Hire in Brazil: A Comprehensive Guide for 2026

Introduction

Employment in Brazil is governed by the Consolidation of Labor Laws (CLT), approved by Decree-Law 5,452 of 1943 and amended by Law 13,467 of 2017. Companies that hire in Brazil work to a second layer as well, since collective bargaining agreements prevail over the statute, even where the negotiated terms are worse than the law.

The agreement covering your activity can move working hours, wage floors, and benefits away from the statutory defaults, so the national minimum wage may be irrelevant to your roles. It can also add costs the code does not, such as topping up sick pay once the state benefit takes over on day sixteen. Set a band before you find the agreement, and you may be repricing the role after the offer.

An Employer of Record (EOR) for employees, or an Agent of Record (AOR) for contractors, gives you a route into the market without registering an entity. This guide covers entity setup, both routes, contract types, working hours, payroll and tax rates, and the full cost of a Brazilian hire.

How to hire remote employees in Brazil?

Brazil gives you three routes: register your own entity, use an Employer of Record (EOR), or engage contractors. The choice decides who signs the contract, who carries payroll and social charges, and how exposed you are if a labor court looks at the arrangement later.

How to hire in Brazil by setting up a local entity?

Creating a local entity in Brazil enables companies to hire directly under Brazilian law.

The vehicle is the Limitada, or LTDA, Brazil's most common company type and the default vehicle for foreign founders. It can be 100% foreign-owned and, depending on the structure, can have a single quotaholder, and there is generally no statutory minimum capital.

The requirement that catches foreign companies out is local representation. A non-resident foreign shareholder must appoint a legal representative resident in Brazil, empowered by a power of attorney, to receive service of process and represent the shareholder before Brazilian authorities, including the Federal Revenue Service and the Central Bank.

The representative is distinct from the company's administrator who runs the company day to day, and the two can be different people.

From there, the sequence runs through the articles of association, registration with the Junta Comercial, the CNPJ, and registration of the foreign capital with the Central Bank.

Two things are worth planning around:

• The most common bottleneck for non-residents is legalizing documents abroad, meaning apostille or consular legalization plus sworn translation, so start there rather than with the filing.
• Treating the foreign-capital registration as an afterthought can later complicate remittance or repatriation of profits.

Once registered, the Brazilian entity signs the employment contracts and carries payroll, social charges, and labor compliance in-house.

How to hire employees through EOR in Brazil?

Utilizing an EOR service is a way to hire employees in Brazil without the need to establish a legal entity. The EOR acts as the legal employer and takes on:

• Onboarding
• Compliance with local laws
• Payroll processing
• Taxation
• Employee benefits
• Offboarding

Day-to-day direction of the work stays with you, along with the decisions on pay, scope, and headcount.

Brazil asks for a resident legal representative before it asks for anything else, and the power of attorney appointing them needs apostille or consular legalization plus sworn translation. The foreign-capital registration matters later too, since treating it as an afterthought can complicate remittance or repatriation of profits years afterward.

Skuad helps remove that dependency. Skuad acts as the legal employer across 160+ countries, so your company can hire, onboard, and pay employees without registering a local entity or building payroll and compliance operations in-house.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Payroll processing in 70+ currencies, with tax withholding and statutory deductions applied at the point of payment
• Statutory benefits, paid leave, and parental entitlements administered in line with local requirements across supported markets
• Termination and offboarding support, including notice periods and severance calculations as required locally
• Background verification covering identity, employment history, and criminal records before onboarding

See Skuad's Brazil hiring guide for the full breakdown of local rules before you hire.

How to hire contractors through AOR in Brazil?

An AOR lets you engage contractors in Brazil without setting up a local legal entity. It acts as a third-party intermediary and assumes legal responsibility for your independent contractor workforce, covering worker classification, contract administration, payments and taxes, and labor law compliance.

Classification is the part that decides whether the arrangement holds. Contractors in Brazil are usually engaged through their own company, a structure known locally as PJ or pejotização, and the label on the arrangement does not settle it.

Brazilian law tests the substance. An employment relation is characterised by the simultaneous presence of four requisites:

• Services rendered on a personal basis
• On a permanent or habitual basis
• With subordination, meaning the services are rendered under the direction of a supervisor
• In view of remuneration

Where those four are absent, the parties are free to structure the relation as independent contractors, service providers, temporary workers, interns, or non-employed officers. Where they are all present, the courts can find employment whatever the paperwork says.

