Hiring Employees in Brazil in 2025: What You Need to Know

Brazil is quickly rising as a prominent destination on the global talent map, renowned for its robust economy, tech-savvy population, and rich cultural heritage. 

As the largest country in Latin America, Brazil offers a diverse workforce, a rapidly developing tech ecosystem, and an increasing number of professionals with international experience. 

With a strong emphasis on education and a growing base of English-speaking talent, Brazil is now a prime location for companies seeking skilled professionals in IT, finance, engineering, customer support, and more.

For US companies, Brazil presents a golden opportunity: access to a large pool of qualified, cost-effective talent, combined with favorable time zone overlaps and an established remote work culture that makes it easier to manage employees remotely. 

Whether launching a new office or expanding remote teams, US employers can benefit from Brazil’s competitive labor costs, highly educated workforce, and maturing infrastructure—all while ensuring compliance with local regulations through strategic hiring models.

How to Hire Employees in Brazil

Assess Your Hiring Needs

• Full-time vs. project-based support: Define whether you need permanent employees for ongoing operations or contractors for projects with defined timelines. This decision will affect compliance, onboarding, and payroll complexity.
• Local compliance requirements: Brazilian labor law is intricate, with strict requirements around contracts, benefits, and termination. Understanding your obligations upfront is crucial.
• Onboarding speed vs. long-term control: Weigh the urgency of hiring against your need for direct oversight. Partnering with an Employer of Record (EOR) offers rapid onboarding; setting up a legal entity provides greater long-term control but is slower and more complex.

Hiring Options in Brazil

• Set Up a Legal Entity: Establishing your own company in Brazil allows for direct employment and full management control. This approach is suited for large-scale, permanent operations but requires significant investment, time, and expertise in local laws.

• Partner with an Employer of Record (EOR): An EOR acts as the legal employer on your behalf, handling compliance, payroll, taxes, and benefits. This option is ideal for fast market entry, small teams, or testing the market, as it eliminates the need for a local entity.

EOR vs. Legal Entity Comparison

Aspect	Employer of Record (EOR)	Legal Entity
Pros	Quick and easy market entryNo need for local incorporationCompliance handled by expertsIdeal for small teams or pilots	Full control over employees and operationsBuilds permanent presence and brandMore flexible for large-scale hires
Cons	Less direct control over HR processesRecurring EOR service fees	Significant setup time (months)High administrative and legal costsComplex compliance obligations
Cost & Implementation	Low upfront, monthly service fees, rapid setup (days to weeks)	High upfront (legal, accounting, office), ongoing admin costs, lengthy setup (months)
Compliance, Payroll, Benefits	Managed by EOR; local experts ensure full compliance with Brazilian law	Company responsible for compliance, payroll registration, tax filings, and benefits administration

Understanding Worker Classification in Brazil

Employees vs. Contractors

Aspect	Employee	Contractor
Legal Relationship	Formal employment contract; governed by CLT (Consolidation of Labor Laws)	Service agreement; not subject to CLT
Control & Supervision	Employer directs work, schedules, and provides tools	Contractor controls how/when work is done; uses own tools
Benefits	Entitled to statutory benefits (paid vacation, 13th salary, social security, etc.)	No entitlement to statutory employee benefits
Taxation	Income tax and social security deducted at source	Responsible for own tax payments
Termination	Protected by labor laws; severance and notice required	Termination as per contract terms; no statutory severance

• Legal and tax implications: Misclassifying employees as contractors can result in severe penalties, back taxes, and liability for unpaid benefits. For more on employee vs contractor classification, always assess the actual work arrangement and consult local experts.

• Hire and Pay Contractors: For project-based needs, you can engage independent contractors via service agreements. Ensure contracts clearly define scope, payment, and independence to avoid misclassification risks.

Hiring Costs and Payroll in Brazil

Hiring Costs Overview

• Gross salary: Varies by role, region, and seniority, but is generally lower than in the US for comparable talent.
• Mandatory benefits: Include 13th month salary, paid vacation, transportation and meal vouchers, and social security contributions.
• Employer on-costs: Social security (INSS), FGTS (severance fund), and other payroll taxes can add 70-80% to the base salary.
• Recruitment fees: Agency or recruiter costs typically range from 10-20% of the first-year salary.

Payroll Setup Steps

• Obtain a CNPJ (Brazilian tax ID) if setting up a local entity.
• Register with social security (INSS) and FGTS authorities.
• Implement payroll software or partner with a local payroll provider/EOR.
• File monthly payroll taxes and make mandatory contributions.
• Issue pay slips and ensure timely salary payments (typically monthly).

Income Tax Rates

• Progressive rates: Employees are taxed at rates from 0% to 27.5% based on income brackets.
• Employer obligations: Withhold and remit tax and social security from salaries; file monthly returns.

Payment Methods

• Direct deposit: Most common and required by law for payroll payments.
• Bank transfers: Used for contractors and expense reimbursements.
• EOR payroll: EORs consolidate and process payments, handling all compliance and documentation.

Using Global Payroll Services

• Global payroll providers like Deel, Multiplier, and Papaya Global can streamline payroll, tax, and benefits for distributed teams.
• These services ensure compliance with Brazilian regulations, automate filings, and reduce administrative burden, especially for companies without a local entity.

