Brazil has many different mandated compensation and benefits laws. So before you onboard employees, make a point to learn every aspect of Brazil’s employment law and research which supplementary benefits can help you stay competitive in this thriving market.
Brazil compensation laws
In addition to regular pay, employees in Brazil are entitled to a 13th-month salary paid in 2 instalments each year: The first installment is normally paid in November and the second in December. The 13th-month payment is a legal benefit and is not part of the base salary. The average of total variable compensation for the calendar year is factored into the 13th-month salary as well, as commission and bonus payments are part of the employee’s salary according to Brazil’s legislation. The 13th-month salary is also due pro-rated upon termination.
Unions and collective bargaining agreements are common in Brazil. Compensation and benefits might vary based on industry and specific labor relations defined by a union, including minimum wage, meal vouchers, and mandatory annual salary increases.
Guaranteed benefits in Brazil
The government in Brazil provides basic health insurance. However, it is market practice to offer supplemental benefits such as medical and dental insurance. Telework allowance and tuition assistance are also frequently offered.
Mandated (by law or collective bargaining agreement) benefits include a monthly meal voucher, transportation vouchers for on-site work, and life insurance at a standard rate for a family of 3.
Restrictions for benefits and compensation
As part of the country’s compensation restrictions, every employee must earn at least the applicable minimum wage, receive statutory benefits, and receive the proper amount of time off. Additionally, an annual bonus payout is more common in Brazil than monthly commissions.
Brazil competitive benefits planning
Benefits planning will be one of many processes you’ll work through when you expand to a new country. Developing a competitive plan will help your company stand out in the market. When planning benefits in Brazil, you should consider factors like health insurance, market competitiveness, and compliance requirements.
Brazil employee benefits plans
Benefits plans are one of the best ways to attract talent and build your team in Brazil. Designing a competitive plan is also an excellent way to show your employees how much you appreciate them, which, in turn, boosts retention rates.
In Brazil, labor laws require many types of benefits for employees, so your supplemental provisions may require more creativity than they would elsewhere. Possibilities include:
- Additional insurance coverage
- Education opportunities and allowances
- Tuition reimbursement
- Flexible working opportunities
Required benefits
The country requires many benefits for employees, including:
- Social Security contributions
- Paid holidays
- Paid sick leave
- Parental leave and allowances
- 13th-month salary
The social security fund covers provisions for employees, including basic medical care, pensions, and extended sick leave payments.
Designing employee benefits plans in Brazil
Designing a benefits plan takes careful consideration. While companies should account for their employees’ needs, it is also important to remain within your financial abilities to stay operational. Below are a few steps to gather the information you need to find this balance.
1. Understand your company goals and resources.
During this first step, it is important to become familiar with your company’s earnings and determine how you intend to allocate your funds. This phase can help you create a budget for your benefits packages, so you don’t overextend your resources.
2. Research industry standards and employee needs.
It’s a good idea to conduct research to understand employee needs and what local workers expect. During this stage, you can explore common industry practice to learn more about standard benefits offerings.
Surveying local workers can help you understand employee needs and prioritize accordingly.
3. Create your benefits packages.
The information you gather about the market and your resources will allow you to make informed decisions about your benefits plan. It’s wise to start with the required benefits first and use your remaining budget for high-priority supplemental benefits.
Average cost of benefits
It’s difficult to define an average cost for benefits since it varies significantly between companies. Costs will depend on the type of benefits you offer, if the employee has dependents, among other factors. It’s helpful to determine a percentage of your company’s income for benefits spending. The budget will depend on your other goals and expenses.
The advantage of setting a percentage is scalability. As your company makes more revenue, you’ll have a bigger budget to spend on additional employee provisions.
How to calculate benefits
Much like the cost, calculations will vary. While social security benefits are guaranteed, the country operates on a progressive scale for contribution percentages.
How are employee benefits taxed in Brazil?
The country defines taxable income as:
- Wages
- Salaries
- Bonuses
- Commissions
- Premiums
- Dividends and interests from international sources
Most benefits will fall within these categories, but there will be exceptions. For example, if you provide a transportation or telework allowance, that will be considered nontaxable income.
Employee health benefits
The healthcare system is universal for all permanent residents and nonnationals in Brazil. However, some health costs aren’t covered by this care. Most employers offer supplemental insurance to fill in the gaps, making it a market standard. Depending on collective bargaining agreements it can be mandatory to provide private healthcare coverage.
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