One of the biggest concerns investors express when considering entering the Brazilian market is the time that starting a business in Brazil can take. While the time taken to register a company has more than halved in the past three years, and the government took steps in early 2022 to make it even easier, hiring staff through a professional employer organization in Brazil can still be significantly faster and more convenient.
A professional employer organization, which is often referred to as a PEO or Employer of Record (EOR), is an outsourcing provider that will hire staff on behalf of a client, allowing the client to establish an overseas presence in only the time it takes to find the right team members.
Once those team members have been hired the PEO will manage their administration, including their salaries, which is why many providers will advetise as payroll outsourcing companies.
Working with a professional employer organization is a particularly attractive for anyone in need of a small number of senior staff to oversee operations, lead regional sales, or other executive duties.
It is also an ideal arrangement for investors looking to hire an overseas team for a limited period of time, as they can do so without having to form and subsequently liquidate an entity, while also having all aspects of compliance related to those workers covered by the PEO firm.
Brazil is famed for being the largest and most-populopus country in Latin America, earning it the nickname “The South American Giant,” while its abundance of natural resources is well-known.
It is also a major producer of agricultural goods, with soybeans, sugar, and meats among the key export products that are based on farming.
The country also has a well-developed industrial base, with largest city Sao Paulo being the country’s major industrial center. It is also a growing hub for technological development and innovation, boasting many of the region’s “unicorns” (startups that have grown to more than US $1 billion in value), and being home to some of the fastest growing financial technology (fintech) companies in the world.
Brazil’s status as a major source of goods also makes it an important destination for international trade, with large volumes of goods entering and leaving the country’s many ports. Meanwhile, the country’s growing middle class provides much of the manpower for a vibrant and developing services industry.
All of these factors mean that Brazil has an abundance of human capital available, regardless of the industry or skill level being recruited for. That means that investors can generally find the right staff, either for a locally incorporated entity or to hire via a professional employer organization in Brazil, with relative ease.
As a founding member of the Southern Common Market (Mercosur) — a thirty year old regional trade bloc that also includes Argentina, Paraguay, and Uruguay, and to which Bolivia is currently awaiting accession — Brazil also provides resident companies with preferential access to the markets of those neighboring countries, as well as a range of markets that have trade deals in place with Mercosur.
Why hire via a professional employer organization in Brazil?
As previously stated, a professional employer organization in Brazil is a company that employs workers on behalf of clients who do not have a local entity in Brazil. As such, a professional employer organization will engage in the entire process of seeking, hiring, and administering staff employed on the client’s behalf. That means, the provider will assist with the recruitment process, help draw up contracts, participate in the onboarding and offboarding of staff, and manage their payroll.
REAL-LIFE EXAMPLE: An Australian company wants to engage and hire a sales representative in Brazil, who is able to represent the business and conduct business locally. According to the company, a bilingual Brazilian employee is able to represent the firm more efficiently than an Australian employee due to his/her knowledge of the local market, and linguistic capabilities. In addition, the Australian company has identified cost savings for this individual. The only problem for the company is that they are not ready to establish a local entity, and have limited knowledge of local labor law. Therefore, they decide to employ a Brazilian PEO service provider, who hires their Brazilian individual on their payroll. The employee is legally employed by the PEO service provider while simultaneously being tasked and guided by the Australian company.
By assisting the client with the likes of drawing up contracts and payroll outsourcing in Brazil, a professional employer organization will take care of some major administrative and compliance concerns. They will also be able to hire staff much faster than it takes to get a company established and running — which in some cases can still be a matter of months.
What will the provider do beyond payroll outsourcing in Brazil?
While payroll outsourcing in Brazil will be one of the key services covered, there are other administrative and compliance matters that must be considered.
Your professional employer organization in Brazil will guarantee that a range of norms and regulations based on local corporate, labor, and employment law are properly implemented, including the following:
- Working hours: in Brazil a standard working week is 44 hours long, with a working day generally lasting for 8 hours.
- Overtime: According to Brazilian labor law, employees mustn’t work more than two hours of overtime per day.
- Paid vacations: After 12 months of employment, an employee is entitled to 30 days of paid leave over the course of the following year, which can be split into up to three vacation periods, of which one must last 14 consecutive days.
- Bonuses: Like in many Latin American countries, employees in Brazil are entitled to a ‘13th salary’ bonus — a full month’s salary paid in two instalments.
- Parenthood leave: Mothers are entitled to maternity leave of up to 120 days, while fathers are allowed to take five days off — however this can be extended to up to 20 days.
- Sick Leave: If it is properly documented, an employer must pay an employee for the first 14 days of absense due to sickness, after which the National Institute of Social Security (INSS) will cover the cost for up to two years.
- Transportation and meals: In Brazil, employers are obliged to pay transportation and food costs for employees working the full eight hours.
- Minimum wage: As of March 2022, the minimum wage in Brazil amounts to 1,212 Brazilian reais per month (approximately US $251).
Biz Latin Hub can be your professional employer organization in Brazil
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in 17 key cities around the region, including Brazil’s economic hub Sao Paulo.
Our portfolio includes accounting & taxation, company formation, due diligence, hiring & PEO, and corporate legal services. Our unrivaled regional presence means we are ideally placed to support multi-jurisdiction market entries and cross-border operations.
Contact us today to find out more about how we can assist you.
If you found this article on hiring through a professional employer organization in Brazil and payroll outsourcing of interest, you may want to check out the rest of our coverage of this country. Or read about our team and expert authors.
Unsure about how to start your business in Brazil? Check out the short video below to learn about our market entry services.
