1) Any employment agreement executed in Brazil must follow Brazilian law and disputes will be resolved in Brazilian courts, with the sole exception being if foreign law is more favorable to the employee. 2) When a foreign company establishes operations in Brazil, it must observe numerous labor laws and protective principles regarding employee rights, including minimum wage, paid holidays, overtime pay, and unemployment benefits. 3) Failure to comply with these labor standards can result in significant legal problems for the foreign company operating in Brazil.

1. International Employment Agreement

2. Talking, here in Brazil, about international
employment agreement, and specially to a foreign
company seeking opportunities and information...
....is talk about the brazilian law.

3. Why?
Because all employment relations executed in Brazilian
soil, shall respect the Brazilian law, and all conflicts
must be solved by the brazilian justice.
The only exception comes when the foreign law is most
favorable to the employee (situation that not,
necessarily, triggers the Brazilian rules)

4. In fact, every time that a foreign company decides
to start a new business in Brazil, beside the whole
string of concerns (as registering property, paying
taxes, enforcing contracts etc.), the company shall
observe one large quantity of normative issues and
protective principles, regarding the labor rights.
(this is very important, otherwise, the company may face a lot of
problems).

5. So, how does it work?

6. 1st – observe the minimum labor standards vested by
the Brazilian Federal Constitution
2nd – observe the rights guarantied in the
Consolidation of Labors Laws
(wich is composed by 922 articles)
3rd – observe the rights contemplated in the normative
acts (depending on the sector of actuation)

7. 4th – observe the rights in the collective agreement
(depending on the professional category, and its Trade
Union)
5th – observe the clauses of the individual agreement
6th – (for international contracts) – observe the
rights related to the original country
and…

8. do not forget to observe all
costs involved in the agreement...

9. Regarding the Brazilian Federal Constitution, the standard
labor rights are the following:
Mandatory Fund of Unemployment Benefit (FGTS): 8,5% per month
Minimum wage (BRL 510,00 ~ EUR$ 229,00)
13th salary
Wage irreducibility
8 hours working time daily, 44 hours weekly
Overtime payment (minimum of 50% of the hourly wage)

10. remunerated weekly rest (preferably on Sundays)
annual holidays
maternity leave/ paternity leave
prior layoff notice (30 days)
additional salary (insalubrities/ hazardous/ night schedule )
prohibition of wage discrimination (and nationality discrimination)
Participation in profit sharing (specific rules, Law 10.101/2001)

11. Example of employee in Brazil (minimum charges)
Salary: BRL 5,000.00
Annual Holidays: BRL 555.50
13th BRL 416.50
FGTS BRL 425.00
Social Security: BRL 1,730.00
Total: BRL 8,127.00
(minimum labor charges is about 62%, but can overpass 100%)

12. Concerning the additional wages, is important to know:
Night schedule (is from 10pm until 5am; is remunerated
with 20%)
Insalubrities (harmful health situation; is remunerated with
10%, 20% or 40%, based on the minimum wage, and
depending on its level)
Hazardous (dangerous and risky situations; is remunerated
with 30%)

13. Another important thing: there are differences
between salary, bonus, gratification and benefits:
The salary is a payment as consequence of the performed work
(all the labor charges fall upon the salary).
The salary is the base for the 13th salary, vacations, overtime, FGTS
(unemployment guarantee fund), INSS (social security national
institute) and many others.
Either the payments are fixed or variable (percentage or
commissions), they are considered as salary before the law...

14. Whenever a bonus is paid as consequence of work, it is
considered a salary.
Only the gratification is not considered as salary if it is not
adjusted
(in other words, it is the employer’s free will).

15. The benefits compound the remuneration. However if they are
adequately adjusted, they are not made part of the salary
before the law.
For example: transport, private pension, graduation course,
medical assistance, dental assistance…

16. My final message...

17. THANKS
Marcello Vieira Machado Rodante
Founding partner of Rodante & Scharlack Advogados
LL.B from the Law School Metropolitanas Unidas
Specialization in Brazilian Constitutional System - EDC
LL.M in Procedural Civil Law (Litigation) - CEU
Attending Specialization in Commercial Arbitration – FGV
mr@rsch.com.br
May 17th, 2010.