Employer of Record in Brazil

PrintMailRate-it

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​published on 9 April 2024 | reading time approx. 3 minutes​


The Employment of Record (EoR) concept, often unfamiliar in Brazil, lacks legal regulation, with no established precedents. However, it closely resembles hiring through an intermediary company, which is prohibited in the country.​



The only exception to this prohibition is hiring through temporary employment. Therefore, companies wishing to proceed with an EoR arrangement in Brazil can do so by entering into a temporary employment contract, following the characteristics, risks, and further details outlined below.

Is the concept of EoR known in your country? Is the concept of EoR regulated by law in your country?

The concept of Employer of Record (EoR) is not well known in Brazil, and is not regulated by law. There are also no jurisprudences on the subject.

However, we can observe that hiring employees through an EoR is the same as hiring through an interposed company, which is prohibited in Brazil, according to TST (Superior Labor Court) summary n. 331.

We also highlight that hiring through an interposed company is allowed on an exceptional basis for the tempo­rary employment contract. However, temporary work shall be exclusively used to replace permanent employees or to meet an unforeseeable or, when foreseeable, intermittent, periodic or seasonal demand for services for a maximum period of 180 days, may be extended for another 90 days. 

Thus, in view of the characteristics of hiring, they do not fit the concept of EoR.

Is the EoR concept similar to temporary employment in your country?

EoR concept is not similar to temporary employment. Temporary work is governed by specific legislation in Brazil and should be used exclusively to meet a supplementary demand for unpredictable services or, when foreseeable, intermittent, periodic or seasonal, for a maximum period of 180 days, may be extended by another 90 days. 

A company that does not have a need to replace an employee, or a supplementary demand that justifies tempo­rary hiring, cannot hire an employee in this mode.

In addition, hiring a temporary employee must be done with a specific temporary work company, and not by any company.

Special features of the activity within the framework of the EoR concept or temporary employment

Hiring employees through an EoR is not permitted in Brazil. In the case of temporary employment contracts, the intermediary company must be a temporary work agency; it cannot be any other type of company. If the hiring is done through a regular company, the contract is invalid, establishing an employment relationship between the foreign company and the employee.

For temporary work, no special authorization is required for the employer.

The closest modality to temporary employment is limited in duration to 180 days, extendable for an additional 90 days.

For temporary work, the worker has rights established in the CLT (Consolidation of Labor Laws), including proportional vacation, one-third vacation pay, proportional 13th salary, weekly rest period premium (DSR), signing of the work card, benefits, etc.

What are the special tax features of the EoR concept in your country?

Hiring employees through an EoR is not permitted in Brazil. For temporary work, the following taxes must be paid: Individual Income Tax (IRRF), Social Security Contributions (INSS), Severance Pay Fund (FGTS), Social Integration Program (PIS), and Contribution for the Financing of Social Security (COFINS).

Considering that the employee is a resident and hired in Brazil, the taxes are paid only in the country, and there is no need for payment in Germany.

Regarding risks, despite the responsibility lying with the temporary service provider, the hiring party has subsidiary liability. Therefore, in case of non-payment of labour obligations by the temporary service company, in case of a labour claim, the hiring party is summoned by the court to make payments subsidiarily. Thus, it is not possible to eliminate the risks of hiring, regardless of the existence of a permanent establishment in Brazil.

How do you anticipate the concept of EoR evolving in your country from your perspective?

The concept of EoR is not evolving in the country and remains relatively unknown, being currently prohibited by law.

Contact

Contact Person Picture

Rafael Silveira Martins

Partner

+55 11 5094 6060

Send inquiry

Contact Person Picture

Edgard Venancio

Associate Partner

+55 11 5094 6060

Send inquiry

Contact Person Picture

Julia Spinardi

Send inquiry

Skip Ribbon Commands
Skip to main content
Deutschland Weltweit Search Menu