Labor Compliance Guide

September 1, 2021

Francisco das Chagas Vieira Junior

Lawyer – OAB nº. 408.621
 Index

1. Introduction………………………………………………………………………….4
2. Employee Rights and Benefits……………………………………………………5
2.1. Main rights and benefits of workers with a formal contract…………………5
2.1.1. Severance Indemnity Fund (FGTS)…………………………………5
2.1.2. Salary allowance (PIS, Pasep)………………………………………5
2.1.3. Paid vacations………………………………………………………...6
2.1.4. 13th salary……………………………………………………………..6
2.1.5. Unemployment insurance……………………………………………7
2.1.6. Extra hours…………………………………………………………….7
2.1.7. Maternity/paternity leave……………………………………………..8
2.1.8. Transportation vouchers……………………………………………..8
2.1.9. Early warning or “Aviso Prévio”……………………………………..8
2.2. Collective Labor Convention……………………………………………………9
2.3. Other benefits granted to workers with a formal contract…………………9
3. Registration………………………………………………………………………..10
3.1. What is E-Social…………………………………………………………….10
3.1.1 Register employer data………………………………………………10
3.1.2. Include employee data………………………………………………11
3.1.3. Register dependents………………………………………………...11
3.1.4. Enter the data of the employment contract………………………...12
3.1.5. Penalties……………………………………………………………...12
3.1.5.1. Non-compliance with the submission……………………12
3.1.5.2. Admission Information…………………………………….13
3.1.5.3. Failure to comply with severance pay……………………13
4. Employee pay discounts…………………………………………………………13
4.1. Mandatory Discounts………………………………………………………….14
4.1.1. INSS – Social Security……………………………………………...14
4.1.2. Withholding Income Tax – IRRF…………………………………...14
4.1.3. Transportation vouchers……………………………………………14
4.2. Optional payroll discounts…………………………………………………….15

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 4.2.1. Meal ticket/food voucher……………………………………………15
4.2.3. Salary advance………………………………………………………15
4.2.4. Union contribution……………………………………………………15
4.2.5. Health and Dental Plan……………………………………………...16
4.2.6. Absences and delays………………………………………………..16
5. Documents required for hiring the employee…………………………………17
5.1. Work and Social Security Card (CTPS)…………………………………..17
5.2. ID card………………………………………………………………………..19
5.3. Taxpayer identification card (CPF)………………………………………..19
5.4. Voter Title with proof of voting in the last 3 elections……………………20
5.5. PIS registration card………………………………………………………...20
5.6. Reservist Certificate, if under 45 years of age (male)………………………21
5.7. Copy of proof of residence…………………………………………………21
5.8. Proof of education…………………………………………………………..22
5.9. Copy of the marriage certificate……………………………………………23
5.10. Copy of the birth certificate…………………………………………………23
5.11. 3×4 photo…………………………………………………………………….24
5.12. Declaration of dependents for Income Tax purposes at source………...24
5.13. Declaration for the transportation voucher………………………………..25
5.14. Admission medical certificate………………………………………………26
5.15. Employee statement not to pay Union contribution………………………27
5.16. Complementary documents………………………………………………..27
6 Checklist……………………………………………………………………...........28

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 1. Introduction

Hiring an employee and filling in the information on the Brazilian government

websites must be done with the help of local professionals. Brazil has an independent
Labor Court, the nuances in Labor Law are complex and can vary not only by state but
even by city.

The employment relationship between employer and employee in Brazil is

regulated by the Consolidation of Labor Laws - CLT1, jurisprudential understanding
and Collective Labor Conventions2. In this scenario, it is necessary to establish some
conceptual differences:

Personnel Department | Departamento Pessoal Human Resources | Recursos Humanos

Is responsible for taking care of the It consists of techniques and practices

bureaucratic part related to employees. with the objective of managing the
So, whoever works in this sector takes internal behavior of employees, in order
care of hiring, relationships during the to enhance human capital,
period of employment and even evaluate results, select talents and train
terminations. skills.

Each new employee must be treated according to their case, due to the fact
that some categories of professionals may require specific exams, (example: the anti-
drug exam for drivers of large vehicles) or will have other rights stipulated by the union
of the professional category.

