Labour Laws in Brazil: A Complete 2025 Guide for Employers and Employees

Hiring in Brazil in 2025 offers global businesses access to a vibrant, skilled workforce—but also presents unique regulatory complexities. Brazil’s labour laws are among the most detailed in Latin America, governed primarily by the Consolidation of Labor Laws (CLT) and supplemented by various constitutional provisions and regional regulations. Whether you’re a multinational company expanding into São Paulo or a startup engaging remote Brazilian professionals, understanding the nuances of employment compliance is essential. This guide provides a comprehensive overview of labour laws in Brazil, including wages, contracts, leave policies, termination rules, and how an Employer of Record (EOR) can simplify your entry into the Brazilian market. With increasing interest in Latin America as a remote talent hub, mastering the regulatory landscape is critical for maintaining compliance and ensuring a fair working environment.

Table of Contents

• Overview of Brazilian Labour Law System
• Types of Employment Contracts in Brazil
• Minimum Wage and Work Hours
• Social Security and Payroll Contributions
• Statutory Leave and Paid Time Off
• Termination Rules and Severance Pay
• Employee Benefits and Bonuses
• Health and Safety Regulations
• Collective Bargaining and Union Rights
• Using an Employer of Record (EOR) in Brazil
• Compliance Tips for Hiring in Brazil
• Conclusion
• FAQs

Overview of Brazilian Labour Law System

Brazil has one of the most structured and comprehensive employment law systems in Latin America, designed to protect workers’ rights while regulating employer responsibilities. The system emphasizes legal clarity, procedural fairness, and transparency across all employment stages. It also enforces mandatory benefits, collective bargaining rights, and job security measures. For foreign employers, this framework can be complex to navigate without localized expertise or support from compliance-focused partners.

CLT: The Foundation of Brazilian Labour Law

The Consolidação das Leis do Trabalho (CLT)—or Consolidation of Labor Laws—is the primary source of labour regulation in Brazil. It governs everything from hiring practices and wages to benefits, leave entitlements, and termination rules. All employment contracts must adhere to CLT standards, regardless of industry or company size.

Applicability to All Workers

CLT provisions apply equally to domestic and foreign workers employed in Brazil, whether they work on-site, remotely, part-time, or full-time. This inclusiveness ensures uniform protection and imposes equal obligations on all employers operating within Brazilian territory.

Pro-Employee Framework

Brazilian labour law actively grants workers significant rights and protections, reflecting its pro-employee orientation.. This includes mandatory benefits, strong union representation, and clearly defined termination procedures. Employers must provide detailed documentation, maintain accurate payroll records, and comply with procedural requirements at every stage of the employment lifecycle.

Regional Regulations and Legal Interpretations

In addition to national laws, employers must consider state-level labour regulations and evolving court interpretations. Labor tribunals and judicial decisions actively shape how employers apply CLT provisions in practice. As a result, businesses often require ongoing legal counsel or the support of an Employer of Record (EOR) to manage cross-jurisdictional compliance effectively.

Types of Employment Contracts in Brazil

Understanding the contract types recognized under Brazilian labour law is essential to ensure proper classification, compliance, and benefits administration.

Indefinite-Term Contracts

The indefinite-term contract is the most common and preferred employment arrangement in Brazil. It does not have a fixed end date and continues until either party lawfully terminates the relationship. This type offers full employee protections under the CLT, including notice periods, severance, and access to the FGTS fund.

• Most secure and flexible contract type
• Requires formal documentation from day one
• Includes entitlement to all statutory benefits

Fixed-Term Contracts

Employers use fixed-term contracts when employment has a defined duration or is tied to a specific project or temporary need. These contracts cannot exceed two years and must clearly state the start and end dates.

• Must be justified (e.g., seasonal work, project-based roles)
• Can be renewed once, with total duration not exceeding 24 months
• Automatically converts into an indefinite-term contract if used improperly

Temporary Employment Contracts

Temporary contracts are governed by separate legislation and are typically managed through third-party staffing agencies. They are often used for short-term substitutions or unexpected workload increases.

• Can only last up to 180 days, extendable for another 90 days
• Requires registration with the Ministry of Labour
• Worker remains legally tied to the agency, not the end client

Contract Language and Legal Formality

All employment contracts in Brazil must be written in Portuguese to be legally valid and enforceable. They should be clear, detailed, and tailored to comply with CLT requirements.

Importance of Formalization

Failing to formalize an employment relationship in writing can lead to automatic classification as an indefinite-term employee, with full rights to severance, notice, benefits, and back payments. Employers must ensure all terms—such as job role, compensation, working hours, and termination clauses—are outlined from the beginning.

