Employment Contracts in Brazil

1. Minimum Requirements

In Brazil, workers may be hired in several ways, but the most common practice is to hire workers as employees.

An employment relation is characterized by the simultaneous presence of four requisites: (a) services rendered on a personal basis; (b) on a permanent/habitual basis; (c) with subordination, i.e., the services are rendered under the employer’s direction; and (d) on an onerous basis, i.e., the individual must receive remuneration in consideration for the services rendered.

Whenever the requisites of employment relation are not present in a labor relation, the parties are free to structure it in a different way other than employment, such as: independent contractors/consultants, service providers/outsourced workers, temporary workers, intern, non-employed officers, among others, provided that the specific rules and regulations regarding such other forms are complied with.

The Labor Code is applicable solely for employees, while the other work structures are governed by different statutes.

2. Fixed-term/Open-ended Contracts

Employment agreements in Brazil are usually for an indefinite term.

As per the Labor Code, fixed-term employment agreements are only allowed: (a) for up to 2 years when: (1) the temporary nature of the service justifies a pre-established term, or (2) the business activities have a temporary nature; (b) during an initial 90 day probation employment period, after which the employment agreement will become for an indefinite term.

Additionally, Law 9.601/98 establishes that collective bargaining agreements may also authorize some additional situations in which fixed-term employment agreements will be allowed.

If the parties intend to execute a fixed term employment agreement it is necessary to have a written employment agreement expressly stating the term and the reason.

The fixed-term agreement will become an indefinite term employment agreement, if the agreement: (a) is for a fixed term, but the reason to justify it is not one of the reasons allowed by law; (b) does not have a clause mentioning the term and the legal justification for such term; (c) is extended more than once; (d) the maximum term is not observed; (e) the renewal is not agreed by the parties in writing; or (f) if successive fixed-term employment agreements are used without observing the 6-month break.

3. Trial Period

The trial period, also called “probation period”, may be established for a period up to 90 days and may be renewed once if the limit of 90 days is observed, e.g., 45 days renewable for 45 days, 30 days extendable for 60 days.

4. Notice Period

The notice period, also called “prior notice”, is only applicable in the event of termination of employment agreements for indefinite term.

In the event of termination of employment agreements for indefinite term without cause by the employer´s initiative, the employer must provide the employee with a prior notice proportional to the length of service, minimum of 30 days if the employee has worked up to 1 year and 3 additional days for each year of service limited to 60 additional days (maximum of 90 days prior notice). The employer may require the employee to work during the prior notice period or may release the employee from working and indemnify the notice period (payment in lieu of notice). If the prior notice is worked, the employee is entitled to be absent 2 hours per day or the last 7 consecutive days of the period.

In terminations without cause of employment agreements for indefinite term by the employee’s initiative (resignation), the employee must provide a prior notice to the employer of 30 days or request to be released from working during the prior notice period.

For more information on these articles or any other issues involving labour and employment matters in Brazil, please contact TozziniFreire Advogados
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