1
http://www.planalto.gov.br/ccivil_03/decreto-lei/del5452.htm
2 Collective Labor Convention is an agreement of a normative nature, whereby two or more Unions representing
economic and professional categories stipulate working conditions applicable, within the scope of their respective
representations, to individual labor relations

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 These are the general common hiring procedures, that cater to all
employees.

2. Employee Rights and Benefits

2.1. Main rights and benefits of workers with a formal contract

2.1.1. Severance Indemnity Fund (FGTS)

The Severance Indemnity Fund, better known as FGTS, is one of the main
rights guaranteed to Brazilian workers by the CLT. It is a kind of savings account,
opened at “Caixa Econômica Federal” for all professionals with a formal contract in the
country.

At the beginning of each month, the employer is responsible for depositing

8% of the employee's gross salary into this account, without deductions. The total of
these deposits characterizes the FGTS, which is available to the worker in some
specific situations.

In case of undetermined dismissal, for example, the worker can withdraw

the amount to ensure their livelihood during the time without a job, in this case there is
additional indemnity. Other situations that allow the withdrawal are: In case of serious
illnesses such as cancer; home purchase, retirement, etc.

2.1.2. Salary allowance (PIS, Pasep)

All workers with a formal contract who receive up to two minimum wages
are entitled to a salary bonus. The benefit corresponds to the value of one minimum
wage, paid annually to PIS/Pasep taxpayers.

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 All professionals enrolled in the PIS/Pasep for at least 5 years and who have
worked for at least 30 calendar days in the year prior to the withdrawal request can
withdraw the benefit.

In addition, the worker's data must be correctly informed in the Annual

Social Information List (RAIS), filled in by the employer

2.1.3. Paid vacations

Those who work with a formal contract are also entitled to 30 days of paid
rest annually. The benefit is granted to the worker after at least one year of work and
the decision on when the vacation will take place is up to the employer.

However, if after one year from the date the employee became entitled, the
benefit is not granted, he is entitled to receive double the value of his vacation and also
take the stipulated rest days.

The professional can also negotiate their vacation with the employer, being
able to divide it into different periods of not less than 10 days. In addition, it is also
possible to trade and sell up to a third of the rest days.

2.1.4. 13th salary

This is a benefit granted to workers with a formal contract at the end of the
year and corresponds to an extra minimum wage, paid in two installments. By law, the
first installment must be paid between February and November, and the second until
the third week of December.

For those who have not completed a year of work at the company, the
calculation of the 13th is based on the number of months worked.

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 2.1.5. Unemployment insurance

Unemployment insurance is a benefit paid to workers who are dismissed

without just cause and who have no other sources of income to guarantee their
livelihood.

It is also available in cases of indirect dismissal, when, for example, there is

a serious misconduct by the employer that justifies the termination of the employment
contract.

The benefit is paid in installments and the number of installments varies

between 3 and 5 depending on how many months the professional worked in the last
few years before making the request.

2.1.6. Extra hours

One of the most basic rights guaranteed to workers with a formal contract
with the CLT is that of a fair working day. Currently, it cannot exceed 8 hours a day
and 44 hours a week for any formal worker.

However, if the employer needs it, he can ask the employee to work up to
two overtime hours, having to pay out an amount at least 50% higher than one hour of
normal work. On Saturdays and Sundays, overtime is doubled.

It is important to highlight that the value of overtime can be defined by an

Agreement or Collective Labor Convention, and may reach 50%, 70%, 100% or even
120% higher than that of a normal working hour.

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 2.1.7. Maternity/paternity leave

Both the mother and the father are entitled to a work permit when they have
a child, without any kind of deduction from the normal salary. For mothers, the period
of leave is up to 4 months, and for fathers, 5 days, and may reach up to 20 days in
companies included in the Citizen Company program.

In addition, during the breastfeeding period, the employee also enjoys

additional benefits, such as flexible arrival and departure times and an extra leave of
up to 2 weeks to breastfeed.

2.1.8. Transportation vouchers

Workers with a formal contract who use public transport to travel to work
are still entitled to an extra allowance, corresponding to at least 6% of their gross
salary, to pay for the tickets.

