In Brazil, legal constraints dictate the type of information that employers can request from and check about employees during the recruitment process.

Criminal records and drug tests are permissible only for specific job positions, and the candidate must provide explicit consent for such inquiries. Pregnancy tests are strictly prohibited by law in all cases. Immigration checks are generally mandatory for foreign workers or expatriates.

Applicants are required to undergo a medical examination, and depending on the nature of the job, additional mandatory tests may be necessary. If the test results are unsatisfactory, the employer reserves the right to halt the recruitment process. However, it is crucial for companies to have justifiable reasons to avoid potential legal repercussions for discrimination claims.

The probationary period can be specified in the Employment Contract, lasting up to 90 days. It can be a continuous 90-day period or divided into two segments, totaling 90 days. The employer has the option to extend this period once, with the total duration at their discretion.

Fixed-term contracts do not include a probationary period.

The standard work period should not exceed eight hours per day and 40 hours per week. Employees working more than six hours a day are entitled to a minimum one-hour break. There must be an 11-hour rest period between the completion of one workday and the commencement of another. A paid rest period per week is granted, preferably on Sundays, although certain categories may have different work shift arrangements.

Day hours are recognized from 5 am to 10 pm, while night hours span from 10 pm to 5 am, entitling employees to an additional 20% of the day-hour rate.

For employers with 20 or more employees, maintaining a record of working hours is mandatory, even for those working remotely. Some exceptions may apply, such as employees in positions of trust, defined by their direct reports, managerial responsibilities, authority to sign on behalf of the employer, or involvement in hiring and firing decisions.

In general, overtime should be capped at two hours per day, with compensation set at a minimum of 100% higher than regular work pay. If overtime occurs on Saturdays, Sundays, or holidays, the additional pay is equivalent to 100% of the standard rate.

Both employees and employers have the option to agree on banking hours to offset overtime instead of direct payment. In such cases, the overtime worked on one day can be compensated by a corresponding reduction in the work shift on another day or days within a six-month period.

Certain categories of employees, as per the Labor Code, are exempt from receiving overtime payments and are not bound by the established limits on working hours:

• Employees engaged in external activities incompatible with fixed working hours, duly noted in the Work and Social Security Card and the employee register.
• Employees in trust positions, subject to evaluation (such as managers).
• Telecommuting employees providing services based on production or task.

Note: Employees in trust positions must receive at least an additional 40% on top of their regular base monthly salary.

Employers bear the responsibility of safeguarding the well-being and safety of their workforce. Consequently, they are obligated to establish and maintain a workplace that is both healthy and safe for employees, adhering to all compulsory regulations related to health and safety. These regulations encompass obligatory periodic medical examinations, medical assessments upon admission and termination, management of medical records, provision of specialized task-related training, establishment of an Internal Commission for Accident Prevention (CIPA), and fulfillment of other prescribed requirements.

Employers must include a section in administrative documents and records for employees to indicate their self-identified racial or ethnic information. This obligation extends to various forms, including those utilized for employee admission and dismissal, as well as registration for the Brazilian Social Security System, among others.

In Brazil, it is customary to recognize employees with bonus payments, whether contractual or discretionary. It is essential that all bonuses are distributed impartially among employees at comparable levels.

The terms and conditions of bonuses are typically negotiated at the discretion of the employer and the employee. However, it is important for employers to be aware that if a bonus is consistently paid, it may be considered part of the employment contract and thus subject to regulations. Once the regular payment of a bonus is established, it cannot be altered to the detriment of the employee.

To prevent the bonus from being regarded as contractual remuneration, the following criteria must be met:
 

• The bonus payment must be discretionary on the part of the employer.
• The bonus should not be distributed regularly.
• The bonus must be linked to the employee’s performance being deemed “above the usual expected.”

