Introduction to payroll in Brazil
As the world’s ninth-largest economy, and due to its strategic geographical location, Brazil continues to attract the interest of foreign businesses looking to expand internationally. While this expansion could be profitable, it’s important to remember that companies operating in this country must comply with specific rules and regulations around payroll.
Payroll in Brazil can be complicated, particularly if a business decides to handle everything internally. Working with a trusted, experienced, and friendly global payroll provider like Skuad can help companies tackle the payroll process in a smooth, seamless, and compliant way.
Payroll Process in Brazil
One of the main complexities of payroll is that the process is composed of three different stages: pre-payroll, payroll, and post-payroll.
The initial phase of payroll requires setting up your organization in Brazil, investigating and understanding legal payroll requirements, and collecting and validating payroll input.
Setting up the organization
Establishing your organization in Brazil is the essential first step to help you create a legal, standardized way to manage payroll. You will need to define policies around:
You will need to register your business as a legal entity, which provides you with a unique business number that you will need to specify on all official payroll communication.
Brazil is a vast country, and different areas may follow different labor and employment rules. Check the specific laws in the area where your business is operating.
There are different types of leave that your company will need to define, including annual leave, sick leave, and parental leave. Make sure that you establish policies around all these leave types, and that you communicate them promptly and clearly to your employees.
Work attendance is another fundamental aspect that affects payroll calculation. Therefore, it’s vital to set organization policies that calculate regular and special attendance, overtime, permissions, and more.
Although your company can decide all of the above as it best suits you, it is mandatory to adhere to Brazilian payroll laws in order to run a fully compliant business.
Several factors influence salary calculation, including allowances, deductions, and leave types.
Choose your company’s payday and establish a clear payment schedule, to keep your employees aware of when they will be paid each month.
Lastly, you will need to collect some personal and professional information on all your employees, as this is another factor that affects payroll.
Payroll calculation phase
Most companies these days work with a payroll system that calculates salaries automatically. If this is you, your payroll calculation phase will involve feeding all the data gathered during the pre-payroll phase into your payroll system, which will return exact amounts for each employee.
As you might expect, the bulk of the post-payroll phase is paying out your employees’ salaries. You can do so either by communicating with your bank and asking them to proceed with salary disbursement, or you can work with software that does that for you automatically.
Keeping a solid track record of your company’s accounts requires recording your employees’ salaries regularly to ensure accuracy and timeliness of payments.
Payroll reporting and compliance
In Brazil, payroll reporting and compliance involve liaising with local and national authorities to communicate important information about taxes, invoices, and salaries.
Handling all this — and more — on your own can be challenging. Don’t go it alone, choose to work with a reliable and experienced payroll provider like Skuad. Contact us today to find out how we can help you navigate all the complexities of payroll in Brazil.
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Payroll Processing in Brazil
Making sure that your company and your employees are paying all the right taxes, in the right amounts, to the right authorities, at the right time can give you more than a headache. You will need to understand all the different tax types, tax brackets, and tax authorities, as well as ensure that you submit everything within the established deadlines.
Payroll Processing Company in Brazil
With a partner like Skuad, payroll processing in Brazil becomes a cinch. Why? Because our team does everything on your behalf, giving you back the time and resources that you need to focus on growing your business.
Payroll Management in Brazil
Managing payroll in Brazil includes keeping track of all the financial information of your employees, while at the same time always complying with the country’s payroll and employment laws.
Payroll Compliance in Brazil
In Brazil, statutory payroll compliance requires paying your employees’ salary and benefits, as well as ensuring that taxes and contributions to local and federal authorities are also deposited on a regular basis.
Payroll Components in Brazil
Here are the main payroll components in Brazil. These are some of the most important elements that determine how your employees’ salaries are calculated and finalized.
Typically, Brazilian employers pay their workforce once a month. Some companies choose to offer advances, to be paid out between the 15 and 20 of the month.
Many companies also offer a thirteenth month of salary, normally spread out over two installments.
Currently, the federal minimum wage is set at R$ 1212 (U$239) per month. However, local authorities and trade unions can negotiate and establish different minimum wages.
In Brazil, employees generally work Monday to Friday, from 8 am until 6 pm — including an unpaid break of one hour. Naturally, different sectors follow different schedules around standard working hours.
Brazilian employees can work overtime hours, but federal laws require them not to exceed 44 hours in one week of work.
Brazilian law requires employers to contribute 26.8% of an employee’s wages towards the National Institute for Social Security (INSS), plus an extra 8% towards Brazil’s indemnity fund.
Employees are entitled to at least 14 days of sick leave per year. Those 15 days are paid for by the employer, whereas any additional days are funded by the INSS.
In Brazil, employees are entitled to four months of maternity leave, which can be extended to 180 extra days if the employer agrees. Maternity leave is paid by the country’s INSS.
Here is a list of the main federal holidays in Brazil:
- New Year's Day: January 1
- Carnival Friday, Saturday, Sunday, Monday, and Tuesday: throughout February
- Good Friday
- Easter Sunday
- Tiradentes Day: April 21
- Labor Day / May Day: May 1
- Corpus Christi: June 3
- Independence Day: September 7
- Our Lady of Aparecida/Children's Day: October 12
- Public Service Holiday: October 28
- All Souls' Day: November 2, 2021
- Republic Proclamation Day: November 15
- Black Awareness Day: November 20
- Christmas Eve: December 24
- Christmas Day: December 25
- New Year's Eve: December 31
As an employer in Brazil, you must pay corporate income tax, social security, withholding tax, and sales tax.
Termination of Employment
In Brazil, employees can be terminated with or without just cause at any time. However, companies must provide either 30 days of notice or a payment in lieu of notice. Certain categories, including pregnant women, are protected by law against all forms of employment termination.
Paid Annual Leave
Brazilian employees receive a total of 30 days of vacation every year. Employees can decide whether to take all of this allowance at once or to split it into two or more parts.
Are you feeling confused and overwhelmed by the amount of information, decisions, and laws surrounding payroll in Brazil? Joining forces with a partner like Skuad can help. We do it all for you, so you can go back to running your business with passion and determination.
Payroll Outsourcing: Your Best Option to Create a Strong, Thriving Team in Brazil
Managing payroll in Brazil is no easy feat. So, what are your options when it comes to navigating all these complexities?
You can opt for internal payroll, for example. This means running all aspects of payroll in Brazil within your company, and is therefore a much more expensive option as it involves hiring specialized HR and accounting staff.
Remote payroll is another option. This method is cheaper than internal payroll, but it also requires keeping abreast of all the ever-changing rules and regulations in the country.
The third approach to payroll management is hiring a payroll processing company. These are local agencies that have the right skills and resources to help you manage payroll smoothly. Nonetheless, finding the right local agency is often a lengthy, stressful, and frustrating process.
Why not opt for outsourced payroll? A global payroll provider like Skuad can take the weight of payroll off your hands, and manage every detail on your behalf, while you get on with your business as usual.
Would you like to see our product in action? Check out our FREE demo, and speak with a member of the Skuad team today.