In April 2025, the Supreme Court suspended pejotização cases nationwide while it decided the issue. On 18 June 2026, the STF (Supremo Tribunal Federal) lifted the nationwide stay of proceedings related to pejotização, so cases addressing alleged misclassification may now resume before first-instance courts and Regional Labor Courts, although the merits have not yet been decided.

Companies should expect increased litigation activity and continued legal uncertainty, with divergent decisions across lower courts until a binding ruling arrives.

Until then, the practical advice is a cautious and well-documented approach. Keep contractors off fixed schedules, off your reporting lines, and free to serve other clients, and keep the evidence of it.

A PJ arrangement (Pessoa Jurídica) signed today will be tested against a standard that does not exist yet. Skuad supports contractor engagement across supported markets.

Here is what Skuad helps with:

• Contractor onboarding with locally compliant agreements
• Worker classification checks that help flag engagement risk before an agreement is signed
• Invoice generation, approval workflows, and contractor payouts in 70+ currencies
• Contractor records, agreements, and payment history in one dashboard alongside full-time employees
• Conversion from contractor to full-time employee through EOR across 160+ countries

Compare EOR and contractor pricing for your Brazilian hires.

What type of employment contract do you need in Brazil?

Brazil recognises several structures outside employment, including service providers, temporary workers, and interns. For someone you are actually employing, the choice narrows to two.

The indefinite-term contract is the norm, since employment agreements in Brazil are usually for an indefinite term. No duration rules apply to it, and it carries the full set of statutory entitlements.

Fixed-term contracts are the exception and the rules are narrow. They are only allowed for up to two years when the temporary nature of the service justifies a pre-established term, or the business activities have a temporary nature.

Outside those two justifications, you do not have a valid fixed-term contract, and a fixed-term agreement may become an indefinite-term employment agreement where the criteria are met. For an ongoing remote role, neither justification usually applies, so the indefinite contract is the honest answer.

What are the employment laws in Brazil?

Brazilian employment comes under the Consolidation of Labor Laws, but the statute is only half the picture. Collective bargaining agreements prevail over law, even when the conditions agreed are worse than the ones established by law, with carve-outs for health and safety, social security contributions, and constitutional rights.

Check which agreement covers your activity before you make an offer, because it can move working hours, wage floors, and benefits away from the defaults below.

What are the working hour rules in Brazil?

Individual employment agreements and internal policies may also establish additional rights, which must always be greater than the rights established by law, so you can go above them and never below.

Who is exempt from overtime in Brazil?

This is the rule most foreign employers miss, and it works in their favour. Three categories are not subject to the limits on working hours, do not have their working hours controlled, and are not entitled to overtime payments:

• Employees who perform activities outside the company's facilities where those activities are not compatible with defined working hours, known as external employees.
• Employees who occupy trust positions, such as managers.
• Employees who work in a remote work system rendering services by production or task.

The third one is the relevant one for a distributed team. Structuring remote roles around output rather than hours takes them outside the overtime regime entirely, which is why the contract wording matters more in Brazil than in most markets.

There is also a route for senior hires. An individual agreement on exemption can be made with employees who hold a university degree and whose monthly salary is equal to or greater than twice the maximum benefit limit under the General Social Security, approximately BRL 17,000.00 (Currency-Brazilian Real) in 2026, a status known as hipersuficiente.

What are the probation and termination rules in Brazil?

The trial period may be established for a period up to 90 days and may be renewed once if the limit of 90 days is observed, commonly structured as 45 days renewable for a further 45.

After that, Brazil allows termination without cause, and prices it through notice and severance rather than blocking it. Prior notice is only applicable in the event of termination of employment agreements for an indefinite term, and where the employer initiates it without cause, the notice is proportional to service:

An employee resigning owes 30 days and can ask to be released from working it. Where both sides agree to end the contract, the notice period is reduced by half.

What are the payroll and tax rules in Brazil?

Salary must be paid in Brazilian currency, and compensation must be paid at least monthly. You withhold the employee's social security and income tax at source, then pay your own contributions on top.

What is the minimum wage in Brazil?

The national minimum wage established by law is currently BRL 1.621,00, reset by decree each January.

It can be improved by state law or through collective agreements signed with the trade union representing the relevant professional category, and a collective agreement may establish a professional salary, a minimum wage for a specific category that must be higher than the national minimum wage.

Check the agreement covering your activity before you set a band, because the national figure may be irrelevant to the roles you are hiring.

