+1 (520) 780-6269 investment@latamfdi.com

Labor contracts in Brazil in 2023

by | May 27, 2023

The kinds of labor contracts in Brazil and other countries change over time. This article provides a general overview of the types of employment contracts that exist in South America’s largest country in 2023.

Labor contracts in Brazil: what are they?

An employment contract is an agreement, as a legal basis, established between an employer and their future employee.

In addition to signifying a bond between the two parties, labor contracts in Brazil also serve as a document that usually contains information regarding the employee and the tasks to be performed.

That is, when the employer delivers an employment contract to the employee, it contains information regarding the employee and information proving its legal validity. In addition, labor contracts in Brazil also spell out rules related to the company. Accordingly, it defines the position the employee will fill and outlines the salary and benefits they will receive.

What are the main types of labor contracts in Brazil?

Labor contracts in Brazil have several variants. These include internship contracts, freelancer contracts, legal work contracts, full-time work contracts, youth work contracts, and apprenticeships.

Let’s examine the various agreements between employers and employees in Brazil.

Indefinite employment

This employment contract is most commonly seen in the Brazilian labor market. It is the most traditional for most active companies at present.

As the name implies, this contract model has no deadline for terminating the employee’s activities. Instead, the contract ends at the employer’s discretion.

Prior notice is required if the parties decide to terminate an employment contract. Notification must be given to the company by the employee in the event of a breach of contract, and, in turn, the employee must inform the employer of their intent to sever the contractual relationship.

As a result of Brazil’s most recent labor reform, both the employer and the worker can enter into one agreement to terminate the contract permanently.

Fixed-term employment contract

In contrast to the option highlighted above, these types of labor contracts in Brazil are under the obligation of the employer to establish the start date and end date for the contract term; fixed-term employment contracts in Brazil do not exceed two years.

Suppose this type of contract is amended and extended beyond the maximum of 2 years. In that case, the agreement must be revised by the employer and his employee and converted into an indefinite employment contract.

Occasional work contracts

This type of labor contract in Brazil originates from the contract for temporary employment or, as mentioned above, a fixed-term contract.

However, unlike the fixed-term agreement,  under the occasional employment contract, a temporary worker performs the defined work tasks for short or even sporadic periods and usually is not considered a company employee.

Home office work contract

Despite being considered a new type of work on the market, these labor contracts in Brazil are also one of the agreements regulated by Brazilian law.

In its legal context, home office work is any task the worker performs during working hours outside the company’s physical location at a place such as a home office.

Despite this being a Brazilian labor contract that guarantees that the employee can carry out assigned tasks during a workday at home, they can still go to the company’s physical location and work in the organization’s internal environment on a sporadic basis.

To ensure that this contract is valid and in compliance with Brazilian labor legislation, the labor agreement must contain all pertinent information related to employee duties and information on the equipment the company has provided to the employee for use in their home office.

Intermittent work contracts

This agreement is another of the many types of labor contracts that exist in Brazil. It allows for sporadic employment for an agreed-upon rate of remuneration. Also, it consists of an agreement between the parties as to the period of provision of mutually agreed upon services.

The rules for this type of contract provide that the employee will be compensated for the work performed can be at least the amount paid to another employee to exercise the same function within the company, whether that employee is working under an intermittent labor contract or not.

Another point that helps to differentiate this type of contract from the others is that the employee has the right to vacation, pension, and the yearly bonus payment proportionate to the time worked.

Part-time labor contracts in Brazil

A partial employment contract in Brazil has a shorter time frame and is limited to 30 hours a week without the possibility of working overtime.

This type of contract is usually established for interns, who need to dedicate part of their time to their studies.

Outsourced labor contract

This type of contract is usually established and worked between companies, where one activity of the contracting company is transferred to another.

The contracted company is responsible for paying legally mandated benefits, wages, training, and other costs related to employees.

Autonomous labor contracts in Brazil

This type of contract is very similar to the standard employment contract many Brazilians are accustomed to.

In this arrangement, the employment contract is autonomous and functions as a provider of services in which the worker and the company do not sign an employment agreement.