Grounds

Brazilian labor legislation delineates five distinct types of termination:

1. Termination without cause: The employer is not obliged to disclose the reason.
2. Resignation by the employee.
3. Indirect termination: Characterized by serious misconduct committed by the employer against the employee.
4. Termination by mutual consent: Both parties mutually agree to terminate employment.
5. Termination for cause: Grounded in specific situations such as:

• An act of dishonesty
• Intemperate conduct (inappropriate sexual behavior) or misconduct
• Habitual trading on the employee’s own account without permission, constituting competition or harm to the employer’s business
• Criminal conviction of the employee (without sentence suspension)
• Negligent performance of duties
• Habitual drunkenness in the workplace
• Breach of company secrets
• Acts of indiscipline or insubordination
• Abandonment of employment
• Physical violence or acts against someone’s honor or name during work (except in self-defense or defense of third parties)
• Customary practice of gambling in the workplace

Termination costs must be settled within 10 calendar days following the end date.

Employers are prohibited from terminating pregnant women during pregnancy or for a period of 60 days after the conclusion of maternity leave. Similarly, employees on sick leave, whether work-related or not, cannot be terminated without cause.

An employee cannot be terminated without legal justification within 30 days prior to the Union base date. In the event of termination during this period, additional severance is required, amounting to one extra monthly salary.

By Employer

The employer is required to provide notice of termination before dismissing an employee without cause, initiated by the employer. In the case of an indefinite-term contract, the minimum prior notice period is 30 days, with an additional three days for each year of service, capped at a maximum of 90 days. Alternatively, the employer may choose to offer payment in lieu of notice, allowing the employee to be released from work during this period. For terminations with cause, notice is not required, and the termination is immediate, with no payment in lieu.

By Employee

When an employee voluntarily initiates the termination of an indefinite-term contract without cause, it is termed a resignation. The employee is obligated to provide a prior notice of 30 days to the employer or may seek release from work during this notice period.

In cases of termination by mutual consent, the mandated prior notice period is reduced by half.

Fixed-term Contract

Terminating a fixed-term contract does not require prior notice, but severance payment is still applicable.

1. Termination without cause by the employer: Payment includes the salary balance, accrued vacation plus one-third bonus, proportional vacation plus one-third bonus, proportional 13th-month salary, and a 40 percent severance fund (FGTS) fine over the balance of the employee’s individual account. The employee is also entitled to withdraw the FGTS balance and receive unemployment insurance.
2. Early termination of fixed-term contracts (including the probationary period): Additional severance is due, equivalent to 50% of salaries up to the end of the original contract tenure.
3. Resignation by the employee: Payment includes the salary balance, proportional 13th-month salary, accrued vacation plus one-third bonus, and proportional vacation plus one-third bonus.
4. Indirect termination: Similar payments are due as in a termination without cause.
5. Termination by mutual consent: Half of the payment for the prior notice and the FGTS fine (employee’s part), and in full, other labor allowances due in a termination without cause. In this type of termination, the employee can withdraw up to 80% of the FGTS balance and is not entitled to receive unemployment insurance.
6. Termination for cause: Payment includes the salary balance and accrued vacation plus one-third.

Brazil lacks specific regulations addressing restrictive covenants or their enforceability following the termination of employment agreements. However, the Brazilian Federal Constitution upholds an individual’s right and freedom to work.

Non-compete Clauses:

In accordance with case law, Brazilian labor courts tend to recognize the validity and enforceability of non-compete agreements post-termination when certain elements are included:

1. Limitation in time: The restriction period must be reasonable, not exceeding 24 months.

2. Geographic limitation: A sensible geographic restriction must be defined, whether on a global scale or within a specific region.

3. Limitation of object: The obligations outlined in the non-compete must stay within reasonable limits to safeguard the employer’s interests.

4. Fair compensation: The parties may negotiate fair compensation on a case-by-case basis, considering the scope of the non-compete obligation, its duration, and restrictions. For instance, if the restriction is broad (e.g., prohibiting the former employee from working for any competitor), compensation during the non-compete period should ideally match the ordinary earnings the former employee would receive if still employed. Generally, fair compensation equates to the last compensation multiplied by the number of months for the non-compete obligation.

Customer & Employee Non-Solicit Clause:

While Brazilian legislation lacks explicit provisions on non-solicitation, employers often incorporate such restrictions in employment agreements, especially for management-level employees. Despite limited case law history, the prevailing legal perspective deems non-solicitation clauses valid when parties agree on limitations in time, geography, and objective.

