What Is an Employer of Record in Brazil?
An Employer of Record in Brazil is a Brazilian company that legally
employs your workforce here, holding the employment contract and
the statutory obligations, while you set the objectives for the
work. It lets companies based anywhere hire people in São Paulo,
Belo Horizonte, Recife, or anywhere else in the country without
incorporating or registering as an employer.
Brazil requires more care in describing this model than the other
markets in this region, and the reason is specific. Legislation
amended in 2017 permits a company to transfer the execution of
any of its activities, including its principal activity, to a
service provider, and the Supreme Federal Court confirmed that
position in a binding 2018 ruling. What the legislation authorizes
is the outsourcing of services. It does not authorize the supply
of workers who then take their direction from the client. The
only licensed channel for supplying labor is temporary work,
which requires registration with the labor ministry and is
confined to transitional replacement of permanent staff or a
complementary surge in demand, for a maximum of 180 days
extendable by 90. An open-ended role does not fit that channel.
The practical consequence is that an arrangement of this kind
in Brazil depends on the provider being a genuine employer and
on the direction of the work being structured with that in mind.
Section 8.5 sets out exactly what that means, what liability
you carry as the contracting company, and when the honest
answer is that you should incorporate instead.
This Model Works Especially Well When
-
You want one to five people in Brazil, and the cost and
timeline of incorporating would exceed what that team
justifies
-
You are building a software, product, or shared services
function and want to test the market before committing
-
You are hiring from a North American base and want a team
that overlaps your full working day rather than the
edges of it
-
You need to hire before the end of a quarter and cannot
wait on incorporation and labor registration
-
You have people in Brazil invoicing you through a PJ and
want to move to a structure that does not depend on an
unresolved court case
Komp delivers this as part of a single workforce platform,
so your Brazilian employees sit alongside contractors,
EOR workers, and direct employees in other countries,
governed by the same data, workflows, and controls.
How Komp’s Employer of Record Works in Brazil
Komp becomes the legal employer for your Brazilian team members
and takes on their statutory liabilities, while you run the
work. Here is what that looks like in practice.
Skip incorporation, the corporate taxpayer registration,
the commercial registry filing, labor and social security
enrollment, and the digital reporting infrastructure that
Brazilian payroll now depends on. Komp already holds all of it.
Komp Activate runs onboarding, including a registered employment
contract, the correct union category, and an experience period
within the statutory maximum. Komp PayOps carries payroll,
income tax and social security withholding, and the monthly
severance fund deposit. Komp TimeOps records hours against
the forty-four-hour week and flags overtime before it is
worked, which matters because overtime in Brazil also
increases the paid weekly rest entitlement. Compliant
offboarding, with notice, the severance fund penalty,
and accrued entitlements settled correctly, closes the loop.
Komp Workforce gives HR, Finance, and Legal a single source
of truth covering your Brazilian headcount, accrued
thirteenth salary and vacation, termination exposure,
fully loaded employer costs, and compliance alerts,
with audit trails built in.
See How It Works →
What Komp Handles Under EOR in Brazil
Komp manages every part of the Brazilian employment
relationship so your team can focus on the work,
not the paperwork.
Contributions, and what the headline rate leaves out
The employer pays 20 percent to the social security institute
on the full payroll with no ceiling, plus an occupational
accident rate of 1 to 3 percent set by activity and adjusted
by a performance multiplier that can halve or double it,
plus around 5.8 percent to the system of sectoral training
and welfare funds. The severance fund adds a further 8 percent.
The employee contributes on a progressive scale from 7.5 to
14 percent, subject to a ceiling that is reset each January.
Payroll tax relief, which is being phased out
Seventeen sectors, including software and information technology
services have been permitted to pay social security on gross
revenue rather than payroll. That relief is being withdrawn
in steps. In 2026, a qualifying employer pays social security
on payroll at 10 percent and the revenue-based contribution
at 60 percent of its original rate, moving to 15 and 40 percent
in 2027 and full payroll contributions from 2028. A technology
employer that has not modeled this will see its cost rise
in each of the next two years.
