Brazil Payroll and Benefits Benchmark guide

The National Minimum wage is 1,039 Brazilian reals.

Minimum wage will rise to 1,045 Brazilian reals in February 2020.

Typically, employees can contribute from 4% to 5% and companies match 100% of employee contributions up to 5%

Typically includes death of any cause, accidental death, & total disability of 24X the insured's monthly base salary. The minimum number of employees eligible for this kind of group insurance is 5.

Employees should provide the following benefit calculated based on the monthly base salary (MBS): * Death: 24X MBS * Accidential Death: 48X MBS * Total or partial Illness Disability: up to 24X MBS

Employees are entitled to 30 days annual leave in a 12-month period and should be taken when also convenient for the employer. Employees are also allowed to split their vacation in up to three periods with one period no less than 14 days. Vacation cannot be taken 2 days prior to a weekend or holiday. Employees are also allowed to sell 1/3^rd of their vacation. Vacation pay is the employee’s monthly salary plus 1/3^rd. Also, employees may offer the company to work for 10 days receiving all the rights above and an additional of 10 days of salary.

Employees are entitled to a sick leave with appropriate documentations from a doctor. The first 15 days of leave are reimbursed by the employer, afterwards the social security takes over the payments for up to two years during which period the employees are on unpaid leave.

Female employees are entitled to 120 days (around 17 weeks) of paid maternity leave and extension by a maximum of 4 weeks on medical grounds (two weeks prior and two weeks after birth).

Fathers are entitled 5 days leave and may be extended to 20 days in the collective bargaining agreement.

No specific laws.

A typical workday is 8 hours long. Work should not exceed 44 weekly hours or 220 monthly hours.

Overtime work during a regular workweek is compensated with an additional 50%, or an additional 100% for overtime worked during holiday. The rate of overtime pay can be increased in the collective labor agreement.

17% standard rate.

Also referred to as FGTS (Fund of Guarantee For The Time in Service). 

Changes to retirement have been reformed, making retirement age of men set to 65, and 62 for women. Both men and women need a minimum 15 years of contributions toward the National Social Insurance Institute (INSS). Those who have not yet entered the labor force will need to contribute at least 20 years.

Both employer and employee make contributions to the National Institute of Social Security (INSS). These contributions go towards retirement, pension due to death, illness, disability, and unemployment. Rates of contributions are determined by income.

Total Contributions for Private Sector Until February 29, 2020:

Employer – 20% for INSS (additional 6.8%-8.8% for other social security taxes). No cap for employer contributions

Employee –

• 8% - R$1,751.81
• 9% - R$1,751.82 - R$2,919.72
• 11% - R$2.919.73 - R$5,839.45

*employees with an income over R$5,839.45 are still taxed at this rate.

Total Contributions for Private Sector beginning March 2020:

Employer – 20% for INSS (additional 6.8%-8.8% for other social security taxes). No cap for employer contributions

Employee –

• 5% - R$1,039.00 (minimum wage rate)
• 9% - R$1,039.01 - R$2,089.60
• 12% - R$2,089.61 - R$3,134.40
• 14% - R$3,134.41 - R$6,101.06 ceiling

After 12 months of continuous employment the employee is entitled to a 13th month salary. This payment is 1/12th of their salary. It can be paid in one instalment before November 30th or or in two instalments (one between February 1 and November 30 and the other until December 20). 

Mandatory cash bonus equal to one-third of employee's monthly salary. Employees have the right to convert one third (approximately 33%) of their paid vacation (normally up to 10 days) to pay in lieu of vacation. Any unpaid vacation days do not roll over, and employers must pay it out at the end of the calendar year at double time rates.

Employees are entitled severance payment which includes the balance of their wages, any holiday entitlement they didn’t use, 13th month salary and access to the funds from the Brazilian Government Severance Indemnity Fund Law. The employer contributes 8% of the employee's wages to this account. If the termination is with a cause, the employees do not have an access to the severance account.

Employers contribute 8% to the Severance Fund (FGTS).  This fund is used by the individual for unemployment, retirement and other incidents.

Salaries are paid on monthly basis by the fifth of the following month. After 12 months of continuous employment the employee is entitled to a 13th month salary. This payment is 1/12th of their salary. It can be paid in one instalment before November 30th or or in two instalments (one between February 1 and November 30 and the other until December 20). 

Termination requires a notice period, and a pre-notice period in some instances.  

The standard notice period is thirty days plus three days for each year of employment. The maximum notice period is 90 days.

Employers contribute 8% to the Severance Fund (FGTS).  

For resignation or mutual agreement, employees are entitled to:

• Christmas bonus - 1/12 compensation per month of work during the calendar year.
• Payment for vacations not taken plus 1/3 bonus
• 30% of the FGTS penalty. 20% due to employee and 10% to the government.

For termination without cause:

All of the above is due but 50% of the FGTS penalty is due; 40% to the employee and 10% to the government.