Hire Employees in Brazil as a Foreign Company Using an EOR.
Brazil is Latin America's largest economy with deep talent in software engineering, finance, marketing, and professional services. RecruitGo handles CLT employment contracts, INSS contributions, FGTS deposits, 13th month salary, vacation bonuses, eSocial reporting, and payroll in BRL so you can hire compliantly in days, not months.
What Is an Employer of Record in Brazil?
An Employer of Record (EOR) is a locally registered company that legally employs workers in Brazil on your behalf. RecruitGo's Brazilian entity becomes the legal employer under the Consolidacao das Leis do Trabalho (CLT). We sign the employment contract in Portuguese, register the employee in eSocial, enroll them in the INSS (social security) and FGTS (severance fund), manage monthly payroll in BRL, calculate and pay the 13th month salary, administer vacation and the mandatory 1/3 vacation bonus, and handle all reporting to the Receita Federal (tax authority).
You retain full control over the employee's work, schedule, and responsibilities. They report to you, work on your projects, and function as part of your team. We handle everything that Brazilian labor law places on the employer.
Why EOR matters in Brazil: Brazil has one of the highest employer cost burdens globally. Mandatory contributions (INSS, FGTS, RAT, Sistema S) add approximately 31 to 37% on top of gross salary. When you include the 13th month salary and vacation bonus, total loaded cost reaches roughly 147% of gross. Add aggressive labor court litigation culture, mandatory eSocial digital reporting, and a complex web of collective bargaining agreements (CBAs), and compliant hiring without local expertise becomes extremely risky.
Who Should Use EOR in Brazil?
What It Costs to Hire Through EOR
Brazil's employer burden is among the highest in Latin America. Mandatory contributions (INSS 20%, FGTS 8%, RAT 1 to 3%, Sistema S ~5.8%) add 31 to 37% on top of gross salary. When you include the 13th month salary provision (8.33%) and vacation bonus provision (~11.11%), total loaded cost reaches approximately 147% of gross.
| Component | Monthly (BRL) | Rate / Basis |
|---|---|---|
| Gross salary | 8,000 | — |
| INSS (employer) | 1,600 | 20% |
| FGTS | 640 | 8% |
| RAT (work accident insurance) | ~160 | ~2% (medium risk) |
| Sistema S (SENAI, SESI, SEBRAE, INCRA, Salario Educacao) | ~464 | ~5.8% |
| 13th month salary provision | 667 | 8.33% (1 extra month/year) |
| Vacation bonus provision | 889 | ~11.11% (30 days + 1/3 bonus) |
| Total employer cost | ~12,420 | ~155% |
* 2026 federal minimum wage is BRL 1,621/month. Five states set higher minimums. RAT rates range from 1% (low risk) to 3% (high risk), adjusted by the FAP multiplier (0.5x to 2.0x). Sistema S rates vary by industry sector. FGTS has no salary cap. EOR management fee not included above.
The hidden cost of termination: If you dismiss an employee without just cause, you must pay a 40% penalty on the total accumulated FGTS balance plus the 30-day notice period (extended by 3 days per year of service, up to 90 days). For an employee who has worked 3 years at BRL 8,000/month, the FGTS balance alone is approximately BRL 30,720, making the 40% penalty BRL 12,288 on top of all other termination payments.
How Hiring Works Through EOR
You share the role, salary in BRL, location, and start date. We check for applicable collective bargaining agreements (CBAs), confirm the RAT risk classification, and return a full cost breakdown within 24 hours.
We draft a CLT employment contract in Portuguese. We register the employee in eSocial, enroll them in INSS, open their FGTS account with Caixa Economica Federal, and register with the applicable labor union. We set up income tax withholding (IRRF) with the Receita Federal.
We run monthly payroll in BRL by the 5th business day. We deduct employee INSS (7.5 to 14%), withhold IRRF income tax, and deposit employer INSS (20%), FGTS (8%), and RAT/Sistema S contributions. We administer transport vouchers, meal vouchers, and CBA-mandated benefits. In November and December, we pay the 13th month salary in two installments.
We track minimum wage adjustments, CBA renewals and salary floor changes, eSocial reporting updates, LGPD data protection requirements, and any changes to INSS or FGTS rules. We file all monthly and annual obligations and handle labor union contributions where applicable.
EOR vs Brazilian Entity vs Contractors
| EOR | LTDA / S.A. (local entity) | Contractor (PJ) | |
|---|---|---|---|
| Time to first hire | 5 to 7 days | 4 to 8 weeks | Immediate |
| Setup cost | None | USD 5K to 15K+ | None |
| Social security compliance | Handled by EOR | Your responsibility | Contractor's own INSS |
| FGTS, 13th month, vacation bonus | Managed by EOR | Your responsibility | Not applicable (risk if misclassified) |
| eSocial reporting | Handled by EOR | Your responsibility | Not applicable |
| Misclassification risk | None (CLT contract) | None (CLT contract) | High. Brazil's labor courts heavily favor workers |
| Best for | 1 to 20 people, speed | 30+, permanent ops, local revenue | True project work with genuine autonomy |
PJ (Pessoa Juridica) contractor risk: Brazil has one of the most aggressive labor court systems in the world. If a worker classified as a PJ contractor actually functions like an employee, the labor court will almost certainly reclassify the relationship as CLT employment. This triggers backdated INSS, FGTS, 13th month, vacation, and penalties that can reach 2 to 3 years of back payments.
