Introduction 

Brazil is the largest economy in Latin America and a key market for international expansion. But it also has one of the most complex and protective labour law systems in the world. From strict termination rules to mandatory benefits and union involvement, navigating employment in Brazil can feel like walking a legal tightrope. Yet, with the right understanding and localised HR support, doing business compliantly in Brazil is entirely achievable.

In my years advising companies entering LATAM markets, Brazil consistently stands out as a place where getting it right from the start can save enormous cost and confusion later. As remote work and distributed teams increase, understanding Brazil’s employment framework is now a critical piece of any global people strategy.

Quick Tips

• Every employee must have a signed employment contract - verbal agreements don’t hold.

• Terminations require clear justification, documentation, and often union negotiation.

• 13th salary (a mandatory bonus) must be paid in two instalments annually.

• Remote work must be explicitly stated in the contract and follow home office rules.

• Labour courts strongly favour employees - proactive compliance is essential.

Key Employment Rights in Brazil 

Under Brazil’s Consolidation of Labour Laws (CLT), employees have a wide range of rights, including paid holidays, maternity and paternity leave, overtime pay, and job security protections. Employers must also contribute to social security, unemployment insurance, and a severance fund (FGTS).

The 13th salary - essentially a mandatory Christmas bonus - is one of the more unique features. Employers must pay half by 30 November and the remainder by 20 December. Failing to do so can trigger fines and labour claims.

It’s also important to note that many collective bargaining agreements (CBAs) may go beyond CLT requirements, particularly in sectors like manufacturing and finance. HR leaders must check for sector-specific obligations.

Hiring and Remote Work Considerations 

Brazil has detailed rules around the employment relationship. Independent contractor use is heavily restricted, and misclassification is a common source of legal action. If a contractor is found to be functioning as an employee, your business could owe years of back pay, social contributions, and fines.

Since the 2021 legal updates, remote work (teletrabalho) must be explicitly mentioned in the contract. Employers are responsible for defining work hours, tracking productivity, and covering costs related to home office setup if applicable. Overlooking these rules can risk non-compliance or employee disputes.

In one case I supported, a tech firm headquartered in the US onboarded several remote workers in Brazil without amending their standard contracts. It wasn’t long before questions arose around expenses and hours, triggering a legal review. We revised contracts, clarified working expectations, and implemented compliant remote work policies - all of which could have been handled proactively from day one.

Termination in Brazil: Not Simple, Not Cheap 

Unlike many countries, Brazil does not allow “at-will” termination. Dismissals must be justifiable and well-documented. For dismissals without cause, employers must pay:

• Notice period (worked or paid)

• Proportional holidays and 13th salary

• 40% penalty on FGTS (severance fund) deposits

Additionally, terminations often require union notification or involvement, especially in unionised sectors. Any procedural misstep can lead to reinstatement orders or costly litigation.

I recently helped a UK client restructure their Brazilian team after a funding change. With unionised staff and tight timelines, we coordinated with local counsel, documented a fair and transparent process, and ensured all entitlements were calculated correctly. The result? A compliant and respectful outcome, with no legal action.

Final Thoughts 

Brazil rewards those who prepare. Labour regulations may seem daunting at first, but they are navigable with good systems and strong local partnerships. Whether you’re hiring one person or building a full operation, make compliance a cornerstone of your Brazil strategy.

What’s next for your global people strategy? 

Book a free compliance check-in or HR audit with ThinkGlobal HR. We’ll help you assess your risks, review your contracts, and build compliant systems across every country you operate in. When it comes to Brazil, we’ve got the local insight and global perspective to keep you on track.