The thirteenth salary, paid across two deadlines
Brazil requires an additional month of salary, accrued at
one twelfth for each month in which the employee worked
at least fifteen days. The first installment falls due
between February and the end of November, and the balance
by 20 December. Komp accrues it monthly rather than
financing it at year end.
Vacation and the constitutional third
Employees accrue thirty calendar days of vacation for every
twelve months of service. This leave must be granted within
the following twelve months; otherwise, it must be paid at
double the normal rate. Employees are also entitled to a
constitutional vacation bonus equivalent to one-third of
their salary and may convert up to ten vacation days into
cash. Vacation leave may be divided into up to three periods,
one of which must be at least fourteen days long. Komp
accrues vacation entitlements and the associated bonus
together.
Payroll, withholding, and continuous reporting
Komp PayOps runs payroll on your chosen cycle, withholds
income tax and social security, and files events through
the national digital system. Admission must be reported
before the employee starts work rather than afterward,
which is a common and expensive mistake for employers
new to Brazil.
Termination, and what it really costs
Dismissal without cause requires notice of thirty days plus
three for each completed year up to a maximum of ninety,
of which only the first thirty may be worked. On top sit
the proportional thirteenth salary, accrued and proportional
vacation with the constitutional third, release of the
severance fund, and a penalty of 40 percent of the accumulated
fund balance. A mutual termination route introduced in 2017
halves the notice and reduces the penalty to 20 percent,
with the employee drawing 80 percent of the fund and
forgoing unemployment insurance.
See How It Works →
Employer of Record vs Entity Setup in Brazil
| Criteria |
Employer of Record (Komp) |
Your own Brazilian entity |
| Best suited for |
One to five people, market entry, testing demand,
roles with clearly separable direction
|
Larger permanent teams, roles you must direct
closely, local revenue, long-term presence
|
| Legal position |
Outsourcing services is lawful including core activity.
The arrangement depends on the provider being a genuine
employer and on how direction is structured
|
Direct employment. The cleanest position
available in Brazil
|
| Client liability |
Subsidiary for labor obligations arising during the
service period, attaching where the client failed
to supervise the provider
|
Not applicable. You are the employer and
the liability is simply yours
|
| Residual risk |
A court may recognize employment directly with you
if the day-to-day direction of the work points at
you rather than the employer
|
None of this kind
|
| Time to first hire |
As soon as the candidate accepts
|
Incorporation, taxpayer registration,
commercial registry, labor and social
security enrollment
|
| Union category |
Komp determines the applicable category
and applies the collective agreement
|
You must establish your own category
and track each annual negotiation
|
| Compliance ownership |
Managed by Komp with AI-assisted monitoring
and human review
|
Your responsibility across labor law,
social security, digital reporting,
and occupational health
|
| Workforce visibility |
Brazilian data unified with your global
workforce on one platform
|
Often a separate local payroll provider
and a separate HR system
|
8.5 Subsidiary Liability, Subordination, and Where the Risk Really Sits
This is the section that matters most on a Brazilian page,
and it is the section that competing pages leave out entirely.
It covers three things: what the law permits, what you are
liable for, and what decides the outcome if a claim is brought.
WHAT THE LAW PERMITS
Legislation amended in 2017 allows a company to transfer
the execution of any of its activities to a service provider,
including its principal activity. The Supreme Federal Court
confirmed this in 2018 in a ruling with binding effect,
holding that outsourcing is lawful regardless of the
corporate purpose of the companies involved, while preserving
the subsidiary liability of the contracting company.
That settled a long dispute, and it is why the older position,
that core activity could not be outsourced, no longer
represents the law.
What the legislation authorizes is the outsourcing of a service.
