In order to grow your business in Brazil, you may need to hire independent contractors to support various project needs. However, it is important to first understand the regulations surrounding this worker...
Read MoreIn order to grow your business in Brazil, you may need to hire independent contractors to support various project needs. However, it is important to first understand the regulations surrounding this worker type to remain compliant.
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In order to grow your business in Brazil, you may need to hire independent contractors to support various project needs. However, it is important to first understand the regulations surrounding this worker type to remain compliant.
Before hiring this worker type, you should first understand the difference between an employee and an independent contractor.
According to the Brazilian Labor Code, an individual is considered an employee when:
The independent contractor relationship is governed by civil law, and a contracted individual should be free to determine how and when their service is performed. Additionally, these individuals typically do not provide essential services for a company, and the relationship isn’t permanent.
Filing labor claims is free for workers, so misclassification penalties in Brazil are common. If your company misclassifies an employee as a contractor, you may face:
The independent contractor hiring process should involve 3 key steps.
Generally, the interview process will be the same for your independent contractors, but there are 2 factors to consider. First, you should clarify that you’re looking for a contractor in the job description posting. This step will help you find the right worker for the job.
Second, you should focus the interview on specific project needs. While employee interviews may focus on character traits and goals, contractor interviews should focus on skills, experience, and the specific project to be performed.
While there are not many required provisions for independent contractors, clarifying terms is essential and will benefit both parties. Independent contractors have the ability to negotiate provisions, so you’ll have to create a contract of service. This contract should:
An important step in engaging the services of independent contractors is understanding how to work with them. Independent contractors should not receive the level of control or supervision that employees do. Independent contractors are generally free to perform the work according to their own schedule and methods.
While training programs can take away performance freedom from a contractor, introductions can be a helpful way to familiarize them with your company without overstepping boundaries. Give contractors the chance to meet the people they’ll work with and answer any questions they may have about the workflow and tools for the project.
It’s common for independent contractors to receive pay on a project basis. Taxation is one of the more complex aspects of contractor status.
Companies are never required to make social security contributions or tax payments when the independent contractor is registered as a legal entity.
Both parties are free to negotiate termination conditions and terms, such as notice requirements. Independent contractors typically work on a project basis or for a set duration, so termination and extension are usually straightforward. Even so, it’s best practice to set clear terms for ending or extending the contract.
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THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
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