuguese isn't required, but it's the standard for clarity and enforceability.

Probation periods on indefinite contracts can last up to 3 months. During that window, either side can end the relationship without notice or severance. After probation ends, full notice obligations apply.

Contractor vs. employee

Misclassification is one of the bigger risks when hiring in Brazil. Courts apply four tests: personal services, habitual work, subordination (where you control how and when the work happens), and payment for those services. If all four are present, it's employment, regardless of what the contract says.

If a worker is reclassified, you'll owe back pay, FGTS deposits (8% of salary), 13th salary, vacation pay, overtime, and a 40% FGTS fine on dismissal. It adds up quickly.

Beyond back pay, you're also looking at fines from labor authorities, tax backpayments with interest, court-awarded damages, and legal fees. The financial exposure is real, so it's worth getting the classification right from the start.

Non-compete clauses can be enforced in Brazil, but they need to be reasonable. That means a defined time limit (up to 2 years), a specific geographic scope, and compensation paid to the employee during the restriction period. Courts will scrutinize anything that goes beyond that.

IP assignment needs to be spelled out explicitly in the contract. Employees retain ownership of their inventions by default, so if you want work product assigned to the company, you need to say so clearly in writing.

Brazil gives employees 30 days of paid annual leave after just one year of work. That's double what many countries offer, and it comes with a mandatory one-third salary bonus on top.

Time off

Employees earn 30 calendar days of paid annual leave after 12 months of work, called the acquisitive period. They must take it within the following 12 months, or you'll face double pay penalties. Unexcused absences can reduce it: up to 5 days means the full 30, but over 32 means zero.

You can split the leave into up to three periods: one of at least 14 days, and the others at least 5 days each. It can't start within two days of a weekend or holiday. Employees can sell back up to 10 days for cash if you agree, but you can't require it. Pay is their full salary plus a one-third bonus, deposited two days before the leave starts.

All leave types

Here's what Brazilian law requires. Job protection applies across all leave types unless noted below.

Mandatory benefits

You're required by law to withhold and contribute to social security (INSS), FGTS (a severance fund), and 13th salary. There's no national health insurance mandate, but INSS covers some medical costs. Pension is also handled through INSS.

As the employer, you contribute 20% to INSS (capped), 8% to FGTS, and provision the 13th salary monthly across two payments per year. Employees contribute 7.5-14% of their salary to INSS. Worth knowing: many collective agreements require meal vouchers (around R$20-30/day) and transport vouchers, even though these aren't universal law. If your team works from home, you're also required to reimburse electricity and internet costs proportional to work use.

What people actually expect

If you're hiring in São Paulo or Rio, legal minimums won't get you far. Employees expect private health insurance that covers top hospitals. The public SUS system exists, but it's stretched, and most professionals won't see employer-provided private cover as optional.

Dental plans are standard. Food allowances (vale-refeição) around R$30/day and transport vouchers (vale-transporte) are near-universal in practice, even where they're not strictly required by law. For remote workers, budget around R$100-300/month for home office costs.

Stronger candidates will often look for 35-40 days of annual leave, flexible splitting, and extended paternity leave of 10-20 days. Profit-sharing or stock options also help if you're competing for experienced hires. Stick to the bare legal minimum and you'll likely lose out to local employers who don't.

Terminating employment in Brazil is possible, but it comes with real costs. The system is employee-friendly, and if you skip steps or fire the wrong person at the wrong time, you're looking at significant payouts or a court reversal.

Firing someone

You can end an indefinite contract without cause, but you'll need to give notice (or pay in lieu) and cover severance. Fixed-term contracts are different: early termination usually means paying 50% of the remaining contract value, or standard indefinite severance if the contract spells that out.

Termination with cause skips notice and most severance, but you need solid documentation. Valid grounds include insubordination, job abandonment, breach of confidentiality, defamation, or gambling on site. Brazilian courts expect real evidence. Without it, the termination can be reversed.

Some employees can't be dismissed at all without special approval. That includes pregnant workers (from confirmation through five months post-birth), employees recovering from a work-related accident or illness (one year after returning), union leaders (one year after leaving the role), accident prevention commission members (one year after the role ends), and anyone within one year of retirement under a collective agreement.

Mutual termination is worth knowing about. It cuts costs: you pay half the notice period and half the FGTS fine instead of the full amounts. Whatever route you take, get everything in writing. You'll need a termination letter, notice documentation, the TRCT, GRRF, and unemployment insurance forms.

Notice periods

Employees give 30 days' notice when resigning. If they don't, you can deduct one month's salary. Employer notice grows with tenure, up to a maximum of 90 days. You can pay in lieu of notice instead of working it out.

Severance

Without-cause terminations trigger a full severance package. That includes the salary balance for days worked, a proportional 13th salary (1/12 per month worked), proportional vacation plus one third, and a 40% fine on all FGTS deposits. The FGTS is an employer-paid fund at 8% of monthly salary. Payment is due on the last day, or within 10 days if the employee skips their notice period.

With-cause termination cuts most of that: no notice, no FGTS withdrawal, no 40% fine. You still owe proportional 13th salary and vacation. Mutual termination sits in the middle: same components as without cause, but notice pay and the FGTS fine are both halved. There are no caps on amounts. Everything goes up with salary and tenure. Probationary periods (up to 90 days) follow the same rules, just with shorter notice.

Work permits and visas

You can hire foreign nationals in Brazil through an EOR, but the EOR handles sponsorship as the legal employer of record. Brazil requires a work visa for non-residents, and EORs use their local entity to make that happen.

The main categories are: Temporary Work Visa (VITEM) for up to 2 years, renewable; Permanent Work Visa for long-term roles; and a Technical Visa for specialists. You'll need a job offer, proof of qualifications, a police clearance, and a health certificate. The process typically takes 2-4 months. Applications go through the Brazilian consulate abroad, followed by registration in Brazil.

Brazil introduced a digital nomad visa in 2022 for remote workers earning at least $1,500/month from foreign sources. It's valid for one year, but it doesn't allow local employment. That means an EOR can't use it for someone on your payroll. Family members can join on some visa types.

A few other things worth knowing

Brazil's data protection law, the LGPD, works similarly to GDPR. You'll need consent for processing personal data, and if you're growing, appointing a Data Protection Officer is worth considering. Breaches must be reported within 2 business days. Fines can reach 2% of Brazilian revenue. An EOR typically manages LGPD compliance on your behalf.

Trade unions carry real weight in Brazil. There are over 10,000 of them, and collective bargaining agreements often set terms above the legal minimums. It's worth checking the relevant industry agreement for your hire, since CBAs can override statutory defaults on things like notice periods and pay. They can't, however, reduce rights below what the law guarantees.

There are no major regulatory changes flagged for termination or hiring through 2026. Labor reforms since 2017 did ease some rules, including mutual termination, but the core protections haven't shifted. Keep an eye on union negotiations and any FGTS updates that might affect your cost calculations.