What are the social security contribution rates in Brazil?

Two points shape how you use this table. The employee side is capped, so contributions stop rising above the monthly ceiling and the effective rate falls away for senior hires. The employer side is not, so the 20% runs on the full salary, however high it goes.

The bracket thresholds and the ceiling amount are reset every January alongside the minimum wage, so pull the current year's table before running payroll rather than reusing last year's.

As a planning figure, the employer's contributions average 27% of the employee's overall salary, and may be higher if the employees are subject to health hazardous working conditions. That covers social security alone. Length-of-Service Guarantee Fund (FGTS), the 13th salary, and paid leave with the required bonus are additional costs.

How much income tax is withheld in Brazil?

Income tax changed on 1 January 2026. Monthly withholding now works on a reduction table:

In practice, that means an employee on BRL 5,000 a month or less now takes home their full salary after income tax, with only social security coming off. The same reduction applies annually, with total reduction up to BRL 60,000.00 a year and regressive reduction between BRL 60,000.01 and BRL 88,200.00.

Skuad supports global payroll processing in 70+ currencies, with tax withholding and statutory deductions applied at the point of payment, alongside statutory contribution workflows across supported markets. The tables reset each January either way. The question is whose payroll run has to be rebuilt against them.

What is the cost of hiring remote employees in Brazil?

Gross salary and social security are only part of the Brazilian number. Four further employer costs fall outside the monthly payroll run, and one of them accrues from the first day of employment.

What mandatory costs come on top of salary in Brazil?

Two months carry a double hit, since November and December each receive a 13th-month salary installment on top of the ordinary payroll. A model built on twelve equal months will be short in both, and short again in whichever month the vacation bonus falls.

The FGTS deposit is the one to watch beyond its monthly cost, because it also sets the size of the termination fine below. Every month you deposit, you are growing the number that the exit payment is calculated against.

What does it cost to end an employment relationship in Brazil?

Brazil allows termination without cause and prices it. The standard type of employment termination is the termination without cause, which entitles the employee to receive mandatory severance, made up of four parts:

• Notice pay of 30 days of salary plus three days per year of employment, capped at a maximum of 90 days. Payment instead of notice is certainly the best practice and occurs in most terminations, so budget it as cash rather than worked time.
• FGTS deposits, which the employee becomes authorised to withdraw.
• A 40% termination fine on FGTS, calculated on the accumulated balance. This is the number that increases with each month of tenure.
• Accrued benefits and a 13th-month salary, proportional to the year worked.

One optional cost belongs here too. If you want a post-termination non-compete, it has to be paid for. Brazilian courts have generally accepted compensation ranging from 50% to 100% of the employee's last salary, and such clauses usually last between six and 24 months.

Failure to provide adequate compensation renders the restriction void, so a free non-compete is no non-compete.

Who pays when an employee is off work in Brazil?

Sick leave starts on your payroll. The employer is responsible for the employee's salary during the first fifteen days of absence, whether the cause is work-related or not.

After the fifteenth day, the INSS (Brazil’s National Institute of Social Security) will pay a sick or accident leave benefit, though it does not correspond to the actual salary and is capped at approximately BRL 8,475.55. Collective agreements often require you to top up the gap, so check the one covering your activity before assuming day 16 is free.

Maternity leave is funded by the state but flows through you. The benefit is paid to the employee for a period of 120 days and is paid by INSS, and in practical terms the employer pays the benefit to the employee and deducts the amount from the social security contributions due to the INSS. Plan for the cash timing rather than the cost.

You are responsible for paternity leave, and the entitlement is increasing. Employees were entitled to 5 days of paid paternity leave, but with the new Law No. 15,371/2026, the benefit will be extended gradually from 5 to 20 days. Check the figure in force on the date of hire rather than budgeting for the old five.

Every line in this section lands on the employer, and most of them fall outside the month the salary is paid. The Skuad employee cost calculator helps you model total employment cost before an offer goes out, using the market and the salary figure you enter. Treat the output as a budgeting estimate.

Estimate the total cost of a Brazil hire before you make the offer.

What are the challenges of hiring in Brazil?

Brazil is easy to hire into. The exposure concentrates in the labor courts, and it comes from three places: how long the claim window stays open, what a collective dismissal requires, and what a dismissal found discriminatory costs. Each one carries a number you can plan against.

