Forums For Adjudicating Employment Disputes
The Labour Court has primary jurisdiction over claims involving work-related situations, including but not limited to claims from employees, officers, independent contractors, and independent consultants. Arbitration Courts prevail over Labour Court’s jurisdiction in case employees earning at least a BRL 12,867.14 monthly compensation (in 2021) expressly agree, in writing, upon solving a labour dispute in such Courts.
The Main Sources Of Employment Law
In Brazil, fundamental employment rights are provided for in the Federal Constitution, which establishes rights and minimum contractual conditions that must be complied with in employment relations.
The rights provided for in the Federal Constitution are codified by federal laws and, in their vast majority, are consolidated in the Brazilian Labour Code (“CLT”).
In addition to the CLT, a significant amount of regulation is introduced by federal labor and social security authorities, such as those relating to occupational health and safety.
There are also mandatory regulations outlined in collective bargaining conventions (“CBC”) executed between one or more Trade Unions representing the companies, and one or more Labour Unions representing employees. Please note that, in Brazil, companies may also be under collective bargaining agreements (“CBA”), which are executed between employers and Labour Unions.
Moreover, policies set forth by the employer are also deemed a source of Employment Law.
Finally, Laws 8,212/1991 and 8,213/1991 and Federal Decree 3,048/1999 cover the principal regulations regarding social security obligations relating to employment.
National Law And Employees Working For Foreign Companies
National law applies to work performed in Brazil, even if the employee works for a foreign company (with or without a branch in Brazil) or is a non-national employee (in such case, specific visa regulations apply). It is not possible to override this by specifying a different set of rules chosen by the parties and included in the employment agreement. Thus, the company must provide to the foreigner the same rights guaranteed by law to Brazilian workers, and it is advisable to include him or her in the local benefits policy.
When hiring non-nationals, employers are subject to specific visa regulations. Labour regulations also limit the total of non-nationals hired as employees in a company to 1/3 of the employees and/or 1/3 of the cost of the payroll.
National Law And Employees Of National Companies Working In Another Jurisdiction
Law 7.064/1982 establishes the rights applicable to employees of Brazilian companies working in another jurisdiction, whether hired in Brazil to perform services abroad or simply transferred to a foreign subsidiary of a Brazilian company. Such rights include the labour rights in the jurisdiction where the work is done as well as any rights under Brazilian law, whichever is the more beneficial to employees.
Employers shall keep employees’ personal data confidential, which may be disclosed only upon a judicial decision or a public authority request. The collection, treatment, and processing of their personnel data must be expressly authorized by one of the legal basis provided for by the Brazilian Data Protection Law (Law 13,709/2018).
With regard to employees under 18 (minors), the collection, treatment, and processing of their personal data shall be made upon the provision of notice (if collected offline) or upon express consent (if collected online). In any case, it is also required specific permission given by at least one of the parents or the legal representative.
Legal Requirements As To The Form Of Agreement
As a general rule, Brazilian law does not require the execution of a written employment agreement. Nonetheless, the parties usually execute written employment contracts detailing the work terms and conditions not established by law or by collective bargaining. Written employment contracts are mandatory for temporary, fixed-term, part-time, telework, and zero-hour contracts, but are highly advisable in case of managerial positions and employees handling confidential information and/or developing products or inventions.
It is essential to highlight that job offer letters are usually construed by the Brazilian Labour Courts as part of the employment agreement. Thus, they create duties and rights for employment, even if the job offer has been replaced by a formal employment agreement.
In any case, it is mandatory to provide the details of the agreement in the Employee’s Labor ID (“CTPS”), including information on the hiring date, compensation and special conditions to which the employment contract is subject to, and employment registration form – this procedure is also called “to register an employee”.
Under Brazilian labour law, an employee is entitled to certain rights, in addition to what may have been agreed to in a written employment agreement.
The maximum length of a probationary period is 90 days according to the law unless otherwise provided by collective bargaining. Should this period be shorter than 90 days, the employer may extend it once if both periods together do not exceed 90 days. If the employment contract continues after the probationary period, including due to job tenure, it is automatically converted into an indefinite-term contract.
Hours Of Work
In general terms, hours of work are limited to 8 per day or 44 per week. In certain situations, such as night shifts or by agreement, this maximum limit may be reduced.
The working hour limits defined by law are mandatory. Some worker categories have a lower limit of working hours per day (e.g., bank workers, workers in hazardous activities). For offshore employees, the hours of work are limited to 12 hours per day, in a shift of 15 days of work per 15 days of rest.
Specific rules regarding working hours may also be established by CBC or CBA.
Special Rules For Part-time Work
The work shift of part-time jobs is limited to 30 hours per week, in which no overtime is allowed, or 26 hours per week plus six hours of overtime (totalling 32 hours), and the relevant salary must be proportional to the full-time job salary.
Part-time employees’ vacation has the same length and conditions of indefinite-term employees.