Unions have the authority to negotiate on behalf of both employers and employees and formalize Collective Bargaining Agreements (CBAs). The terms and conditions established through union negotiations are obligatory, extending to all employers and employees within the designated category. Alternatively, an employer has the option to engage in specific CBA negotiations with the employees’ union, outlining how the agreement will be applicable to its workforce. Certain matters, such as implementing a working hours system or a profit-sharing program, can only be instituted through a CBA.

An employee must receive a payslip when receiving their salary. This document should encompass information about the pay period, gross salary, applicable deductions, and the net salary.

Upon completing a qualifying period of 12 months, employees are entitled to 30 calendar days of paid vacation. This leave should be utilized within the subsequent 12-month period, at times mutually agreed upon with the employer. The vacation period can be divided into segments, subject to the employee’s consent. It can be taken in up to three periods, with one lasting no less than 14 days and the others not less than five days each. Furthermore, employees have the option to exchange up to 10 days of their vacation period for an equivalent salary compensation. The vacation remuneration, including the monthly salary and one-third of the employee’s monthly salary, is termed a vacation bonus. Payment of this bonus must occur at least two days prior to the vacation start date.

Carryover Rules:

If the vacation remains untaken within the year, employers are obliged to pay double the salary for the vacation period. In such cases, employees retain the right to carry over the vacation to the following year.

Upon submission of an appropriate medical certificate, an employer is responsible for covering an employee’s salary for the initial fifteen days of sick leave. Following the fifteenth day of absence due to illness, the Social Security Agency (INSS) assumes responsibility for providing a sick leave benefit to the employee. It’s important to note that this benefit does not serve as a direct replacement for the actual salary. Instead, it is calculated by the INSS based on the individual’s recent contributions and is capped at approximately BRL 7,786.02. The INSS-supported leave continues for as long as necessary for the employee to achieve full recovery, with no legal limitations imposed on this duration.

During the period of medical leave, the employment contract is temporarily suspended but may not be terminated.

As per the Labour Code, employees are entitled to be absent from work without any impact on their salary in the following situations:

• Marriage: Three consecutive days (with the option to take vacation time immediately before or after marriage leave, provided the employer is informed at least 60 days in advance).
• Certified voluntary blood donation: One day per 12-month period.
• Electoral enlistment: Up to two days, consecutively or not.
• Military or other public service: For the required period (with the employer obligated to continue salary payments during the first 90 days).
• University admission tests: On the dates of the exams.
• Participation in court proceedings: For the necessary duration specified by authorities.
• Union officers: For the necessary period to fulfill duties related to the mandate.
• Accompanying a spouse or partner to medical appointments and follow-up examinations during pregnancy: Up to 6 medical appointments.
• Accompanying a child up to six years to a medical consultation: One day per year (if the employee needs to care for a sick minor child, the absence is excused and without pay for the day not worked, and it cannot replace a rest day).
• Certified cancer preventive exams: Three days per 12-month period.
• Legal abortion: Two weeks.

Collective bargaining agreements may introduce additional types of paid leave to be adhered to by the company.

Furthermore, the employer has the option to grant unpaid leave upon employee request, during which the contract is suspended through all legal means.

Employees are entitled to a paid leave of two consecutive days in the event of the death of a spouse, ascendant, descendant, sibling, or a person economically dependent on the employee (as declared in their labor booklet).

All female employees are entitled to maternity benefits, subsidized by the INSS, for a duration of 120 days. This period can commence up to 28 days before the expected birth date. The employer is responsible for making this benefit payment and can later offset the corresponding amount from the social security contributions owed to the INSS.

Male employees in Brazil have the right to five consecutive days of paid paternity leave.

Under specific circumstances, maternity leave may be extended to 180 days, and paternity leave can be extended up to 20 days. However, adherence to the requirements established by the government program is essential in these cases.

Adoptive parents are also entitled to the same duration of 120 days for female employees and five consecutive days for male employees.

Employees have the right to paid leave from work on public holidays, and additional local (municipal or state) holidays may be applicable based on the company’s location. If an employer mandates an employee to work on a holiday, the remuneration must be at least double the regular compensation. Collective Bargaining Agreements (CBAs) may stipulate a higher rate for holiday remuneration.