1. Legal Framework
Employers and workers must make compulsory contributions to the Brazilian Social Security Agency, which is in charge of managing a system designed to protect the employee in case of illness and retirement.
In what regards healthcare, despite the fact that employers are not obliged to grant private healthcare to their employees, it is a very common practice. If an employer grants the benefit, the employer should grant it to all its employees in order to avoid the benefit having a salary nature.
Collective bargaining agreements may establish additional benefits to employees and, therefore, employers must comply with the conditions set forth and grant such benefits to its employees.
2. Required Contributions
Employers’ contributions average twenty-seven percent (27%) of the employee’s overall salary. Contributions may be higher than this average if the employees are subject to health hazardous working conditions. Companies in some specific industries are subject to a 1% or 2% social security contribution on top of their revenue instead of the employees’ salary.
The employer withholds the employee’s individual contributions. The individual contribution is proportional to the salary amount and is capped by the Federal Government, currently at approximately BRL 570.00 per month and adjusted on an annual basis.
The social security authority provides the following insurances to workers who have contributed to the system, which will depend on the number of contributions made and on the amounts involved in each contribution. The main insurances provided are:
- Death allowance;
- Accident allowance;
- Disease allowance; and
- Imprisonment allowance.
4. Required Maternity/Sickness/Disability/Annual Leaves
All female employees are eligible for maternity benefits, including when adopting a child. The maternity benefit will be paid to the employee for a period of 120 days. The maternity benefit is paid by INSS, the Brazilian social security agency. In practical terms, the employer pays the benefit to the employee and deducts the amount from the social security contributions due to the INSS. Male employees are entitled to 5 days of paid paternity leave.
In the event of sickness leave or injury at work, the employer will be responsible for the employee’s salary during the first fifteen days. After the fifteenth day of absence due to sickness, the INSS will pay a sick leave benefit to the employee. The benefit does not correspond to the actual salary of the employee, since the benefit corresponds to a specific INSS based calculation made over the last contributions and it is capped to approximately BRL 5,000.00.
5. Mandatory and Typically Provided Pensions
To be eligible to receive retirement pension based on age, individuals have to make a minimum of 180 monthly contributions to INSS. Males must be at least 65 years of age to retire, and females must be at least 60 years of age.
A worker can also be eligible to receive a length of service pension, depending upon the number of years he/she has made contributions to INSS. Female and male workers with 30 and 35 years of contributions, respectively, are eligible for a length of service pension.
There is also a special retirement for employees who have worked under unhealthy conditions; their contribution periods are shorter than the regular period.
There is also disability pension for workers who have become disabled due to work related illness or accident.
Apart from the aforementioned public retirement system, some companies provide their employees with a private pension plan, which can be defined by the companies on the amounts of contributions by both parties (employers and employees).