1. Labor claim window

The claim window is long, and it runs backwards. Employees may file labour claims while working, or within two years from the termination date, to claim rights related to the past five years. Two years to bring a claim, five years of history inside each one, and payment for overtime is one of the most common claims seen in litigation.

If you are relying on the remote work exemption from working hour limits, that contract wording will be read back five years when it is challenged, so keep the records that support it from day one.

2. Collective dismissals

Collective dismissals go through the union before they go through you. According to the Supreme Federal Court (STF), employers must negotiate with unions when dismissing several employees at the same time.

Skip that step, and employees and unions may bring claims before Labour Courts alleging failure to negotiate, discriminatory selection criteria or abuse of management rights, after which courts may suspend dismissals, order reinstatement or impose compensatory and moral damages. Scaling a Brazilian team down needs a timeline that includes the union.

3. Discriminatory dismissal costs

A discriminatory dismissal is priced separately. On top of the ordinary severance, claims may seek reinstatement, compensation for moral damages, payment of lost wages, and, in cases involving discriminatory dismissal, double salary for the period of unemployment.

Exposure rises again with class actions or Civil Public Claims that may be filed by unions or the Labour Prosecutor's Office targeting indemnities for moral damages in significant amounts. The defence is documentary, so keep records of employees' performance and any other business reasons involved in the decision about employment terminations.

All three land in the same place, and all three are defended with records created long before anyone files a claim. By the time the exposure is real, the window to build that evidence has closed.

Skuad helps with that record layer. Skuad Shield supports compliance monitoring across supported markets, so your team is not following regulatory change on its own.

Here is what Skuad helps with:

• Compliance monitoring across supported markets, with updates as local employment requirements change
• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Termination and offboarding support, including notice periods, documentation, and severance calculations as required locally
• Statutory benefit and leave administration in line with local requirements across supported markets
• Worker classification checks that help flag engagement risk before an agreement is signed

Hire in Brazil without setting up an entity

In Brazil, the bill arrives years after the decision. An employee can sue two years after leaving, and the claim reaches back five years. Every contract you sign today, and every hour you leave unrecorded, is evidence in a case nobody has filed yet.

The exit gets more expensive the longer someone stays, because the FGTS termination fine is calculated on a balance you top up every payroll.

An entity puts all of it on your team, from the records to the filings to the defence. An EOR carries the employment relationship for full-time hires, and an AOR does the same for contractors, so the documentation is built to local requirements while the employment is still routine.

Skuad acts as the legal employer across 160+ countries and supports contract generation, worker classification checks, payroll in 70+ currencies, and compliance monitoring from a single platform.

Book a demo to see how quickly Skuad can onboard your first Brazil hire.

FAQs

1. What does it mean to hire in Brazil through an EOR?

To hire in Brazil through an Employer of Record means the provider acts as the legal employer under the CLT, using its own CNPJ (Brazil’s National Registry of Legal Entities). It signs the contract, processes payroll, remits social charges, and files the eSocial registration, while you direct the employee's day-to-day work.

2. Can a foreign company hire in Brazil without a local entity?

Generally not directly, since registering a CLT employee requires a Brazilian CNPJ and eSocial registration before the person starts. An EOR is the usual route, since it holds the entity and acts as the legal employer. Setting up your own LTDA needs a legal representative resident in Brazil.

3. How much does it cost to hire in Brazil beyond gross salary?

Employer social security averages around 27% of salary, and FGTS adds a monthly 8% deposit. Beyond that, you fund the 13th-month salary, 30 days of paid leave with a one-third bonus, and the FGTS termination fine at exit. The 27% covers social security alone, so model the rest separately.

4. What are the misclassification risks when you hire contractors in Brazil?

Brazilian courts apply the primacy of reality, so a PJ contractor showing personal service, habituality, subordination, and payment can be ruled a CLT employee, whatever the contract says. Reclassification brings retroactive benefits, FGTS with the 40% fine, and back charges, with claims reaching five years of history.

5. What leave applies when you hire in Brazil?

Employees get 30 days of paid annual leave after 12 months, plus a one-third vacation bonus. You cover the first 15 days of sick leave, after which INSS takes over. Maternity runs 120 days funded by INSS through your payroll, and paternity is rising from 5 to 20 days.

6. What does it cost to dismiss an employee when you hire in Brazil?

Dismissal without cause triggers notice of 30 days plus three days per year of service capped at 90, release of FGTS deposits, a 40% FGTS fine on the accrued balance, and proportional 13th salary and leave. The fine grows every month, so longer tenure means a larger exit.