It is important to emphasize that, here, the amount is deducted from the

salary and that the benefit must be available for both permanent and temporary
employees.

2.1.9. Early warning or “Aviso Prévio”

It works as a kind of communication of the intention to terminate the

employment contract with the employee, in which the professional will remain working
at the company for a specified period. That way, both parties can prepare for that
output.

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 The period can also be indemnified, with the immediate interruption of the
service or with the worker serving the period at home.

2.2. Collective Labor Convention

Collective Labor Convention is an agreement of a normative nature, whereby

two or more Unions representing economic and professional categories stipulate
working conditions applicable, within the scope of their respective representations, to
individual labor relations.

This agreement may provide exclusive rights and benefits for professional
categories. "Normative nature" means they have applicability of law. Some of the
benefits can be: life insurance, overtime at a higher rate, funeral assistance, etc.

2.3. Other benefits granted to workers with a formal contract

In addition to all the rights mentioned above, the CLT also guarantees the
worker a series of other benefits, such as night pay, weekly paid rest, family salary,
justifiable absences, among many others.

In addition, most organizations offer their employees corporate benefits that

are not determined by law, but that companies grant the objective of increasing
professional satisfaction and productivity. Among them are, for example, food stamps,
health insurance, dental care and profit sharing.

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 3. Registration

3.1. What is E-Social

E-Social is the Digital Bookkeeping System for Tax, Social Security and
Labor Obligations, created in 2014 by the Brazilian Federal Government.

It is where the employee's registration is carried out. After entering all the
data, you will be able to generate an Access Code to enter the system and change
your password. Registration can also be done using an e-CPF Digital Certificate.

3.1.1 Register employer data

When accessing the system, you will be directed to the employer's

registration screen, where you will have to enter your e-mail address and landline and
cell phone numbers. After saving this information, it should be updated whenever there
are changes.

In addition, you can include additional information by selecting the option on

the upper right side of the screen to inform:

a) the option for electronic registration of employees;

b) the indication of the situation of an individual, informing its regularity, the
closure of the estate or permanent departure from the country;

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 c) software company information if you choose not to use the eSocial
system.

3.1.2. Include employee data

Next, you must inform the date of birth, admission, group and category of
the employee, choosing the option. Once this is done, the system will open the next
screens, requesting this information from the employee:

a) country of birth;
b) PIS number;
c) marital status;
d) race;
e) education;
f) city and state;
g) data from the Work and Social Security Card (number, serial number and
dispatch UF);
h) contact information (landline, mobile and email);
i) full address.

3.1.3. Register dependents

If the employee has dependents, check the "Fill dependents" option to

include specific information about them, which are:

a) CPF;
b) full name;
d) birth date;
e) type of dependent.

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 It is also necessary to inform if he is dependent for purposes of deduction
of income tax, receiving family allowance and if he has any physical or mental
incapacity for work.

3.1.4. Enter the data of the employment contract

On the following screens, you must register all information about the
employment contract, including:

a) type of contract (for a fixed or indefinite period);

b) office;
c) base salary;
d) periodicity of payment (weekly, fortnightly, monthly, etc.);
e) full address from where the functions will be performed;
f) working day.

3.1.5. Penalties

If a company that does not comply with its obligation and does not send the
information, it will be subject to fines3 and penalties, as follows:

3.1.5.1. Non-compliance with the submission

If the payroll is not sent, the company will have a fine of approximately
R$1,812.87 (USD 351,16).

3
These penalties do not refer to judicial fines, fines from the Public Ministry of Labor or the Federal
Revenue in relation to non-compliance with labor obligations.

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 3.1.5.2. Admission Information

Upon admission of the employee, the information must be sent one day
before the employee starts working, if this deadline is not met, the company may face
a fine of R$ 3,000.00 (USD 581,11). This rule is in accordance with article 47 of the
Labor Law.

3.1.5.3. Failure to comply with severance pay

If the employer does not pay the severance payments within the deadline,
the company may face a fine of R$ 170, 26 (USD 32,98) for each employee.This
information is based on article 477 of the CLT.

4. Employee pay discounts

In this topic we will discuss employee pay discounts.The amount deposited

to the employee is not the same as written in his work card, because there are
discounts on the payment4.

