UK firms employing Brazilian talent: where the CLT departs from UK practice

Once a UK firm moves a Brazilian worker from an invoice to a payslip, Brazilian labour law governs almost every term of the job. The Consolidação das Leis do Trabalho (CLT, the labour code) fixes pay items, holiday, hours and exit costs that a UK employment contract would normally leave to negotiation.

Many UK companies meet Brazilian candidates through remote recruitment and start by paying them as freelancers. That can work for short, clearly defined projects. It becomes harder to defend once the person works set hours, reports to a UK manager and has no other clients, because CLT art. 3 treats personal, continuing, paid and directed work as employment.

At that point the UK firm has three routes. It can register its own Brazilian company, a sociedade limitada (LTDA), and employ staff through it. It can keep a contractor model and accept the classification risk. Or it can engage an employer of record that signs the CLT contract and runs payroll.

Whichever route is chosen, the employee is registered centrally. Admission goes onto the digital carteira de trabalho (CTPS) through the eSocial system, which also carries monthly payroll data to the Receita Federal and feeds the FGTS Digital platform. There is no equivalent of a UK employer simply adding someone to its RTI submission after the first payday.

Some UK firms want to send an existing British employee to Brazil rather than recruit locally. That person needs a residence authorisation for work with a Brazilian employment contract, which Resolução Normativa CNIg nº 2/2017 governs and the justice ministry (MJSP) processes. For tax, the Receita Federal counts someone arriving with a temporary visa and a Brazilian job contract as tax resident from day one, taxed on worldwide income at the normal monthly table. Plan the relocation and the Brazilian payroll together, since the first Brazilian payslip and the first residence step fall close to each other.

Brazilian employer charges take a much larger share of pay than UK employer National Insurance, and they start from the first real of salary. Our São Paulo worked example puts them at 35.8% of every payment.

For 2026 to 2027, HMRC’s secondary Class 1 rate is 15% on earnings over the £5,000-a-year secondary threshold, or £96 a week, and eligible employers can reduce their bill with an Employment Allowance of up to £10,500 (GOV.UK rates and thresholds for employers). There is no upper limit on the employer rate, but the threshold and allowance soften the cost for smaller teams.

Brazil has no threshold of that kind. Our example employer sits in the lucro real or lucro presumido regime under FPAS 515 and pays:

• Employer INSS at 20% of total pay, with no ceiling (Lei 8.212/1991 art. 22).
• RAT, the work-accident contribution, at 2%; the statutory band is 1% to 3% depending on activity risk.
• Terceiros levies for education and training bodies at 5.8%.
• FGTS deposits of 8% into the employee’s severance fund account (Lei 8.036/1990 art. 15).

On a salary of R$ 15.000,00 a month those items total R$ 71.600,00 a year, and the full employer cost is R$ 271.600,00. Structure matters as much as the rate, because every Brazilian charge also falls on the 13º salário and on the extra third paid with holiday.

A Brazilian CLT employee receives 30 calendar days of férias (annual leave) after each 12-month acquisition period, paid with an extra one-third of a month’s salary. The UK statutory minimum is 28 days for someone on a five-day week, which is 5.6 weeks, and an employer may count bank holidays within it (GOV.UK holiday entitlement).

Because Brazilian leave is counted in calendar days, weekends inside a holiday period count towards the 30 (CLT art. 130). Public holidays are separate from férias. São Paulo city’s official 2026 calendar lists national, state and municipal holidays, while Carnaval is a ponto facultativo, an optional day off, for private employers unless a collective agreement or local law says otherwise.

The feature UK payroll teams find most unusual is the terço constitucional, the one-third holiday bonus set by the Federal Constitution (art. 7, XVII). On a R$ 15.000,00 salary the holiday month pays R$ 20.000,00 in our example, and employer charges apply to the extra R$ 5.000,00.

UK managers also need to plan for the 13º salário, a statutory extra month of salary for a full year’s work. Together with the one-third bonus it lifts annual pay to about 13⅓ monthly salaries. Our guide to the 13º salário and the holiday third shows how both are budgeted month by month.

Brazil has no direct equivalent of UK automatic enrolment; retirement is funded through the state INSS system, and the employer also pays into a separate severance fund, the FGTS. Both are compulsory for CLT employees.

