Brazil Vacation Laws: A Guide for US Companies Hiring Abroad
Vacation laws in Brazil follow the structure of vacation laws in the US in many ways, but there are also key differences. Read our guide to learn more about Brazilian vacation laws for US companies building teams internationally.
Published on September 13, 2021
A little historyEmployment contracts and the collective bargaining agreements therein, like rest periods and vacation time, was set in motion in the late 19th century, after the economic sector of Brazil was upended. Brazil's economy had been driven for centuries by the coffee industry, which collapsed after slavery was abolished in Brazil in 1888. After the end of slavery, the coffee industry began hiring European immigrants to work as coffee bean laborers. The labor was just as exploitative as slavery, with women and children bearing the brunt of 14- to 16-hour work days and employer abuses.Fast forward to 1858, when typography workers in Rio de Janeiro organized themselves to protest abusive working conditions. Fifty years later, the first Brazilian Worker Encounter inspired the organization of several trade unions, and put pressure on the Brazilian government to create federal law that protected these unions. This is why Brazil (along with many industrialized countries) now has collective bargaining agreements, as well as employment agreements with minimum wage requirements, working hours, overtime pay, and yes--vacation benefits.
Differences between employees and independent contractorsBefore we dive into vacation laws, let's get an overview of worker classification, as it relates to benefits such as PTO.There are two main types of worker classifications: independent contractors and employees. It's critical to know the difference between the two, especially because failure to classify a worker correctly could result in fines, back taxes, and backpay to an employee who was misclassified as a contractor.
EmployeeIn employment relationships, the employer has more oversight over the worker, and controls certain aspects of the employee's work, like what tools they will use, the employee's working hours, where they will perform their work, and the employee's salary. Under the Brazilian Labor Code (Consolidação das Leis Trabalhistas, or CLT), there are four requirements that all need to be fulfilled in order to classify a worker as an employee:
- personal service: the employee provides a service to their employer
- regularity: The employee works on a permanent basis
- economic dependency: the employee is financially dependent on the business of the employer
- subordination: the employee is lower in rank than the employer
Independent ContractorsIndependent contractor relationships are regulated by Brazilian Civil Law. In contrast to an employment contract, an employer does not have control over when and how an independent contractor works. The contractor is entitled to work their own hours, use their own tools, and set their own rates for rendering a service to the employer. They may have a temporary job tenure with the company, and can work for third parties if they choose to do so. Some examples of independent contractors might be domestic workers, app developers, construction workers, or technicians.Unlike an employment agreement, independent contractors are not entitled to vacation pay or leave, or any other benefits such as health insurance, legal representation, a 13th salary, unemployment insurance, or severance payments at the end of their job tenure.
Individual or collective vacationAs you build your team of remote employees in Brazil, you will be required to provide them with vacation periods. Vacation pay is calculated in accordance with the employee's average pay for the last 12 months. In addition to getting paid time off, 1/3 of the employee's normal salary is paid to the employee as a vacation premium.There are two different kinds of vacation: individual vacation (sometimes called annual vacation) and collective vacation. Here are some differences between both types of vacation time:
Individual vacation 😎🏖An employee is entitled to a vacation period after twelve months of service to an employer. For every 12 months the employee has worked, they earn 30 days of paid vacation leave. There are a few ways one can divide up this vacation. Some take the 30 days of vacation in one block, some divide the time into a 20-day period and then a 10-day period, and others divide the time in up to three periods of 14, 5, and 5 days. The vacation period cannot start 2 days before a holiday or a weekend.
Collective vacation 🏖📆Instead of organizing a vacation for each individual employee, a company with team members in Brazil may arrange two periods of vacation per year for its employees, with a minimum of 10 days for each vacation period. The companies that do this instead of arranging respective vacation periods for individual employees must provide the Ministry of Labor with a 15-day notice period. An employee is entitled to exchange their collective vacation for a vacation bonus, but an applicable collective bargaining agreement must be set up between the employer and the trade union representing the employee under Brazilian labor law.