4
Note | Severance Indemnity Fund – FGTS: The FGTS is calculated based on the employee's receipts,
8% will be calculated on this amount, which must be paid. There is no discount on the employee's
salary.

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 4.1. Mandatory Discounts

4.1.1. INSS – Social Security

The social security discount is one of the mandatory salary discounts. Thus,
it will be calculated based on the employee's monthly remuneration. The percentages
will vary depending on your salary range and the month of contribution. In this sense,
the rate will be at least 7.5%, and may reach 14%.

4.1.2. Withholding Income Tax - IRRF

This tax is not paid by all employees, as up to a salary of BRL 1,903.98

(about USD 369,45) the employee is exempt. If the salary is above the BRL 1,903.98,
there will be a deduction from the Income Tax.

Calculation basis (R$) Aliquot - (%) Deduction (R$)

Up to 1.903,98 - -
1.903,99 to 2.826,65 7,5% R$ 142,80
2.826,66 to 3.751,05 15% R$ 354,80
3.751,06 to 4.664,68 22,5% R$ 636,13
4.664,68 or above 27,5% R$ 869,36 or above

4.1.3. Transportation vouchers

It is an amount that deducts up to 6% from the payroll to cover the

employee's travel costs. If the transportation cost is more than 6%, the company will
have to bear the difference.

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 It is not required in the case of an employee who works from home, but any
travel by that employee must be paid for.

4.2. Optional payroll discounts

4.2.1. Meal ticket/food voucher

Along with the transportation voucher, the "VR" or food voucher is one of
the most recurrent salary discounts in companies. Comprising a payroll discount of up
to 20% of the amount delivered to the employee.

4.2.3. Salary advance

Payment of a portion of the salary before the date the employee usually
receives, payments in Brazil are monthly. When the employee asks for or for another
reason there is an advance on salary, he can also have its amount written off from the
payroll.

4.2.4. Union contribution

This is not an HR benefit, but after the Labor Reform5 – Law 13.467/2017,
Union Contribution became optional. Thus, it will only be discounted if the worker
chooses.

5 The Law 13.467/2017 can be acessed through the link: http://www.planalto.gov.br/ccivil_03/_ato2015-

2018/2017/lei/l13467.htm

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 4.2.5. Health and Dental Plan

If the company offers and the worker accepts this benefit, the health and
dental plan may also be discounted. However, this discount will depend on the type of
plan. After all, there are companies that fully fund the health plan for employees,
instead of having a salary discount.

Note: The employee dismissed without "determined cause"1, who contributes to

the corporate health plan, is entitled to maintain the plan for a period of 1/3 (one
third) of the time who stayed in the plan, with a minimum limit of 6 months and a
maximum of 24 months after termination, pursuant to the provisions of art. 30, §
1 of Law 9,656/98.

4.2.6. Absences and delays

The employee who is absent from work or is late at the start of the working
day, the company has the right to discount delays over 10 minutes a day or for
unexcused absences.

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 5. Documents required for hiring the employee

The documents below refer to hiring, other documents may be necessary in the
dismissal, such as the notice letter and dismissal examination, which, although not
mandatory, is important to reduce liability risks.

In addition to the employment contract, with specific clauses for the

employment relationship of each employee, in the vast majority of cases the following
documents are needed:

5.1. Work and Social Security Card (CTPS):

It is the document in which the labor portfolio is registered, it is possible to

check the date of dismissal and hiring of the companies the employee has worked for.
Must be returned to the employee within 48 hours by issuing a protocol both upon
delivery and upon return.

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 The card must have the employer's information on one of its pages:

It also exists in the digital version:

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 5.2. ID card;

Several documents can be used as ID, such as a driver's license or

professional license, but the most common way the document is presented is as
follows:

5.3. Taxpayer identification card (CPF);

It is not necessary if the identity document has the number.

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 5.4. Voter Title with proof of voting in the last 3 elections;

Voting is mandatory in Brazil, the citizen who does not vote loses some civil
rights, such as being hired, the situation is easy to be resolved through the payment of
a fine that costs cents.

But in addition to the voter's document, small receipts are required obtained
in the last 3 votes or issue a certificate on the government's electoral website6.