Besides national minimum wage (currently BRL 1,100 per month) employees are entitled to (i) annual Christmas bonus (13th Salary), which is an additional monthly salary, paid in two instalments, the first during the period from February to November, and the second up to December 20; (ii) Unemployment Severance Fund (the so-called “FGTS”), which is an amount to be funded by the employer by depositing 8% of the employee’s monthly salary in a special bank account at the Federal Savings Bank (Caixa Econômica Federal); and (iii) 30 days of vacation per year of service paid with salary and a bonus equivalent to one-third of the salary.
Please note that CBC or CBA may also set forth other earnings.
Employees are entitled to an annual 30-calendar day paid vacation, which must be paid together with an annual bonus equal to 1/3 of the employee’s monthly salary owed together with the vacation payment (up to two days before the start of the vacation).
Employees are also entitled to a minimum 11-hour rest period between two work shifts and a break for rest and meal according to the following parameters: a 15-minute break if the working hours exceed four hours, but do not exceed six hours; or a break of at least one hour if the working hours exceed six hours. Such a break for rest and meal is not counted towards the calculation of the daily working hours.
The weekly 24-hour rest is paid by the employer, being included in the employee’s monthly salary. Depending on the industry, every 3-7 weeks the weekly rest must be given on Sunday.
The minimum age for work as an employee is 16 years. Apprentices may be hired once they are 14 years old. There is no maximum age for non-governmental employees. Apprentices must not be older than 24. Retirement does not imply an automatic cause for termination.
The legislation ensures the right to sick leave to the employee under medical recommendation, in which case the employment contract is suspended and cannot be terminated. The employer pays the first 15 days of sick leave, and the National Institute of Social Security (“INSS”) pays the other days of leave as a social security benefit. There is no time limit for sick leave.
Also, as mentioned above, Brazilian laws provide that companies are obliged to hire a certain number of apprentices and disabled workers.
Location Of Work/Mobility
The employment agreement must provide details of the employee’s place of work. If the employee may be required to travel for business or even to be transferred to another location of work, it is recommended that this be recorded in the employment agreement.
In case of a temporary transfer to another location of work, the employer must pay a transfer allowance of at least 25% of employee’s salary during such a transfer, together with any costs of the transfer.
In the event of a permanent transfer to another location of work, this must be recorded in a formal agreement, and the employer must pay the corresponding costs related to the employee’s relocation. Any transfer of the employee to work abroad will trigger the application of a Brazilian special law related to cross-border work.
An employee may work from his/her home under a telework system, provided that such condition and the costs related to are expressly provided under the employment agreement.
The employer is under no obligation to establish or contribute towards a private pension scheme, even though this is a common practice in Brazil. Employees are considered covered by the National Institute of Social Security pension plan (mandatory for employees), which is funded by employers and employees to the Government.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
In case of pregnancy or adoption, female employees are entitled to 120-day maternity leave starting on the day of the newborn’s or the mother’s hospital discharge, whichever the later, paid by the National Institute of Social Security which is, rather than an employment right, social security right. Besides, during pregnancy and until at least 150 days after birth, the employee is entitled to job security.
Male employees are entitled to a 5-day paternity leave paid by the employer, both in case of birth and adoption.
As a rule, the mandatory terms must be noted in the Employee’s Labor ID, i.e., the name of the parties, job title, salary, commencement date and probation period (if applicable), promotions, salary increases, and other rights and duties.
The employer and the employee are free to agree on any other terms in addition to the compulsory provisions, provided that these terms are not detrimental to the employee than the rights provided under the Federal Constitution, the Labour Code and the CBA or CBC, and in any applicable special laws.
In any case, once set forth by the employer, rights, and benefits may not be changed except if favourable to the employee.
Types Of Agreement
Employment Agreements may but do not have to be in writing, provided that the essential elements are noted in the Employee Booklet. Employment agreements are usually established for an indefinite period, however, in a few circumstances may be established for a fixed period or part-time jobs.
In general, the protection of trade secrets and other confidential business information are provided for in the Federal Constitution, which ensures the free initiative and exercise of economic activity, and Law 9,279/1996, which fights unfair competition, states that some conduct committed by an employee, partner or administrator of the company impaired is a crime.
Therefore, employees must keep confidential any secrets or confidential information belonging to the employer (including documents, memoranda, drawings, diagrams, lists, computer programs and other items that may contain business secrets), being possible that the employment agreement be terminated for cause in case of failure to comply with this obligation.
Specific and more detailed confidentiality clauses are commonly inserted in employment agreements. It is also possible to add a confidentiality clause after the employment has commenced by means of a written agreement.
Ownership of Inventions/Other Intellectual Property (IP) Rights
In general terms, inventions or objects (subject to intellectual property rights) produced or created by the employee during his/her employment belong to the employer. Still, for certainty, it is advisable to have an express provision in the employment agreement. The compensation for the invention developed is limited to the employee’s salary, unless the parties agree on other indemnity or rights.
