International Employment Law “Quick Facts”: Brazil

Author:
Mariana Villa da Costa – Littler Mendelson

Happy New Year readers!  We are excited to launch a new series of posts on the basics of global employment law called “International Employment Law Quick Facts.”    The series will bring basic, but important information on what an employer needs to know when hiring someone in a different country, using an easy to follow Q&A format.  We will capture information such as definition of employer and employee, requirements for written employment agreements, consequences of discrimination and harassment in the workplace, minimum wage requirements, etc.

We will kick off 2010 with the first country in the series – my native country of Brazil.   I would be more than happy to get suggestions from you, readers, on which other countries you want to see next!  Add a comment, or send me a note to let me know your suggestion.  We will try to publish upcoming installments in this series based on what you request, so keep checking back!

Q. What are the definitions of employee, employer and independent contractor?

A.

Employee:  The legal definition of employee by the Labor Code is  every individual (natural person, never a legal entity) that personally renders services on a non eventual basis (continuity), under the employer subordination (obedience to rules and orders given by the employer), and that receives a salary.  If one of these requirements is not present in the relationship, it is not an employment relationship.  As in most countries, it is very important to correct classify the relationship to avoid the common issues with independent contractors vs. employee definition.

Employer:  An employer is the sole-proprietorship or joint-proprietorship company that, in assuming the risk inherent to the economic activity, hires, remunerates and manages the personal provision of services.

Independent Contractor:  The difference between employee and an independent contractor lies on the requirements that one must have to be an employee.  An individual will be considered an independent contractor and, therefore, will not be covered by the labor legislation, if he or she has independence to perform the work and it is not subordinate to a company’s directives and regulations, and there is no exclusivity in the relationship between the parties.

Q. Is it necessary to have written employment contracts in Brazil?

A. According to the Brazilian law, the execution of an employment contract is not mandatory; however, it is important to note that this is common procedure in Brazil and should be observed as a good practice.

Q. Are there any specific rules in regards to the duration of employment contracts?

A. In Brazil, and due to the principle of continuity, the general rule is that the agreement is entered between the parties for an indefinite term. The agreement for a definite term is an exception to the general rule and should be entered in writing.

According to the Labor Code, an employment for a definite term can only be executed in a few circumstances:

• A maximum of two years, provided that the nature of the work justifies the transitory nature, or the if the contract is for the performance of temporary business activities; or
• A probationary or trial period (cannot exceed 90 days and must be in writing).

Q. Are there any rules in regards to discrimination in employment?

A. Yes, the Brazilian Federal Constitution prohibits discrimination, although it does not define what that is.  It simply says that any difference in salary or unequal treatment in relation to recruitment and employment is prohibited.

Q. What are the rules regarding working hours?

A. In Brazil, the Federal Constitution and the Labor Code provides that the maximum hours per week are 44 hours, or 8 hours per day.

An employee cannot work more than two overtime hours per day since the workday cannot exceed the legal limit of ten hours; however, the law provides some very exceptional situations for overtime in the excess of two hours.

The minimum additional overtime pay is 50% of the regular hourly rate, but it may be higher if established in a collective agreement.

Employers must allow an interval of 11 hours of rest between two working days.

Q. Are there any minimum wage requirements in Brazil?

A. Yes, the Brazilian Federal Constitution has established a system of national minimum wages.  The minimum wage is fixed every year by law, but some categories also put in place their own professional minimum wage that cannot be inferior to the national one.

Q. What are the rules regarding the terminations of contracts?

A. Employers in Brazil may terminate contracts in Brazil with or without a cause, provided that all termination and severance amounts are paid.

The only exception is that the employer cannot terminate an employment contract when the employee is under a provisional job tenure, for example, female employees during and after pregnancy, and employees who are union leaders.

In Summary

I hope this quick summary can be used as a road map for employers doing business in Brazil.  Please post your questions and comments.

Important Note:  This posting is intended to provide a brief overview of employment law in Brazil.  It is not intended as a substitute for professional legal advice and counsel.

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