5.5. PIS registration card;

The document number, which is sometimes also present in the CTPS, is

sufficient to fulfill the requirement, and it is not necessary to send a copy of the physical
document.

6
https://www.tse.jus.br/eleitor/certidoes/certidao-de-quitacao-eleitoral

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 5.6. Reservist Certificate, if under 45 years of age (male);

The military enlistment is mandatory for all men, it is necessary to present

a document that proves that the male employee presented himself to the armed forces:

5.7. Copy of proof of residence;

Any document that proves the address, it is more common to use water bills,
electricity or telephone services.

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 5.8. Proof of education;

Required for higher education professionals, but optional for professionals

who do not need university or technical training to practice their profession. The
Professional Council card is required in some professions, such as doctors,
accountants, lawyers, engineers, etc:

In other cases, the diploma is enough. Diplomas in Brazil most often look
the same as in the United States:

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 5.9. Copy of the marriage certificate

If the employee is married, he/she must present a marriage certificate:

5.10. Copy of the birth certificate

If the employee is not married or divorced, he/she must present a birth

certificate:

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 5.11. 3×4 photo

Usually used to prepare the employee badge or include in the organization

form of employees in the personnel department.

5.12. Declaration of dependents for Income Tax purposes at

source

Informs the employee's financial dependents, so that they can obtain

income tax deductions (withheld at source in the case of employees):

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 5.13. Declaration for the transportation voucher

If the employee wants to receive, it is necessary to fill out a form showing

the necessary money and routes used:

25
 If he doesn't receive, he fills in simple declaration:

5.14. Admission medical certificate:

It must be paid for by the employer and made before the start of activities:

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 5.15. Employee statement not to pay Union contribution

Employees who do not wish to pay contribution to the Union of the

professional category they belong to must sign a declaration in their own hand that
states:

CARTA DE OPOSIÇÃO AO DESCONTO DAS LETTER OF OPPOSITION TO DISCOUNT

CONTRIBUIÇÕES AO SINDICATO CONTRIBUTIONS TO THE UNION

Data. Date.

Ao Sindicato (...) To Union (...)

Assunto: CONTRIBUIÇÃO ASSISTENCIAL Subject: ASSISTANCE CONTRIBUTION

/CONTRIBUIÇÃO CONFEDERATIVA /CONFEDERATIVE CONTRIBUTION

Eu (...), portador da carteira profissional n.º (...), I (...), holder of professional card No. (...),
regularmente registrado na empresa (...), CNPJ n° regularly registered with the company (...), CNPJ
(...), com sede à (...), nº (...), bairro (...), não No. (...), with registered office at (...), No. ( ...),
sindicalizado, manifesto oposição ao desconto em neighborhood (...), not unionized, manifests
folha de pagamento a título de contribuição opposition to the payroll deduction as assistance
assistencial, confederativa ou outras contribution, confederation or other contributions
contribuições em favor dessa entidade. in favor of this entity.

Atenciosamente, Regards,

Assinatura do trabalhador Signature

5.16. Complementary documents:

During the process, the documents that may eventually be needed are birth
certificates and/or ID for children under 21, vaccination card for children under 5, proof
of schooling for children up to 14 years old.

It may also be required: NDA - confidentiality agreement, data protection

agreement and company training document (procedural or technical training).

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 6. Checklist

Standard
Contract
Work and Social Security Card (CTPS)
ID card
Taxpayer identification card in the Individual Taxpayer Registry (CPF)
Voter Title with proof of voting in the last 3 elections
PIS registration card
Reservist Certificate, if under 45 years of age (male)
Copy of proof of residence
Proof of education
Copy of the birth certificate or Copy of the marriage certificate;

3×4 photo
Declaration of dependents for Income Tax purposes at source
Declaration for the transportation voucher
Admission medical certificate
Employee statement not to pay Union contribution

Complementary | Optional
Birth certificates for children under 21
ID for children under 21
Vaccination card for children under 5
Proof of schooling for children up to 14 years old
NDA - confidentiality agreement
LGPD/GDPR/CCPA/POPI - data protection related agreement
Training document

fcvj.adv@gmail.com | +55 (11) 98677-4431 | https://www.linkedin.com/in/fcvj/

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