Employee Benefits and Leave Entitlements
Mandatory annual benefits
Leave entitlements
CBAs can override minimums: Many industries have collective bargaining agreements that provide benefits above CLT minimums: higher salary floors, additional benefits, shorter workweeks, and enhanced leave. Your EOR identifies the applicable CBA during onboarding.
Termination Rules and Severance
Brazilian termination law is heavily protective of employees. Brazil's labor courts handle over 3 million cases per year, and employees win the majority.
Termination without just cause
The employer must pay:
Termination with just cause (justa causa)
The CLT lists specific grounds for just cause dismissal (Article 482). With just cause, the employer pays only accrued salary and unused vacation. No FGTS penalty, no notice period. However, the burden of proof is entirely on the employer and courts scrutinize just cause dismissals strictly.
Protected employees (estabilidade)
Job stability applies to pregnant employees (from confirmation until 5 months after birth), post-accident employees (12 months after return), union representatives, CIPA members, and pre-retirement employees under some CBAs. Dismissing a protected employee without cause is void and triggers reinstatement with back wages.
Probation period
Up to 90 days (often 45 + 45 renewal). During probation, termination is simplified but accrued salary, FGTS deposits, pro-rated 13th month, and pro-rated vacation must still be paid.
Working Hours and Overtime
The standard workweek is 44 hours (8 hours/day Mon-Fri + 4 hours Saturday, or distributed as 8h48m Mon-Fri). Daily maximum is 8 hours with up to 2 hours overtime. Some CBAs establish 40-hour workweeks.
| Scenario | Rate |
|---|---|
| Regular overtime | 150% of hourly rate (50% surcharge) |
| Sunday / holiday work | 200% of hourly rate (100% surcharge) |
| Night shift surcharge (10 PM to 5 AM) | 20% surcharge. Night hour = 52 min 30 sec |
| Maximum overtime | 2 hours/day. Must be agreed in writing or through CBA |
| Banco de horas (time bank) | Overtime compensated with time off. 6 months (individual) or 12 months (CBA) |
Frequently Asked Questions
Total employer cost is typically 147 to 155% of gross salary. This includes INSS (20%), FGTS (8%), RAT (1 to 3%), Sistema S (~5.8%), 13th month salary provision (8.33%), and vacation + 1/3 bonus provision (~11.11%). CBAs may add further costs. The EOR management fee is additional.
FGTS (Fundo de Garantia do Tempo de Servico) is a mandatory severance savings fund. The employer deposits 8% of the employee's monthly gross salary into a government-managed account at Caixa Economica Federal. The employee cannot access the funds freely. They become available upon termination without cause, retirement, home purchase, or certain other qualifying events. If the employer terminates without cause, they must pay an additional 40% penalty on the total FGTS balance.
The 13th month salary (Gratificacao de Natal) is a mandatory annual bonus equal to one month's salary. Paid in two installments: the first by November 30 (gross, no deductions) and the second by December 20 (with INSS and IRRF deductions). Pro-rated for employees who worked less than 12 months. Constitutionally mandated and cannot be waived.
Termination without cause requires: prior notice (30 days + 3 days per year of service, up to 90 days), 40% FGTS penalty, pro-rated 13th month, pro-rated vacation + 1/3, release of FGTS balance, and unemployment insurance documentation. Total termination cost for a 3-year employee can equal 3 to 4 months' salary. Protected employees cannot be dismissed without cause.
eSocial is Brazil's unified digital reporting platform that consolidates labor, social security, and tax obligations. Employers must report all employment events (hiring, termination, salary changes, leave, injuries) through eSocial in real time. Late or incorrect filings trigger automatic penalties. Your EOR manages all eSocial reporting.
Yes, but only for genuinely independent work. If the contractor follows your schedule, works exclusively for you, or is integrated into your team, labor courts will reclassify the relationship as CLT employment (pejotizacao). This triggers backdated INSS, FGTS, 13th month, vacation, and penalties. Brazil's labor courts are extremely active and employee-friendly.
CBAs are negotiated between labor unions and employer federations, typically renewed annually. They can establish higher salary floors, additional benefits, shorter workweeks, and enhanced leave. CBAs are legally binding and override CLT minimums where they provide greater benefits. Your EOR identifies the applicable CBA during onboarding.
Typically 5 to 7 business days. Setting up your own LTDA entity takes 4 to 8 weeks including CNPJ registration, state and municipal tax registrations, eSocial enrollment, and bank account opening.
Brazilian employees are entitled to 30 days of paid vacation per year plus a constitutionally mandated bonus of 1/3 of their monthly salary (terco constitucional de ferias). The vacation pay + bonus must be paid at least 2 days before the vacation starts. Employees can also sell up to 10 days of their vacation back to the employer.
Employer and Employee Contributions
Brazil's social security system is administered through INSS (pension, disability, maternity, sick pay) and FGTS (severance fund). The employer bears a significantly larger share. FGTS has no salary cap and the employer's 20% INSS contribution also has no cap for standard CLT companies.
Employer contributions
Employee contributions (deducted from salary)