The supply of workers who then take their direction from the
client is a different thing, and the only licensed channel
for it is temporary work. A temporary work company must be
registered with the labor ministry and hold share capital
scaled to its headcount. Temporary placement is confined
to the transitional replacement of permanent staff or a
complementary surge in demand, lasts a maximum of 180 days
extendable by 90, and is followed by a ninety-day interval
before the same worker may return to the same client.
The statute provides that placing a worker before that interval
expires creates an employment relationship with the client.
An open-ended engineering role does not belong in that channel,
which is why Komp employs your Brazilian team as an ordinary
registered employer instead.
WHAT YOU ARE LIABLE FOR
The contracting company is subsidiarily liable for labor
obligations arising during the period in which the services
were provided, and it must oversee the provider’s payment
of the severance fund and social security contributions.
Subsidiary means a claimant pursues the employer first
and reaches you if that fails, which is a materially
better position than joint liability. Brazilian courts
attach that liability based on a failure to supervise,
so documented oversight is the defense. One exception
is worth knowing: where a temporary work company becomes
insolvent, the client’s liability for contributions
and pay is joint rather than subsidiary.
WHAT DECIDES THE OUTCOME
The decisive question in a Brazilian claim is not the
wording of the service agreement. An employment relationship
exists where there is personal service by an individual,
regularity, payment, and legal subordination, and the
Consolidação das Leis do Trabalho voids acts designed
to frustrate its application. Subordination is assessed
on who directs the work in practice: who sets hours and
targets, assigns tasks, conducts performance reviews,
and approves leave. Where all that sits with the client
and nothing sits with the employer, a court can recognize
employment directly with the client despite the paperwork.
That risk is real, it is not removed by an indemnity between
two companies, and it does not disappear because the client
is foreign. It becomes materially more collectible the
moment the client incorporates in Brazil, because the
new entity inherits the history.
WHAT REDUCES IT
-
Use a genuine employer:
own Brazilian registration, standard employment contracts,
digital reporting, severance fund deposits, and collective
agreement enrollment, rather than a shell that invoices
for bodies
-
Keep formal subordination with the employer:
performance management, discipline, leave approval,
and contractual changes run through Komp, while you
set objectives, priorities, and deliverables
-
Avoid the markers of direct employment:
client job titles on contracts, client-issued equipment
without a documented basis, inclusion in the client’s
own performance and disciplinary processes
-
Document oversight every month:
payroll, severance fund, social security, and collective
agreement compliance, evidenced rather than assumed
-
Know when to stop:
at scale, or where a role must be directed closely
and continuously by your own managers, incorporation
is the better answer, and we will say so
Komp issues the oversight evidence as a monthly file rather
than on request, because a file assembled after a claim
is filed carries far less weight than one produced each
month as a matter of routine. If you want to compare
providers on this, ask any provider for the monthly
oversight file it will give you, and ask what it does
when a role no longer suits this model.
8.6 Employer of Record Cost in Brazil
EOR pricing in Brazil varies by provider, service scope,
and team size. The comparison worth running is not the
fee alone. It is the fee against incorporation, local
accounting, continuous digital reporting, and the cost
of a labor claim in a jurisdiction that received around
3.6 million new labor cases in 2024.
Brazilian employment cost is commonly quoted as adding
70 to 80 percent to salary. That range is reachable,
but only if it also loads paid weekly rest, notice
provisions, and collective agreement benefits, and
it is often inflated by dividing against hours worked
rather than contracted salary. A realistic planning
figure is around 1.66 times base salary for an employer
paying full payroll contributions, and closer to
1.50 times in 2026 for a technology employer still
within the payroll tax relief regime. That advantage
narrows each year as the relief is withdrawn.
| Cost line |
Who pays |
How it behaves |
| Social security |
Employer |
20 percent of the full payroll with no ceiling.
