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Brazil Labor Law Reforms – Here’s What Overseas Employers Need to Know

When assigning staff overseas, there are so many different regulations and rules to keep track of, which can affect the overall cost and complexity of foreign employment.  The challenge is staying abreast of any changes to local laws, and this is where a service such as Shield GEO can be invaluable to multinationals and their HR departments.

For example, we have a client with staff on assignment in Brazil, and there were some recent changes to the labor laws there related to many different provisions.  Here is how we updated our client on those developments, including union contributions, termination and vacation leave rules:

Union Contributions in Brazil

There is a system in place in Brazil for employees and employers to contribute to unions.  Previously, this contribution was mandatory for both, but going forward it will be voluntary.  There are two types of contribution available: monthly and annual.

Annual Contribution

If the employee still wishes to contribute, they can do so annually.  Typically, this contribution equals 1 day of salary, deducted in March from the payroll and calculated in the payslip.

Monthly Contribution

There is also a monthly contribution available that is related to the collective labor agreement (CCT) and established as an assistance contribution.  The amount of the contribution is determined in the CCT.

Our advice to the client in this case was to wait and see what the assistance contribution would be, and then decide if they (or the employee) still want to participate or not.

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Termination of Employment in Brazil

Termination rules have also seen a few changes in Brazil with the new labor laws, and now termination agreements no longer need ratification by the union or Ministry of Labor.  There is also a new law that allows for termination by mutual consent which reduces the notice period.


The labor law reform also included changes to vacation leave.  Leave can now be split into three different periods: one of at least 14 consecutive days and two other periods of at least 5 days each.

The Shield GEO Solution

Shield GEO has local partners and in-country experts that stay on top of all employment and immigration related laws that affect foreign companies.  This is essential to avoid compliance issues with labor laws or miscalculation in payroll withholding or contributions.  We make international employment simple for our clients, and offer dedicated, professional support in over 90 different countries.

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The information in this article is subject to changes in local legislation.

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