In this way, the service provider is not subordinated to the contracting party, and all the work is previously agreed upon and established by the parties that are party to the relationship.

It is worth noting that this type of work is considered self-employed. Payment for services rendered is made through the issuance of self-employed payment receipts (RPA). Social Security contributions must be recorded ( INSS ), and income tax must be paid to the Federal Government.

Contracts for interns

Hiring interns is quite common in the Brazilian labor market. This is even more so the case for youth who are enrolled in a college or university. Under this type of agreement, the internship serves as extra academic hours that enable a student to acquire real-life work experience.

This type of contract is not classified as a typical labor agreement because it is considered a learning opportunity for the intern.

Because of this, the intern does not have the right to receive severance pay, salary bonus,  or vacation pay.

However, The intern has the right to be covered under personal accident insurance and, where applicable, a monthly stipend to cover living expenses.

Labor contracts in Brazil for trainees

This type of contract applies to recent graduates aged 21 to 30 years old.

The hiring time for this modality of employment varies from 4 to 6 years of work. The employment relationship with the contracting company is configured as established by Brazilian labor legislation.

It is worth mentioning that it is the responsibility of the contracting company to determine the period of the contract. This means that the company must indicate whether it will be for a fixed or indefinite period.

Employment contracts for young apprentices

We can see this type of contract in companies that hire people between 14 years old and 24 years old. These individuals are usually enrolled in an apprenticeship program a training organization runs.

In this case, the young apprentice may already have completed their education or still be enrolled. It is essential to point out that if the person selected has any disability, the maximum age does not apply.

As with contracts for interns, a work contract for a young apprentice can be up to 6 hours a day, and the employment contract can be up to two years.

Conclusion

The country’s labor market is vast, and Brazil has many other types of labor contracts.

While they differ on specific issues, they are very similar on others. Because of this, there is a need to highlight functions, rights, and duties, as well as the matters linked to wages and benefits.

 

Contact LATAM FDI to discuss your foreign direct investment plans in Latin America.

The Landscape of Venture Capital in Peru: A Promising Environment for Startups

Venture capital in Peru has emerged as a vibrant ecosystem, showcasing remarkable potential for entrepreneurial growth and economic development. In recent years, the Peruvian startup scene has witnessed a surge in innovative ventures across various sectors, reflecting the country’s evolving entrepreneurial landscape.

Almost six million hectares have the potential to develop forestry investments in Paraguay

“Paraguay Forestry for the World” is a plan to position the industry and forest products abroad, meeting the traceability requirements to allow leveraging exports of wood products .

Uruguay presents Investment Guide “ Doing Business – Investing in Tourism in Uruguay”

As part of a collaboration agreement between the Development Bank of Latin America and the Caribbean (CAF) and the World Tourism Organization (UNWTO), several countries have recently been invited to develop an investment guide contributing to generating investment opportunities in the tourism sector.

Understanding the Role of Mercosur in the Global Economy

As part of a collaboration agreement between the Development Bank of Latin America and the Caribbean (CAF) and the World Tourism Organization (UNWTO), several countries have recently been invited to develop an investment guide contributing to generating investment opportunities in the tourism sector

Invest Minas: Navigating Foreign Direct Investment Opportunities in Minas Gerais, Brazil with Gustavo Almeida

Today we have Gustavo Garcia with us. Gustavo is the Chief Operating Officer of an organization called Invest Minas. Invest Minas is in Belo Horizonte, Brazil.

The Free Trade Agreement between Guatemala and Israel to enter into force

On March 4, 2023, the free trade agreement between Guatemala and Israel will enter into force, which is expected to double trade and investment between the two nations.

Why Invest in Chile?

Whether in mining, agriculture, renewable energy, technology, or tourism, opportunities to invest in Chile abound for those willing to seize them.

The advance of China in the economy of Bolivia, the heart of South America

The advance of China in the economy of Bolivia is becoming increasingly more assertive. This is not only due to loans that the Asian giant has made to the South American nation but also due to the growing Bolivian presence of Chinese companies.

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our LATAM FDI team.

You have Successfully Subscribed!