Onboarding a Workforce in Brazil
As the largest country in South America, and a top ten world economy, any global expansion strategy should consider the possibility of recruiting and hiring in Brazil.
A successful Brazil human resources expansion means understanding what makes the country, and its people, ‘tick’. Here we explain both the cultural and compliance factors that will affect the way in which you hire staff in that country.
The Brazil Business and Workplace Culture
When recruiting or hiring in Brazil, it is important to have an understanding of business culture and etiquette in that country. You should be aware of:
- Timeliness. While you should ensure that you attend all business arrangements on time, do not be surprised if Brazilian colleagues are more relaxed about punctuality. Similarly, where interviewing candidates, it may be worthwhile being tolerant of some degree of lateness;
- All business is personal. In Brazil, satisfactory business dealing is built on personal relationships. It is common to begin discussions with non-work matters before eventually bringing discussion around to the point at hand. It is also common for businesspeople to wish to get to know an individual in person, rather than simply by phone or email, before signing on the dotted line;
- Hierarchy. The ‘chain of command’ is relatively important in Brazil. This means that the person you may be engaging with in a business deal may not be the eventual decision-maker. In turn, this means that business decisions may take longer than you expect. You may find that formality and hierarchy in business becomes less important, the further north in Brazil you go;
- Dress. Brazilians are famous for their sense of style. Suits are expected of men, and women may be expected to dress more ‘glamorously’ than they would in other countries. Note is quite common for executives (and only executives) in Brazil to wear a three-piece suit.
Your Best Options for Recruitment and Onboarding of New Employees in Brazil
As is generally the case, when hiring recruiting and hiring in Brazil, you can choose between setting up your own legal entity, or using a global Professional Employer Organization (global PEO) solution. A global PEO is able to recruit, hire and become the ‘Employer of Record’ for your employees in Brazil. Through a global PEO solution, employees continue to work directly for your enterprise, however, the global PEO takes responsibility for all recruitment, as well as the employer’s compliance and payroll tax obligations.
The Obligations of Employers in Brazil
Anyone recruiting or hiring in Brazil needs to have a firm understanding of the obligations of employers in that country. Key considerations to keep in mind include:
- Social security contributions. Both employees and employers are required to make contributions which are used to fund pensions. Contribution rates range from 8 percent to 11 percent with a set maximum cap;
- Severance indemnity fund. Employers must make contributions to this fund. It is set at 8 percent of the monthly employee compensation. This is a form of unemployment or sickness insurance that employees can draw on under certain circumstances;
- Minimum wage. The Brazilian minimum wage is currently (2020) set at 1,039 Brazilian reals (U.S. $257.56). Note that five states set their own minimum wage (Paraná, Paraná, Rio Grande do Sul, Santa Catarina, São Paulo). All employees are entitled to a ‘bonus salary’. This is equivalent to a 13th month of wages or salary, and is paid to employees at the end of the year;
- Working week. Normally, the working week in Brazil is 44 hours over a six-day period. Any hours in excess of the scheduled workday must be paid with a minimum extra amount of 50 percent (going up to 100 percent on Sundays or holidays);
- Required documentation. All employees must have valid work and social security documentation (‘Carteira de Trabalho e Previdenciária Social’). This sets out the terms of employment, and must be maintained in accordance with strict record-keeping requirements;
- Vacations: After a year’s employment, employees are entitled to 30 days of paid vacation;
- Maternity leave: Women who give birth are entitled to 120 days paid leave. This is paid by the employer (who is then reimbursed by the government).