Vacation requirementsIt is illegal to deny an employee vacation time, and the employer must grant their employees vacation time or a vacation bonus within twelve months, or bear the consequences enforced by labor laws in Brazil. The failure to provide paid vacation time may result in a requirement to pay an employee double vacation in addition to 1/3 of their monthly salary. If an employer decides to grant less than a full vacation, the Labor Ministry may become involved and issue a violation notice. Instead of taking their annual paid vacation period, an employee may cash in 1/3 of their leave and receive it as a holiday bonus.The only scenario in which an employer may reduce vacation days is if the worker has more than 5 unjustified absences in a year. These are days where the employee was absent and their absence was not related to activities such as a court date, the birth of their child, the death of a family member, blood donation, military service, or marriage.If the employee is absent and their absence is unrelated to the aforementioned conditions, their vacation time is reduced as follows:
- 6 to 14 unjustified absences = 24 days vacation
- 15 to 23 unjustified absences = 18 days of vacation
- 24 to 32 unjustified absences = 12 days of vacation
- 32 unjustified absences in a year = 0 days of vacation
Required paid time off in an employment contractA law-abiding labor contract for an employee grants a worker paid time off, uninterrupted periods of rest, and financial security for when the employee falls ill. Here are some of those requirements under Brazilian employment law.
Weekly Rest 🧘Employers must grant their employees 24 hours of paid weekly rest, and it is best practice to schedule it for Sundays, especially as 90% of Brazilians are Christian and may attend church services on that day. Employees are also entitled to a rest period of 11 hours between 2 working days, and if their work day exceeds 12 hours, they must be granted 36 hours of rest.
Sick leave 🤒Under employment law, if an employee is out sick, the employer must pay the employee's salary for the first 15 days after the employee becomes ill. On the 16th day and thereafter, Social Security becomes responsible for the payment of the employee's salary.
COVID-19 🦠If an employee contracts COVID-19 and it is a proven work-related illness, that is, an illness that was contracted on the employer's premises, the employee is entitled to 12 months of job tenure, which starts the day that the employee returns to work. The sick leave benefit paid by the Social Security ends on that day, and the employer is responsible for the rest of the remuneration paid to the employee.
Maternity and paternity leave 🤱Pregnant employees are entitled to 120 days of paid maternity leave, and if the female employee has a medical condition, she can extend her maternity leave two weeks before and two weeks after giving birth. A pregnant employee is paid 100% of her wages; however, an employer can claim a portion of those wages to be paid back through tax benefits granted by the federal government. Fathers in Brazil are entitled to five days of paid paternity leave, where they are remunerated 100% of their wages.There are some female employees who are enrolled in a government program called Empresa Cidadã, which provides financial aid to families. If a woman enrolled in this program is pregnant, she is entitled to up to 180 days of maternity leave; fathers can take an additional 15 days of paid leave on top of the 5 days they are already entitled to, totaling in 20 days of paid paternity leave.In a workday that consists of eight hours, breastfeeding employees have two periods of a half an hour to pump breastmilk or breastfeed their babies, or they may leave an hour early from work to do so.
Bonus monthly salary, or the "13th Salary" 🤑In an employment relationship in Brazil, the employer pays a "13th salary" to the employee, often during the holiday season at the end of the year. This bonus salary is equivalent to the employee's monthly salary, and this remuneration paid at the end of the year can be divided into two installments: the first installment can be paid between February 1st and November 30th, and the second installment is due by December 20th. Upon termination of an employee, the employer pays a pro-rated 13th salary.Employees that use their vacation days between January to June are permitted to request that they receive 50% of their 13th salary in addition to the vacation payment, which, as we mentioned, is 1/3 of a month of the employee's compensation.
National Holidays in Brazil 🗓🎉
- New Year’s Day (January 1)
- Carnaval (February 15-16)
- Good Friday (Friday before Easter Sunday)
- Easter Sunday (can fall anywhere on the calendar between March 22-April 25)
- Tiradentes’ Day (April 21)
- Labor Day (May 1)
- Corpus Christi (Thursday after Trinity Sunday)
- Independence Day (September 7)
- Our Lady Aparecida, or Children’s Day (October 12)
- All Souls Day (November 2)
- Republic Proclamation Day (November 15)
- Christmas Day (December 25)
Navigating vacation laws in BrazilHiring abroad can be complex, no matter where you want to build an international team of workers, and vacation laws are just a small part of that. Partnering with a company that specializes in international compliance is an important step in ensuring that your company avoids expensive penalties for accidentally overlooking a critical labor law, a detail in a collective bargaining agreement, or by wrongly classifying a worker.Pilot provides remote payroll, benefits, and compliance for US-based companies hiring globally. Our team of HR and legal experts is happy to help you navigate any questions as you build your international team.
The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
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