An employer of record in Brazil is a locally registered company that hires your candidate as the legal employer under Brazil's Consolidacao das Leis do Trabalho (CLT), the consolidated labour code that governs nearly every formal employment relationship in the country, while you manage their actual work. Brazil is one of the more statute-heavy countries an EOR operates in: the CLT layers on a mandatory 13th salary, a monthly FGTS deposit, INSS social security contributions and a constitutional vacation bonus, on top of base pay, and all of it has to show up correctly in the payroll math before you compare providers on their headline monthly fee.
The 13th salary is not optional
Every formally employed worker in Brazil is constitutionally entitled to a 13th salary, an extra month of pay on top of the normal twelve, paid in two installments: the first by November 30, equal to half the prior month's remuneration, and the second by December 20, settling the balance. It can be paid proportionally for a partial year of service. This is not a bonus an employer can decline to offer; it is a statutory entitlement, and an EOR's annual cost model for a Brazilian hire should show it as a distinct monthly accrual, in BRL, rather than leaving you to discover it in December.
FGTS: an 8% monthly deposit that follows the worker
Under Brazil's FGTS (Fundo de Garantia do Tempo de Servico) rules, confirmed on the programme's own government page, employers must deposit 8% of the worker's monthly salary into an individual account held at Caixa Economica Federal, the state bank, by the 20th of the following month. This is paid on top of salary, not withheld from it, and functions as a forced savings account the employee can draw on in specific situations such as buying a home. Apprentices are a lower 2% rate. On top of the monthly 8%, dismissal without cause triggers an additional fine calculated on the accumulated FGTS balance, which is one of the largest single line items in a Brazilian termination and should be quoted explicitly by any EOR before you commit to a hire.
INSS and social security
Brazil's National Social Security Institute, the INSS, administers the general social security regime that funds retirement, disability, survivor and maternity benefits for formally employed workers, per the institute's own government page. Employed workers contribute through employer payroll deductions, with the employer separately paying its own INSS contribution on top of gross wages, and both flows are tracked against the worker's CNIS contribution history, which determines eligibility for benefits later. An EOR handles this filing as part of standard Brazilian payroll, but it is worth confirming the contribution is itemised on the payslip rather than bundled into a single opaque number.
Vacation and the constitutional third
Brazilian workers are entitled to thirty days of paid annual vacation after each full year of service, and critically, the Federal Constitution requires that vacation pay include an extra one third on top of the normal salary for that period, commonly called the terco constitucional. Like the 13th salary, this is a constitutional right rather than a negotiable perk, and it applies whether the vacation is taken in full or, within limits, split. Any employer of record operating in Brazil should already have this baked into its standard payroll cycle; if a quote does not mention it, ask directly how it is accrued.
Questions people ask about employer of record brazil
What is the 13th salary and does an EOR have to pay it?
Yes. Every formally employed worker in Brazil is entitled to an extra month of pay each year, split into two installments due by November 30 and December 20. An employer of record operating legally in Brazil must fund and pay it as part of standard CLT compliance.
How much does an employer deposit into FGTS each month?
8% of the worker's monthly salary, deposited by the employer into an individual account at Caixa Economica Federal by the 20th of the following month, on top of salary rather than withheld from it. Apprentices are deposited at 2%.
What does INSS cover for an employee in Brazil?
INSS is Brazil's national social security institute. It funds retirement, disability, survivor and maternity benefits, and both employer and employee contribute, with the contribution history tracked in the worker's CNIS record.
Is the vacation bonus in Brazil mandatory?
Yes. The Federal Constitution requires paid annual vacation plus an additional one third of salary for that period, the terco constitucional, on top of the standard 30 days of paid leave earned each year of service.