Technology employers within the relief regime
pay 10 percent of payroll in 2026 plus a
revenue-based contribution, rising to
15 percent in 2027 and 20 percent from 2028
|
| Occupational accident rate |
Employer |
1 to 3 percent by activity, multiplied by
a performance factor between 0.5 and 2.0
based on the employer’s own claims history
|
| Sectoral training and welfare funds |
Employer |
Around 5.8 percent in total,
varying by activity classification
|
| Severance fund |
Employer |
8 percent of pay deposited monthly into
the employee’s account, with a penalty
of 40 percent of the accumulated balance
on dismissal without cause
|
| Employee social security |
Employee |
A progressive scale from 7.5 to 14 percent,
applied up to a ceiling reset each January
|
| Thirteenth salary |
Employer |
One additional month, accrued monthly,
paid in two installments with the balance
due by 20 December. Carries contributions
|
| Vacation and the constitutional third |
Employer |
Thirty days per year plus a bonus of one
third of salary. The constitutional third
attracts employer social security following
a 2020 Supreme Federal Court ruling
|
| Notice |
Employer |
Thirty days plus three for each completed
year to a maximum of ninety, of which
only the first thirty may be worked
|
| Collective agreement benefits |
Employer |
Meal and food allowances, profit sharing,
health cover, and wage floors set by the
agreement covering your category.
These do not appear in a headline
salary figure
|
| Minimum wage |
Employer |
1,621 reais a month from January 2026,
though for professional roles the binding
floor is the collective agreement rate
rather than the national minimum
|
WHAT SHAPES YOUR PRICE
-
Payroll tax relief eligibility:
whether your activity classification qualifies,
and which step of the phase-out applies in
the year you are modeling
-
Collective agreement:
the agreement covering your category sets wage
floors and mandatory benefits, which are frequently
larger than the gap between providers
-
Claims history and risk class:
the occupational accident rate is adjusted by
a multiplier that can halve or double it
-
Overtime exposure:
overtime carries a surcharge of at least
50 percent and also increases the paid weekly
rest entitlement, so the effective cost
exceeds the headline surcharge
-
Integrations and reporting:
HRIS, ERP, and finance system connections
WHY EOR DELIVERS STRONG ROI
-
Faster revenue:
your Brazilian hire starts without waiting
on incorporation and labor registration
-
Lower overhead:
no local accountant, no digital reporting
capability to build, no in-country HR staff
-
Lower risk:
correct contributions, correct union category,
and documented oversight from the first payroll
-
Less admin:
one platform, one invoice,
one partner for Brazilian employment
Request Your Custom Brazil Pricing
→
Who Should Use an EOR in Brazil?
Companies nearshoring from the United States and Canada
Brazil sits one to two hours ahead of United States Eastern time and has not observed daylight saving since 2019, which gives a stable overlap with the North American working day across the largest talent market in the region.
Companies building engineering and product functions
Brazil has the deepest engineering bench in Latin America by absolute volume, concentrated in São Paulo, Campinas, Belo Horizonte, Florianópolis, Recife, and Porto Alegre. Technology employers also retain payroll tax relief through 2027, which narrows the cost gap against smaller markets.
Companies testing before incorporating
Brazilian incorporation is slower and more involved than elsewhere in the region, and continuous digital reporting makes payroll a capability rather than a task. Using this model to prove the market first and incorporating once the team justifies it is a sound sequence, provided the roles are suitable.
Companies with people invoicing them through a PJ
Engaging Brazilian professionals through their own company is widespread, and its lawfulness is the subject of an unresolved general repercussion case at the Supreme Federal Court. Proceedings were suspended nationally in April 2025 and partially released in June 2026, with cases above the regional courts still on hold and no binding ruling yet. Anyone relying on that structure is holding an open position in a case that has not been decided.
HR and finance leaders who want the real number
Costs modeled against the applicable relief regime and collective agreement rather than a blended percentage, overtime and weekly rest treated correctly, consolidated invoicing, and audit-ready records for every employee.
Why Komp Is Different from Generic EOR Providers
Many providers can put a Brazilian employee on payroll. Komp is built as workforce infrastructure, combining AI intelligence, payment infrastructure it owns outright, and human governance, so you can grow in Brazil with confidence.