Minimum Wage and Work Hours

As of 2025, the federal minimum wage is R$1,500/month, though individual states may establish higher rates depending on cost of living and regional labor agreements. The standard workweek is 44 hours, usually spread across five or six days. Overtime is paid at 50% above the normal rate or 100% on holidays and Sundays. Employers must also observe mandatory rest intervals and comply with time-tracking requirements.

Social Security and Payroll Contributions

Employers are required to contribute to Brazil’s social security system (INSS), FGTS (severance fund), and other levies totaling around 30–40% of gross salary. Contributions include health insurance, risk insurance, education funds, and more. Accurate reporting through Brazil’s eSocial platform ensures legal compliance and transparency. Late or incorrect filings can trigger substantial penalties and legal scrutiny.

Statutory Leave and Paid Time Off

Employees are entitled to 30 days of annual paid vacation after 12 months of service. The vacation must be taken within the following 12 months and is typically paid with a one-third bonus on top of the regular salary. In addition to public holidays, Brazil mandates 120 days of paid maternity leave and five days of paternity leave. Sick leave is also protected, with payments handled by the employer initially and by INSS after a certain period.

Termination Rules and Severance Pay

Terminations must follow strict procedural steps, including advance notice and documentation. Employees dismissed without cause receive a 40% FGTS penalty, advance notice or pay in lieu, and other severance benefits outlined by law. Employees can also be terminated for cause under specific conditions, such as dishonesty or gross misconduct, but employers must document and justify such decisions thoroughly.

Employee Benefits and Bonuses

Mandatory benefits include transportation vouchers, 13th-month salary, and meal allowances. Many employers also provide private health insurance, daycare assistance, or profit-sharing programs. These benefits are often negotiated through collective bargaining and serve to boost employee morale and retention. The 13th-month salary, or “Christmas bonus,” is legally required and highly anticipated by the workforce.

Health and Safety Regulations

Brazilian law mandates regular risk assessments, employee health exams, and ongoing safety training, especially in industrial or high-risk work environments. Employers must provide adequate PPE (personal protective equipment) and report workplace incidents through regulatory channels. The Internal Commission for Accident Prevention (CIPA) is a mandatory workplace safety body for companies with more than 20 employees.

Collective Bargaining and Union Rights

Union representation is common across sectors and significantly influences working conditions. Collective bargaining agreements (CBAs) can override statutory law when they are more favorable to the employee. Employers must stay informed about active CBAs in their industry and region, as failure to comply can result in labor disputes and fines.

Using an Employer of Record (EOR) in Brazil

An Employer of Record in Brazil, such as Asanify, enables international companies to hire local talent without having to establish a legal entity in the country. The EOR acts as the official employer on behalf of the client company, taking full responsibility for compliance with Brazil’s Consolidation of Labor Laws (CLT) and any state-specific regulations. This includes managing employment contracts, payroll processing, tax deductions, social security contributions, statutory benefits, and termination procedures.

Partnering with an EOR is especially valuable for businesses entering Brazil for the first time, conducting market feasibility studies, or managing distributed remote teams. It simplifies onboarding, ensures full legal compliance, reduces operational overhead, and significantly accelerates time-to-hire in Brazil’s complex employment landscape.

Compliance Tips for Hiring in Brazil

Staying compliant in Brazil requires careful attention to contracts, documentation, and evolving legal requirements. Here are key practices to follow:

• Localize contracts: Always draft employment contracts in Portuguese and ensure they follow CLT requirements, including role details, benefits, and termination clauses.
• Use the eSocial platform: Report all payroll, tax, and employment changes through Brazil’s official eSocial system to meet real-time compliance standards.
• Track entitlements accurately: Monitor leave, bonuses like the 13th salary, and overtime to avoid disputes and ensure timely, lawful payments.
• Stay informed on legal updates: Keep up with CLT reforms, judicial rulings, and union agreements relevant to your industry and region.
• Partner with legal experts or an EOR: Engage experienced counsel or a trusted Employer of Record in Brazil to reduce risks and handle compliance efficiently.

Suggested Read: Employer of Record Brazil: A Comprehensive Guide on Employer of Record 2025

Conclusion

Navigating labour laws in Brazil requires detailed attention to employment terms, contributions, documentation, and worker protections. Brazil’s pro-employee regulatory environment can seem daunting, but proactive compliance builds long-term stability and trust. By following legal requirements and partnering with compliance experts, employers can build strong, motivated teams while avoiding costly fines or disputes.

Leveraging digital tools for payroll tracking and HR documentation also enhances transparency and operational efficiency. Regularly updating internal policies to reflect legal reforms helps prevent inadvertent violations. Ultimately, a compliant and employee-centric approach positions businesses for sustainable success in the Brazilian market.

FAQs

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.