TL;DR, Hiring in Brazil
- Fully-loaded employer cost: ~50–60% on top of gross salary (INSS 20% + FGTS 8% + Sistema S ~5.8% + RAT + 13th + vacation). Adding FGTS termination penalty (40% + 10%) and monetised leave on offboarding can push the effective total employer cost to 70–80%; that termination exposure is not modelled in the monthly calculator.
- INSS employer rate: 20% on full payroll (no cap from employer side)
- FGTS: 8% of gross salary deposited monthly into employee severance fund
- 13th-month salary mandatory; paid in 2 installments (November + December)
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Statutory employer costs in Brazil
Brazil has Latin America's highest employer burden: ~50–60% recurring, rising to ~70–80% once FGTS termination penalty and monetised leave are counted on offboarding. INSS social security is 20% (no employer cap), plus FGTS at 8% deposited monthly into the worker's linked account (counted once, as an employer-funded statutory deposit rather than a payroll tax), plus 'Sistema S' contributions (~5.8% for SESI/SENAI/etc.), plus accident insurance (1–3% RAT). Mandatory 13th-month salary, one-third vacation bonus, and FGTS penalty on dismissal push total cost dramatically above gross.
| Contribution | Employer rate | Notes |
|---|---|---|
| INSS (employer) | 20% | No cap from employer side; employee side capped at ~R$8K/mo |
| FGTS (statutory employer fund) | 8% | Lei 8.036/1990 art. 15: 8% of remuneration, including the 13th salary and the constitutional vacation third, deposited monthly into the worker's linked Caixa account. Counted once, on its own line, not inside the ~27.8% contribution blend. |
| Sistema S (SESI, SENAI, SEBRAE etc.) | ~5.8% | Varies by industry classification (CNAE) |
| RAT (workers' comp / accident) | 1–3% | Risk-tier dependent; office work ~1% |
| Salário-educação | 2.5% | Education funding contribution |
Mandatory employee benefits
Beyond statutory contributions, Brazil law requires the following benefits the employer must fund.
- 13th-month salary
- One extra month, paid in 2 installments: 50% by 30 November, 50% by 20 December.
- Vacation (férias)
- 30 days/year plus the constitutional one-third supplement (CF art. 7 XVII), i.e. one third of a month's pay per full leave entitlement. Must be taken within 12 months of vesting. The calculator annualises the supplement at 1/36 of annual base for enjoyed leave, charges the full employer contribution blend on it (STF Tema 985) and FGTS at 8%; leave indemnified on termination is outside this recurring model.
- Vale-transporte
- Public transport allowance; employer funds cost minus 6% of employee salary.
- Vale-refeição / vale-alimentação
- Meal/food vouchers; not strictly mandatory federally but expected by collective bargaining agreements (CBAs).
Termination, notice and severance
Probation
Up to 90 days (45+45) under CLT, must be in the contract from day 1.
Notice period
30 days minimum (aviso prévio), extending 3 days per year of tenure, capped at 90 days. Notice can be worked or paid in lieu.
Severance
Without cause: 40% FGTS penalty (employer pays 40% of total FGTS balance to employee) + aviso prévio + proportional 13th + proportional vacation + 1/3 vacation bonus. Total termination cost commonly equals 1.5–2 months of pay even for short-tenured employees.
Common compliance pitfalls
- Collective Bargaining Agreements (CBAs) override federal minimums in many industries. Tech workers in São Paulo are covered by SINDPD agreements that mandate higher minimum salaries, PLR profit sharing, and meal vouchers, your EOR must comply.
- PJ (pessoa jurídica) contracting, paying Brazilian engineers as contractors via their own CNPJ, is widespread but legally risky. Recent labor court decisions are reclassifying long-term PJ relationships as CLT employment with back-pay liability.
- 13th-month is paid on the highest salary, not the average. A salary increase in November means the full 13th is calculated on the new salary.
- RAT contribution rate is reviewed annually by INSS based on industry accident rates; can jump from 1% to 3% with one bad year of claims at the EOR.
Frequently asked questions
Brazil's CLT (Consolidação das Leis do Trabalho) labor regime layers federal contributions (INSS 20%, FGTS 8%, Sistema S ~6%) on top of mandatory benefits (13th month, paid vacation + 1/3 bonus, FGTS termination penalty). A R$10,000/mo gross salary costs the employer roughly R$17,000–18,000/mo in total.
FGTS (Fundo de Garantia do Tempo de Serviço) is a severance fund: employers deposit 8% of monthly salary into a government-managed account in the employee's name. On termination without cause, the employer must also pay a 40% penalty on the accumulated FGTS balance.
Many do, but it's legally risky. If the Ministry of Labour or labor court rules the relationship was de facto employment (subordination, exclusivity, regular schedule), you owe years of back-pay CLT benefits + FGTS + 13th + vacation. EOR is the safer compliant path for foreign companies.
For a 2-year-tenured employee earning R$10K/mo, termination without cause typically costs R$30–35K: 40% FGTS penalty (~R$8K) + 30 days' aviso prévio (R$10K) + proportional 13th (~R$3K) + proportional vacation + 1/3 bonus (~R$3K) + accrued benefits.
Yes. CBAs in tech (SINDPD) often require vale-refeição (meal vouchers ~R$700/mo), private health insurance for employee + dependents (~R$500–1500/mo), and PLR profit-sharing. Without these, you'll lose candidates to local employers.
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.