AI Agent Swarms with human control
Autonomous agents continuously check payroll, contribution rates, collective agreement floors, accrued entitlements, and regulatory change. Recommendations are surfaced for review before anything is executed: autonomous intelligence, human control.
We tell you the risk, because the risk is yours
Your liability as the contracting company is subsidiary and it attaches where oversight was absent. That is a fact about your position, not ours, and a provider that does not raise it has left you to find out from a claim. Section 8.5 sets out what reduces the exposure and what does not.
A substantive employer, not an invoicing layer
Own Brazilian registration, standard employment contracts, continuous digital reporting, severance fund deposits, and collective agreement enrollment. In a jurisdiction that reads substance over form, that is the whole question rather than a credential.
Komp runs its own entity network and owned payment rails rather than subcontracting to local partners, so your employees are paid on time, and your data stays in one system.
Komp Activate, Komp Workforce, Komp TimeOps, and Komp PayOps connect hiring, workforce records, time, and pay across Brazil and 150+ countries.
Brazilian Employment Compliance: What Global Employers Must Manage
Brazilian employers answer to the labor ministry and its inspectorate, the federal revenue authority, the social security institute, the bank administering the severance fund, the unions that negotiate collective agreements, and a labor court system that handles more claims than any comparable jurisdiction. These are the areas that matter most, and how Komp covers them.
Union categories, which you do not choose
Collective agreements bind every employer and employee within the represented category and territory, whether the employer joined the negotiating body or not. The category follows the employer’s predominant economic activity and its location rather than the employee’s job title, and more than one union can plausibly claim a technology employer. The agreement sets wage floors, meal and food allowances, profit sharing, and health cover, and these are frequently larger than the differences between providers.
The old compulsory union contribution ceased to be mandatory under the 2017 reform, and the Supreme Federal Court upheld that in 2018. A separate assistance contribution set by a collective agreement may be charged to all employees in the category, including non-members, provided a genuine and accessible right to object is guaranteed. The Court confirmed that position in 2023 and settled its temporal effects in late 2025.
Continuous digital reporting
Labor, social security, and tax events are reported through a single national digital system rather than filed periodically. Admission must be reported before the employee begins work, and changes, payroll, occupational health events, and terminations follow defined deadlines, with the monthly closing feeding the contribution and severance fund filings. Late or inaccurate reporting attracts penalties per employee and per event.
Psychosocial risk, enforceable since May 2026
The occupational health and safety standard governing risk management was amended to require the identification and assessment of psychosocial risk factors, including workload against available time and resources, pace, targets and internal pressure, leadership conduct, harassment, and indicators of burnout. The requirement took effect in 2025 with an educational grace period, and enforcement with penalties began on 26 May 2026. A generic risk program will not satisfy it, because the assessment must rest on a diagnosis of the actual organization.
Working time, overtime, and weekly rest
The limit is forty-four hours a week and eight a day. Overtime carries a surcharge of at least 50 percent and is capped at two hours a day. Habitual overtime also increases the paid weekly rest entitlement, which must be recalculated rather than ignored, and failing to do so is one of the most common heads of claim. An hours bank may be agreed individually for up to six months or by collective agreement for up to twelve.
Premiums for night, unhealthy, and hazardous work
Night work between 10pm and 5am carries a 20 percent premium and a shortened counting hour. Unhealthy conditions attract 10, 20, or 40 percent of the minimum wage by degree, and hazardous conditions 30 percent of base salary. These are not cumulative, and the employee takes the higher of the two.
Leave and family entitlements
Maternity leave runs 120 days and may be extended to 180 where the employer participates in the voluntary program, with job stability from confirmation of pregnancy until five months after the birth. Paternity leave stands at five days in 2026 and begins a phased extension to ten days in 2027, fifteen in 2028, and twenty in 2029 under legislation passed in March 2026. Sick pay is borne by the employer for the first fifteen days, after which the social security institute takes over.
