A) EMPLOYER POLICY REQUIREMENTS
In Brazil, labour relations are a matter of Federal law, so the States and Municipalities have no power to legislate over labour matters. Therefore, labour rights are nationally standardized, and the same labour costs and consequences will apply regardless of an employer’s place of business or place of incorporation.
The basic principles concerning labour relations in Brazil are contained in the Labour Code, the so-called “CLT”, enacted on May 1, 1943 and amended over the years by scattered statutes. The most important change in the Labour Code occurred in November 2017, when the Labour Reform became effective changing more than 100 articles of the Code.
The Federal Constitution of 1988 also establishes rights for urban and rural workers and there are also regulations of the Ministry of Labour that must be observed when hiring workers in Brazil.
The Labour Code and Federal Constitution establishes several mandatory rights that must be observed by employers such as: minimum wage, annual vacation, 13 salaries per year, deposits in the “severance fund”, severance package, maximum working hours per day and week, among others.
Considering that the mandatory rights are non negotiable and already established by law, it is not necessary to have employer’s policies and/or employment handbooks related to the matter. Nevertheless, employers may provide additional rights to the ones established by law and may also implement their internal policies in Brazil as long as they are not in conflict with Brazilian law.
Several international companies that open branches in Brazil opt to have written internal policies, even if they repeat some rights already established by law, to have all employees and even foreign executives responsible for the Brazilian branch aware of the applicable rights and conditions of the relationship. The code of conduct and employee handbook are the most common policies usually implemented in Brazilian branches.
In what regards health and safety at the work place, Brazilian companies must implement:
- Occupational health and medical control program (known as PCMSO);
- Environmental risk prevention program (known as PPRA); and
- Other bodies that vary in accordance with the risk factor of the company and number of employees, such as internal commission to avoid work-related accidents (known as CIPA).
B) EMPLOYMENT AGREEMENTS
In Brazil, workers may be hired in several ways, but the most common practice is the hiring of workers as employees.
An employment relation is characterized by the simultaneous presence of four elements: (i) services rendered on a personal basis; (ii) on a permanent/habitual basis; (iii) with subordination, i.e., the services are rendered under the direction of a supervisor; and (iv) on an onerous basis, i.e., the individual must receive remuneration in consideration for the services rendered.
If the elements above are not present in a labour relationship, the parties are free to structure it in a different way other than a formal employment agreement, such as: (i) independent contractors/consultants, (ii) service providers/outsourced workers, (iii) temporary workers, (iv) interns and non-employed officers, among others, provided that the specific rules and regulations regarding such other forms are complied with.
However, whenever the elements of an employment relationship are present and the employee is hired in any other form other than as an employee, the individual is able to request acknowledgement of employment before a Court, with the consequential payment of all labour and social security rights. The non employee agreement executed by the parties will be disregarded because in Brazil, for employment purposes, the facts prevail over formal documents.
In what regards employment agreements, although it is not mandatory to have written agreements because verbal agreements are also valid, it is recommendable and common to execute one. The agreements may be for: (i) indefinite term, (ii) fixed term, or (iii) intermittent work. The most adequate term varies in accordance with each type of activity to be performed.