Doing Business in Brazil – Basic Brazilian Labour and Employment Rights and Entitlements
BASIC BRAZILIAN LABOUR AND EMPLOYMENT RIGHTS AND ENTITLEMENTS
A complimentary overview provided by Montgomery & A ssociados (Updated as of September 2020 taking into account the legislation in force at such time)
- INTRODUCTION – EMPLOYMENT RELATIONSHIPS
1.1. The basic rules governing labour and employment relationships in Brazil are set out in the Federal Constitution and in the Brazilian Consolidation of Labour Laws (Consolidação das Leis do Trabalho – “CLT”).
1.2. Brazil’s labour and employment legislation is supplemented by other federal, state, and/or municipal statutes, social security norms, court decisions, administrative regulations and collective bargaining agreements (“CBAs”).
1.3. Pursuant to Article 3 of the CLT, an employee is defined as an individual who renders services on a regular basis, under subordination (i.e. subject to direct oversight) and dependency to his/her employer, against receipt of salary.
1.4. It follows from the foregoing that if any individual renders services in Brazil under a relationship in which the above-mentioned requirements are satisfied, he/she will be considered an employee and, therefore, be entitled to labour rights and entitlements that cannot be waived, even if the prior arrangement between the parties provided otherwise. Furthermore, regardless of the place of hiring, origin of the agreement or of the company, if the services are rendered in Brazil, Brazilian law will apply. If the services are rendered in multiple countries including Brazil throughout a single employment relationship, Brazilian case law determines that the most favourable legislation shall apply.
1.5. In turn, an employer is a company, entity or individual, who/which assuming all the economic risks of its activities, hires, pays a salary, directs, coordinates and oversees the services rendered by the employee(s).
1.6. The employment relationship is construed by the execution of a written or verbal employment agreement entered into between the employer and the employee. Although not mandatory, a written employment agreement is recommended to provide certain terms and conditions not specifically provided for by Brazil’s labour and employment legislation.
1.7. As far as duration is concerned, an employment agreement can be entered into: (i) for an indefinite term, which is the most common format in Brazil; or (ii) for a fixed term, allowed only in specific situations provided by law.
1.8. Prior to the employment agreement, the parties involved in the intended employment relationship can also execute an offer letter, containing the main aspects of the negotiation that preceded their relationship. Although commonly used by foreign companies, it is important to mention that the offer letter is not a mandatory document for a Brazilian employment relationship.