What a collective agreement may and may not override
The 2017 reform allows a collective agreement to prevail over statute on a defined list of matters, including the hours bank, shift patterns, reduced meal breaks, remote work, profit sharing, and job classification. A second list is expressly unavailable, covering the minimum wage, the thirteenth salary, the severance fund and its penalty, vacation with the constitutional third, maternity and paternity leave, notice, and the health and safety standards. Reducing pay or hours requires a collective instrument.
Worker classification and the unresolved case
Engaging professionals through their own company is widespread in Brazil, and whether it is lawful is before the Supreme Federal Court as a general repercussion case. Proceedings nationwide were suspended in April 2025, a judgment began in late 2025 and was interrupted by a request for review, and the suspension was partially released in June 2026 so that first instance courts and regional courts may hear cases again, while matters above that level remain on hold. No binding ruling has been issued. The practical position is that this structure is neither safe nor settled, and exposure should be quantified rather than assumed away.
2026 is a parallel-run year for the new consumption taxes created by the 2023 constitutional amendment. The new contributions must be calculated and shown on fiscal documents at nominal rates, with compliant taxpayers relieved of actual payment, and the substantive transition begins in 2027. Payroll generates no credit under the new system, so labor-intensive service contracts carry a higher net burden, and multi-year agreements benefit from a rebalancing clause.
The Brazilian Risk That Decides the Outcome
In Brazil you will be named in the claim. Whether you lose it turns on documented oversight and on who directed the work.
Two facts about Brazil are rarely stated together on a page like this one. The first is volume: the labor courts received around 3.6 million new claims in 2024, legal aid is widely available, and there is no meaningful loser-pays deterrent, so an exit claim is close to a norm rather than an exception. The second is that your position as the contracting company is subsidiary rather than joint, which is genuinely better, but that liability attaches precisely where the client failed to supervise the provider. Those two facts combine into one operating conclusion: being named is likely, and the file you can produce decides what happens next. That file is monthly evidence that payroll, the severance fund, social security, and the collective agreement were checked and found in order. Assembled after a claim arrives, it is worth far less than the same documents produced as routine. Alongside it sits the question that no indemnity can answer. An employment relationship in Brazil turns on personal service, regularity, payment, and legal subordination, and the law voids arrangements designed to frustrate it. If your managers set the hours, assign the tasks, run the performance reviews, and approve the leave, while the registered employer does none of those things, a court can find the employment relationship is with you. Structure the direction of the work deliberately, keep performance management and discipline with the employer, and accept that some roles are better served by your own entity. A provider unwilling to tell you which roles those are not managing your risk. It is managing its own.
Employer of Record Coverage Across Brazil
Brazilian labor law, social security, and income tax are federal, so the core obligations are identical wherever your team sits. What changes by location is the talent market, the cost base, the municipal service tax position, and which union category and collective agreement apply, since those are set by territory as well as by activity.
Employer of Record in São Paulo
By a wide margin the largest professional market in Latin America, covering enterprise technology, financial services, and the headquarters functions of most multinationals operating in the country. The deepest talent pool and the highest salary base.
Employer of Record in Campinas
A research and hardware cluster anchored by a major public university and established technology research centers, strong in engineering and deep technology roles.
Employer of Record in Belo Horizonte
A substantial startup and software ecosystem supported by a large public university, with a cost base below São Paulo and strong retention.
Employer of Record in Florianópolis
A concentrated software and subscription technology market with quality of life as a genuine retention advantage, which shows lower attrition than the larger centers.
Employer of Record in Recife, Curitiba, and Porto Alegre
Recife hosts one of the largest technology parks in Latin America, while Curitiba and Porto Alegre combine established engineering pipelines with costs well below the southeast.
Wherever your Brazilian team sits, Komp issues the employment contract, enrolls the role under the correct union category, runs payroll with the right withholding, reports events through the national digital system, deposits the severance fund, and accrues the thirteenth salary and vacation with the constitutional third, so adding a new location never adds new compliance work for you.
.png)