Compliance Risks When Hiring Employees in Brazil

Incorrect Payroll Contributions

• Failure to remit correct INSS, FGTS, and tax contributions can result in audits, fines, and liabilities for back payments.

Permanent Establishment Risk

• Repeated hiring or business activities in Brazil without a legal entity or EOR may trigger permanent establishment, exposing you to corporate tax and legal compliance obligations.

Statutory Benefits

• Mandatory benefits (13th salary, vacation, transportation, meal vouchers, and health insurance) must be provided. Non-compliance leads to penalties and possible litigation.

Misclassification Risks

• Improperly classifying employees as contractors can result in reclassification, backdated benefits, taxes, and severe penalties. Always clarify status and structure contracts accordingly.

Provincial/Regional Law Variances

• While labor law is federal, some states or municipalities may have additional requirements, especially regarding holidays, minimum wage supplements, and union agreements. Always check local regulations.

Onboarding New Employees in Brazil

Before Their First Day

• Confirm employment contract (in Portuguese), signed by both parties.
• Request copies of CPF (tax ID), RG (identity card), proof of address, and work/residence permits if applicable.
• Register the employee with INSS and FGTS authorities.
• Set up payroll and benefits enrollment.

On Day 1

• Conduct company orientation (in person or remote).
• Issue access credentials, equipment, and key documentation.
• Review health and safety protocols.

During Their First 90 Days

• Probationary period (up to 90 days) allows for performance review and easier termination if needed.
• Provide ongoing training, mentorship, and feedback.
• Complete benefit enrollments and onboarding surveys.

Offer Letter Essentials

• Clearly state job title, salary (gross and net), benefits, working hours, vacation policy, and termination conditions.
• Include confidentiality and IP clauses as required.

NDAs and Confidentiality

• Have all employees sign NDAs and confidentiality agreements to protect company information, especially for remote and tech roles.

Running Background Checks

• Background checks are common in Brazil but must comply with data privacy laws. Obtain written consent and limit checks to legitimate business needs.

Managing Remote Employees in Brazil

Computer and App Access

• Ship laptops and equipment or provide stipends for home office setup.
• Set up secure access to company systems, cloud storage, and communication tools.
• For effectively managing remote employees, ensure compliance with Brazil’s data protection laws when handling employee information.

Intellectual Property Protections

• Include robust IP assignment clauses in all employment and contractor agreements.
• Clarify ownership of work product, especially for software, creative, and R&D roles.
• Types of IP rights to consider: copyrights, patents, trademarks, and trade secrets.

Complying with Brazil Labor Laws

Working Conditions by Employment Type

• Employees are entitled to maximum 44-hour workweeks, overtime pay, paid annual leave (minimum 20-30 days), rest breaks, and safe working environments.
• Contractors set their own hours and conditions, but must not be subject to employee-like control.

No At-Will Employment

• Brazil does not recognize at-will employment. Terminations must have just cause or follow specific procedures, with payment of notice and severance as required.

Trade Unions and Collective Bargaining

• Many industries in Brazil are unionized. Employers must respect collective bargaining agreements which may set higher standards than national law for pay, benefits, and working conditions.

Terminating Employees in Brazil

Acceptable Termination Reasons

• Just cause (gross misconduct, theft, etc.)
• Without cause (business needs, redundancy), requires statutory severance and notice
• Mutual agreement or end of fixed-term contract

Notice Periods and Legal Protections

• Notice period is typically 30 days, with an additional 3 days per year of service (up to 90 days).
• Severance pay includes FGTS withdrawal, a penalty payment (40% of FGTS balance), and accrued benefits.
• Special protections exist for pregnant employees, union leaders, and others.

Why U.S. Companies Can Consider Hiring in Brazil

Access to Skilled Talent

• Brazil boasts a large population of young, well-educated professionals, especially in STEM fields, finance, customer support, and creative industries.
• Top universities, growing English proficiency, and international experience make Brazilian talent globally competitive.

Cost Efficiency

• Salaries are significantly lower than in the US, even after adding mandatory benefits and payroll taxes.
• Using an EOR or remote-first model eliminates the need for costly office space and reduces administrative overhead.

Time Zone Overlap

• Brazil’s time zones (BRT, GMT-3) align closely with US Eastern and Central time, enabling real-time collaboration and efficient support for distributed teams.
• Ideal for 24/7 operations, customer service, or development cycles requiring rapid communication.

Growing Remote-Friendly Infrastructure

• Brazil leads Latin America in internet penetration, with widespread availability of high-speed connections and a thriving coworking culture.
• Major cities like São Paulo, Rio de Janeiro, and Belo Horizonte are recognized hubs for startups, tech innovation, and remote work.

Hire Talent in Brazil, Turn Opportunity Into Impact 

Hiring employees in Brazil is both an opportunity and a challenge for US companies. The country offers an impressive talent pool, cost advantages, and time zone alignment, but requires careful navigation of complex labor laws and compliance requirements. 

Whether you choose to work with an EOR or set up your own entity, success in Brazil depends on respecting local regulations, investing in strong onboarding, and building genuine relationships with your Brazilian team. 

With the right strategy, Brazil can become a cornerstone of your global workforce.