BrazilBrazil has the largest developer population in Latin America, strong senior engineering talent, and a timezone that lines up almost perfectly with US East Coast hours. What surprises US founders is the price tag on formal employment: between the 13th salary, FGTS deposits, and the vacation bonus, statutory costs can add 55-70% on top of gross salary, the heaviest employer load of any major hiring market.
Here's what you actually need to know.
Quick facts
| Brazil | |
|---|---|
| Currency | Brazilian Real (BRL) |
| Standard work week | 44 hours, 5 days |
| Payroll frequency | Monthly |
| Employer statutory cost | ~55-70% on top of gross salary |
| Minimum wage | R$1,621/month |
| Probation | Up to 3 months |
| Notice period | 30 days, plus 3 days per year of service |
| 13th month pay | Mandatory, paid in two installments |
| Employees paid in | BRL, required by law |
First decision: contractor or employee?
Most US startups start with Brazilian contractors (often PJ, a contractor invoicing through their own small company), and for genuinely independent senior engineers that structure is common and workable.
The line you can't cross is misclassification, and Brazil polices it harder than almost anywhere. Employment here is governed by the CLT (Consolidação das Leis do Trabalho), labor courts are employee-friendly, and a contractor who works fixed hours, exclusively for you, under your direction can sue to be reclassified as a CLT employee. If they win, you owe back 13th salaries, vacation plus the 1/3 bonus, FGTS deposits, and social security, with penalties. The rough test: if you'd be uncomfortable with them taking a second client, they're probably an employee.
When someone becomes core to the team, convert them properly through an employer of record (EOR) or your own Brazilian entity.
Paying contractors in Brazil
The mechanics on your side are straightforward:
- Collect a W-8BEN before the first payment. It certifies the contractor is a non-US person, so you generally don't issue a 1099. Confirm your setup with your accountant.
- Sign a real contract. Scope, rate, IP assignment, termination terms, written for Brazilian law. A copy of your US template invites exactly the reclassification risk described above.
- Pay in USD or BRL, their choice. Contractors can invoice in USD. The expensive path is the bank wire: $25-45 per wire, an FX spread buried in the rate, and a 2-5 day wait.
Shor pays Brazilian contractors over local rails, same-day, with a flat disclosed 2% FX margin and a $19/month per-contractor fee. Contracts, W-8BEN collection, and invoicing are built in.
Hiring full-time employees
This is where Brazil's reputation comes from. Employer-side statutory costs on top of gross salary:
| Contribution | Rate (employer side) | Notes |
|---|---|---|
| INSS (Social Security) | 20% | Flat on payroll, no cap |
| RAT (Work Accident Insurance) | 2% | Varies by industry risk classification |
| S System (training/industry) | 5.8% | Third-party social contributions |
| FGTS (Severance Fund) | 8% | Monthly deposit into the employee's fund account |
| 13th salary provision | 8.33% | Mandatory, paid in two installments (Nov/Dec) |
| Vacation bonus (1/3 of salary) | 11.1% | Paid on top of vacation pay |
Headline employer load: roughly 55-70% on top of gross salary. An engineer on R$20,000/month costs you well over R$30,000/month before platform fees. Budget with the full number from day one; statutory rates change, so confirm current figures with your accountant.
One 2026 note if you've read about Brazil's payroll tax relief for tech companies: the sector-based exemption (desoneração da folha) is being phased out, with previously exempted sectors paying a blended rate through 2027 and returning to the full 20% INSS from 2028. EOR employees are generally already on the standard 20% table, so this changes little for you, but it explains why some quoted Brazil employment costs are rising.
Employees must be paid in BRL to a Brazilian bank account. That's law, not preference.
Leave and benefits
- Annual leave: 30 days, plus the mandatory 1/3 vacation bonus when taken
- Sick leave: 15 days at full pay (social security takes over after that)
- Maternity leave: 17 weeks at full pay, state-funded
- Paternity leave: 5 days, paid
- Public holidays: ~12 days
A transport voucher is mandatory if the employee requests it (you can deduct up to 6% of salary). Beyond statute, competitive offers in Brazil commonly add private health insurance, meal or food vouchers, education allowances, and profit sharing (PLR).
Ending employment
Brazil is not at-will, and termination is the most litigation-sensitive moment in the relationship:
- Notice: 30 days plus 3 days per year of service (worked or paid in lieu)
- FGTS penalty: termination without cause triggers a 40% fine on the employee's accumulated FGTS balance, on top of releasing the balance itself
- Final settlement: accrued salary, prorated 13th salary, accrued vacation plus the 1/3 bonus, and the FGTS settlement
Every without-cause termination needs a legal and financial check before you pull the trigger. This is exactly the situation where an EOR earns its fee.
Documents we'll collect from your employee at onboarding
CPF (tax ID), CTPS (digital work card), and a Brazilian bank account for salary. Statutory setup covers the FGTS account, INSS enrollment, and eSocial reporting.
What it costs through Shor
- Contractors: $19/month each, same-day BRL or USD payouts
- Full-time employees (EOR): $299/month each, INSS, FGTS, 13th salary, and filings handled
- Your own Brazilian entity: we run payroll on top of it for less than EOR, in the same dashboard
No setup fees, no annual lock-in, and the FX margin is a flat disclosed 2%. The pricing calculator shows the full Brazil math including every statutory line.
Next steps, depending on where you are: the EOR pricing comparison puts published provider prices side by side, and EOR vs. your own entity has the breakeven math for when a local entity starts to win. To see Brazil against the rest of our coverage, the reference tables compare employer costs, notice periods, and public holidays across every country here. Already with another provider? Switching EOR providers covers the traps worth planning around.
FAQ
Can I pay Brazilian employees in USD? No. Salary must be paid in BRL to a Brazilian bank account. Contractors, however, can invoice in USD, and many do.
What does the 13th salary actually cost me? One extra month of salary per year, paid in two installments in November and December. Provision for it monthly (about 8.33% of salary) instead of treating December as a surprise. It's on top of the 30 days of vacation and the 1/3 vacation bonus.
How fast can someone start? Contractors: same day, once the contract is signed and the W-8BEN is in. Employees via EOR: typically 10-15 business days after the signed contract and complete documents, driven by statutory registrations.
What does an employer of record in Brazil cost? With Shor, $299/month per employee, plus the statutory employer contributions (roughly 55-70% of gross salary) that any employer in Brazil pays. Deel and Remote charge $599-699/month for the same coverage.