In general terms, an offer letter and any other work invitation, either in writing or orally, sent to an applicant before the execution of an employment agreement, is binding upon the Parties and deemed a part of the employment relationship from the date the offer/invitation is delivered.
Another key aspect involving pre-employment issues is related to the legal extent of background checks.
Although in Brazil there are no specific restrictions on applicants’ background checks, each person’s privacy, private life, honor, and image shall be respected. Therefore, courts have decided that a legal background check involves direct or indirect (through expertise vendors) access to public records kept by official agencies. Courts have also interpreted that getting the applicants' express authorization for background checks is the best practice and that the results should not necessarily be revealed to applicants.
According to the Brazilian Data Protection Law (effective as of May 3, 2021, or August 1, 2021 - pending confirmation by the National Congress), once data has been gathered, analysed, and deployed in the hiring decision-making process, it should be immediately erased and cannot be stored in any case considering its general purpose has been fulfilled; otherwise, a significant fine may be imposed.
When hiring non-nationals, employers are subject to specific visa regulations. For each foreign employee, the employer must employ two Brazilian employees. This is the ‘two-thirds rule’ established by the CLT, which is also required in relation to the company’s payroll.
Among the many types of work permits, the most applied-for permission is the temporary permit granted for foreign professionals who aim at working in the country with or without a job offer. If no job offers are issued, the work permit will be granted in the following cases: (i) technical assistance or technology transfer services; (ii) professional training provided by a foreign company´s subsidiary or by a Brazilian company; (iii) professional internship; or (iv) auditing or advising services for more than 90 days. The length of the visa in such cases ranges from one to two years, and their extension will be conditioned upon specific ordinances to be released by the Ministry of Economics.
The permanent visa applies, among others, in the following situations: (i) foreign investors wishing to reside in Brazil; and (ii) foreigners who want to hold roles as officers of Brazilian companies.
In cases where foreign professionals are sponsored by a Brazilian company by means of a job offer or an employment contract, the length of the visa is up to two years, extendable for the same period upon the employer’s justification. This visa is available for employees who are transferred from one corporate entity in another jurisdiction to a related entity in Brazil.
Officers and administrators that do not qualify as employees may apply for permanent visas, which are approved when the company evidences an investment, duly registered with the Central Bank of Brazil, of an amount of at least 600,000 reais for each professional, or an investment of at least 150,000 reais per professional provided that the Brazilian company undertakes to create at least 10 new jobs within two years following its incorporation in Brazil or the concession of the permanent visa to the foreign administrators or officers.
Another possibility is the granting of a permanent visa to foreign individuals investing in Brazilian companies. In such cases, each foreign investor must provide evidence that he or she has already made capital contributions, duly registered with the Central Bank of Brazil, to a new or an existing Brazilian company, of an amount not lower than 500,000 reais. Exceptionally, the Immigration Council can authorise, at its sole discretion, the granting of a permanent visa even if the capital contribution is lower than 500,000 reais but higher than 150,000 reais, provided that the investment is in innovation, primary and applied research or for scientific and technological purposes. Finally, visas issued before the Migration Law comes into force will remain in force until their expiration date.
The admission of foreign workers that do not fulfil the legal requirements subjects the company to fines imposed by the Brazilian immigration authorities, and the federal police may deport the illegal foreign worker.
Hiring Specified Categories Of Individuals
There are constitutional and legal restrictions relating to specific tasks, such as night work and hazardous work, which may not be performed by under-age employees.
Companies with 100 or more employees are obliged to hire from 2% to 5% of disabled workers or those submitted to professional rehabilitation after work-related accidents (depending on the number of employees in the company),
Different treatment also applies to the hiring of apprentices. The apprenticeship is a hiring regime that, in addition to the theory taught in courses, grants professional and technical training to people between 14 and 24 years old. Companies are also obliged to hire a specific number of apprentices, the quota varying from 5 to 15 per cent of the number of workers who perform roles that demand professional training.
Outsourcing And/Or Sub-Contracting/Temporary Agency Work
Outsourcing is deemed licit and can be agreed upon activities related, or not, to the core business of the company provided that some conditions and requirements are met. Contractors are secondarily liable for the outsourced employees’ labour rights and obligations.
Temporary work shall be performed by individuals to urban companies (hiring parties) and is allowed in two situations: to meet the temporary need to replace regular and permanent employees in the company (for example, in the case of vacation and sick leave) or to deal with extraordinary increase of activities (for example, at certain times of the year, such as during the holiday season).
The temporary employment contract is necessarily written and can be executed for 180 days, consecutive or not, extendable for a further 90 days if the preliminary conditions that led to the temporary staffing hiring are still in force.
Although temporary employment agencies are responsible for paying and assisting the temporary workers hired by them with respect to their rights and obligations, hiring parties must provide temporary workers with the same health and safety work conditions already granted to regular employees, as well as the same medical and meal assistance, provided that the temporary work is performed within the hiring party’s offices or plant. The same provisions apply to outsourced workers.