In the UK, the minimum contribution to an auto-enrolment workplace pension is 8% of qualifying earnings, of which at least 3% comes from the employer (GOV.UK workplace pensions). Employees can opt out after being enrolled.

In Brazil, nobody opts out. Employee INSS for 2026 climbs through bands of 7.5%, 9%, 12% and 14% and stops at pay of R$ 8.475,55, which limits any one person’s contribution to R$ 988,09 a month. The employer adds its own 20% INSS with no ceiling. On top of that, 8% of pay goes from the employer into an FGTS account held in the employee’s name with a payment deadline on the 20th of each following month.

The FGTS behaves more like a severance reserve than a pension. It sits in the employee’s name, and a dismissal without cause obliges the employer to add 40% of everything deposited during the contract. Private pension plans exist but are a benefit your firm chooses to offer, often alongside a health plan or meal vouchers set by the sector agreement.

A UK firm should agree salary, hours, remote-working terms, probation and benefits before the Brazilian contract is drafted, because the CLT limits how these can be changed later to the employee’s disadvantage. The contract also needs to reflect any convenção coletiva de trabalho (CCT), the sector agreement that binds by category and territory.

• Hours. The standard day is 8 hours, within a 44-hour week (CLT art. 58); overtime may not exceed 2 hours in any day.
• Probation. A contrato de experiência runs for up to 90 days (CLT art. 445).
• Remote work. Remote working has to appear expressly in the contract, and written terms on equipment and expenses are required by CLT arts. 75-A to 75-F.
• Language. Ask the employer of record whether the contract will be issued in Portuguese, English or both, so UK managers can read the terms they are working to.
• Pay date. Pay runs once a month, and the latest lawful payday is the fifth business day after month-end (CLT art. 459).

Watch the political calendar as well. A constitutional amendment to cut the week to 40 hours, PEC 221/2019, passed the Câmara in May 2026 but was still awaiting a Senate plenary vote on 25 September 2026. It is not law, and current contracts should use the 44-hour rule.

Brazilian exits are defined mainly by cost: dismissal without cause is open to the employer, at the price of notice, the 40% FGTS penalty and a settlement paid inside 10 days. UK dismissals turn more on the reason and the fairness of the process.

Notice, the aviso prévio, is 30 days in the first year and then lengthens by 3 days per full year, never beyond 90 days (Lei 12.506/2011). The final payments, called verbas rescisórias, cover unpaid salary, the part-year 13º salário, outstanding holiday plus its third, and notice, and the employer has 10 days to pay them under CLT art. 477.

Dismissal por justa causa, for serious misconduct, requires one of the grounds enumerated in CLT art. 482. Art. 484-A adds an agreed exit: half the notice, a 20% FGTS fine, access to 80% of the fund for the employee, and no unemployment insurance.

Any dispute is heard by the labour courts, the Justiça do Trabalho. A former employee has 2 years after leaving to file a claim, and may reclaim rights for up to 5 years before that (Federal Constitution, art. 7, XXIX). UK firms used to a short tribunal time limit should keep Brazilian payroll records well beyond the end of each contract.

Through Employer of Record Brazil, the CLT contract is signed by us as employer of record; we run eSocial and payroll and pay INSS, IRRF and FGTS, while your UK team directs the work. You avoid registering a company and setting up Brazilian tax and payroll accounts before the first hire.

The cost is from USD 560 a month per employee (about R$ 2.901,24; ECB conversion, 24 September 2026), charged in addition to salary, charges and benefits. There is no percentage mark-up on pay, and your quote lists the set-up fee we normally charge once.

UK legal teams should read the arrangement with care. No Brazilian statute addresses employer of record; Lei 6.019/1974 covers only licensed temporary work agencies and outsourcing in which the provider directs the work. Where a UK manager directs the worker, the risk of an employment finding against the client does not disappear, which is why the employer of record’s contract and your management practice both need attention. The same concern applies with more force to long freelance arrangements, as we explain in a closer look at pejotização and PJ contract risk.

When comparing providers, ask how each one handles collective agreements, benefits and eSocial reporting. Our guide to picking an EOR provider for Brazil lists the questions to raise. It is also sensible to ask in which currency invoices are raised and how each month’s payroll figures reach your finance team before payday.