Hiring an Employee in Brazil

Written by | Contracts, Corporate

Brazil has a very prescriptive and detailed employment law system. The main body of law is set out in the Consolidation of Labour Laws (Consolidação das Leis do Trabalho, “CLT”). However, the rules are also set out in the Federal Constitution and many collective bargaining agreements negotiated between employer and employee trade unions.

Recruitment process: What information can you seek from the prospective employee?

As a general rule, Brazilian labour law does not allow employers to impose conditions based on gender, race, place of origin, marital status, colour, age or family status (among others) as these are considered discriminatory.

Those who are regarded as having been discriminated against can seek moral damages from the prospective employer.

Due diligence: What can you check and what can you ask the candidate?

Brazilian employment law sets limitations regarding the information that the employer may request from the employee.

(a) Background check

In Brazil it is acceptable (and common) for employers to undertake a background check on the employee’s identity, education and professional history while the prospective employee is going through the recruitment process. This is done prior to making an employment offer to the employee.

The employer may request proof of education (such as certificates). The request must be linked to the screening process for the position.

When seeking information relating to the candidate’s employment history, it is important to confirm the information provided with the candidate during the interview, including confirmation that the employer may contact former employers and persons provided by the candidate as referees.

(b) Criminal record check

The general rule is that an employer cannot run a criminal check on their potential candidates as it is considered discriminatory behaviour (this is so even though under Brazilian law criminal records are regarded as public information accessible by anyone). This general rule aims to prevent discrimination against those who have been convicted of a crime or are going through a criminal investigation.

However, case law provides a list of activities and jobs where the employer may exceptionally run a criminal check on the candidate during the recruitment process. These include domestic employees; caregivers of minors, the elderly or the disabled; road transport drivers; employees who work in the agricultural sector handling of sharp work tools; bankers; employees who work with toxic, narcotic substances and weapons; and employees with access to confidential information.

To run this criminal check it is not necessary to ask for the candidate’s permission or even tell the candidates that the employer will perform the check. The employer can simply request (or search for) the prospective employee personal information as part of the recruitment process.

Note that the criminal system in Brazil is divided into Federal and State levels, with the majority of the crimes being dealt with by State courts. For this reason, it is important to ask the candidate his or her previous addresses for the past five years.

(c) Other information

Brazilian law is quite restrictive on the information that can be sought from employees and that can be checked during the screening process.

It is recommended that legal advice be sought during the recruitment process.

Making an Offer: When is it binding?

Once the employer has sent an employment offer to the employee the offer is binding on the employer. Moreover, under Brazilian law a candidate may file an employment action seeking compensation for damages arising from the expectation of being hired. This cause of action arises where the employer did not have a “fair reason” not to proceed. The employment courts will consider whether the candidate has demonstrated that he or she has fulfilled all requirements of the potential employer for the position offered.

Ongoing Obligations: What are the mandatory entitlements?

The main mandatory entitlements set out by the CLT are:

(a) Minimum wage

There is a Federal minimum wage that is the base for all employees in Brazil. The Federal minimum wage may be increased (not lowered) by State and Municipal laws. The minimum wages are adjusted annually.

Additionally, collective labour agreements apply to most employees and contain mandatory minimum wages that apply to different employees.

(b) Overtime

The standard work hours in Brazil is eight hours per day or 44 hours per week (four hours on Saturday). Overtime is paid with a minimum additional of 50%, which may be increased by collective labour agreements. Generally employees cannot work for more than 10 hours per day.

Specific rules apply to different types of employees considering that some types of employees have specific restrictions on working hours.

(c) Vacation

Employees are entitled to a 30-day paid vacation with a bonus which is equivalent to 1/3 of his or her monthly salary after one full year of employment. Employees cannot opt out of taking vacations.

There are restrictions as to when the employees can take their time off and minimum number of days to be taken in a sequence.

(d) Thirteenth salary

Employees are entitled to a mandatory payment of an extra salary by the end of each year. This is called the “13th Salary” and is a peculiar feature of Brazilian employment law.

(e) Remunerated weekly day off

Employers must provide a 24-hour paid rest for each week of work, preferably on Sundays.

(f) Social Security contribution

Contribution rates payable by the employer usually range from 26.8% to 28.8% depending on the employer’s activity. Employees are also liable for Social Security payments which range from 8% to 11%.

(g) Federal Severance Pay Fund (FGTS)

The Federal Severance Pay Fund (Fundo de Garantia por Tempo de Serviço, “FGTS”) is a fund managed by a government-controlled bank (Caixa Econômica Federal) created for the purpose of supporting employees that have been dismissed without cause.

FGTS is funded by a contribution of 8% of an employee’s monthly compensation (payable by the employer).

Subject to certain conditions, an employee’s accumulated FGTS can be used to purchase real estate.

(h) Other entitlements

There are other employee benefits set out in the CLT or provided for in collective bargaining agreements, such as maternity and paternity leave, transportation subsidy, paid absences and additional salary payable if the employee works in hazardous or unhealthy conditions.

Questions?

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Last modified: April 6, 2020