Mandatory Employee Benefits in Brazil
13th month salary
In Brazil, it’s mandatory to provide employees with an additional month’s salary at the end of the year, which is called the 13th month salary. Employers must provide this benefit to all employees who have worked all 12 months of the year. Those who join the company later in the year are entitled to a proportional fraction of the 13th salary (monthly salary divided by 12 and multiplied by months worked in the year).
The 13th salary can be paid as a lump sum at the end of December or divided into two equal payments: (1) between February and November and (2) by the 20th of December. Employees may request one-half to be paid along with their vacation bonus. Employees who are dismissed are also entitled to the pro-rated equivalent of their 13th month salary.
Every employer must deposit 8% of the monthly salary of each of the employees into a special account opened with the Federal Savings Bank. A new account is added for the employee with every new job. This account is used for the Severance Pay Fund (FGTS), which employees are entitled to at the end of employment unless the employment is terminated with just cause. FGTS income is exempt from tax.
In addition, companies must pay a penalty equal to 40% of the sum already in the fund to employees terminated without a cause.
Employees can withdraw the FGTS when they retire, are terminated without cause, suffer a serious illness, or need money to purchase a home, amongst others.
Along with a generous yearly holiday entitlement of 30 days, employers must also provide employees with a vacation bonus on top of their regular pay. The vacation bonus equals one-third of the employee’s monthly compensation and must be paid two days in advance of the employee’s time off.
Not applicable to remote workers. Available in digital form (pre-paid rechargeable cards). Employees who must commute to and from work by public transport are entitled to a transportation voucher, provided by the company if the cost of transportation surpasses 6% of their monthly wages. The amount beyond 6% is paid by the employer. In certain cases, for instance, when the commute costs are under 6% of the salary, there would be no reason to provide these vouchers.
Mandatory for companies with more than 30 female employees; otherwise, optional
Called auxílio creche in Portuguese. Companies with more than 30 female employees must provide daycare space on their premises for those still breastfeeding (which, in some cases, can be extended until the child turns six) or give the employee an allowance or reimbursement equivalent to the cost of sending the kid to daycare.
The amount of the allowance is negotiated between the employer and the employee, based on the surrounding daycares’ monthly prices. Some CBAs stipulate the amount. If the daycare that the employee wants to send their kid to charges more than the average price, the employer isn’t obliged to pay that difference, allowing the employee to pay for the additional cost.
Employers cannot deduct the daycare allowance from the employee’s pay, as it’s a right of the female employees to get assistance with this cost.
Non-mandatory Employee Benefits in Brazil
Employee benefits and conditions are vested rights, and employers aren’t allowed to make changes to the employment terms and conditions, which may make the employee worse off, regardless of whether the employee had previously agreed to such changes.
Called vale-refeição in Portuguese. Meal vouchers are very common in Brazil. It’s a special rechargeable card that can be used in most restaurants so the employee doesn’t pay for their meals at work daily. Any unused amount accumulates on the card. Offering meal vouchers to employees gives employers some tax breaks. The amount added to the card varies according to the cost of living in each city (e.g., in São Paulo, it’s BRL 30–50 per day).
Called vale-alimentação in Portuguese. Unlike the meal vouchers, these are used in supermarkets and grocery stores and are also available as rechargeable cards. If a store accepts a card, the funds don’t necessarily have to be spent on food only. Most companies provide employees with either food or meal vouchers. Any amount not used accumulates on the card. Offering food vouchers to employees gives employers some tax breaks. If employers are registered with PAT — the government branch responsible for administering meal and food vouchers — they could claim up to 4% deduction in income tax. The amount added to the card varies according to the cost of living in each city (e.g., in São Paulo, it’s about BRL 500 per month).
Private health insurance
It’s very common for tech companies in Brazil to provide employees with health insurance paid by the company. On top of that, dependants are often included and so are vision and dental care.
Some companies deduct a fixed price from the employee’s pay and cover the rest, while others pay the amount in full. If health insurance is made available to all employees, the premium is exempt from social security and income tax.
Under healthcare plan regulations, employees are entitled to be continuously covered by their employer’s plan for up to 24 months if they’re dismissed without cause, or may get lifetime coverage if they retire after being covered by the plan for at least ten years. These regulations apply to the plans where employees are paying part of the premiums. Plans that are fully funded by the employer are not subject to these extension rights.
Larger companies often offer private pensions to their employees, with companies contributing 3% of the employee’s salary. Defined contribution plans are currently the norm. Employees can contribute out of their salaries up to a certain rate, varying on the private pension plan, and employers usually match that contribution up to a certain rate.
If available to all employees, pension plans are qualified (as long as they meet the legal requirements) in Brazil, which means the beneficiary pays no social security and no income tax until they receive the funds.
Company life insurance schemes are very common in Brazil, especially at larger companies. They are often tied to the employee’s role and salary — often three times the employee’s annual salary. Some companies have add-ons to the life insurance to cover travel insurance, funeral assistance, anticipation of the insurance lump sum in case of serious illness, and incapacity caused by an accident.
Extended maternity and paternity leaves
Most private companies adhere to the government scheme Empresa Cidadã, which gives mothers an additional 60 paid days off and fathers 15 paid days off. Some tech companies go beyond with an additional one or two months paid by the employer, and some even match the paternity to the maternity leave and provide an additional four weeks of fully paid flexible work arrangements to assist with returning to work.
Some tech companies support employees with their fertility, surrogacy, and adoption journeys, regardless of their marital status, gender, or sexual orientation. Usually, the assistance is financial (through an allowance to be used for the benefit, up to 90% and capped at US$20,000) and emotional (giving employees access to professionals to be by their side during the journey). It may also the kind that supports new parents.
Increasingly, companies allow employees to work remotely full time or on a hybrid setup — with two–three days at the office and the remainder at home.
On top of that, flexibility with working hours has also increased, giving employees more flexibility with when they get work done, especially for days they have other errands (usually respecting the business core hours).
Education and training
Most tech startups encourage and support employees to keep learning throughout their careers. Many companies offer continuous training, education allowance, tuition assistance, and yearly budgets to be spent on professional conferences.
More importantly, most companies with distributed teams subsidize English, Spanish, Mandarin, or other language relevant to the employee’s role. Language classes are very common in Brazil.
Home office allowance
Tech companies whose employees work from home often provide them with monthly stipends or one-off office setup allowances. Some who don’t have offices nearby also allow the possibility of using co-working spaces for those who prefer to work alongside others from time to time.
It’s common to give employees the option of choosing their preferred hardware. Some companies go beyond and provide stipends to cover electricity, Wi-Fi, and office materials.
Charity and volunteering
Some companies match employee’s charity donations (up to 1% of the employee’s salary), while others allocate a certain number of hours yearly (up to 40) that employees can use towards volunteering in projects they care about rather than work.
To those employees who don’t take public transportation to work, some tech companies give a fuel allowance to cover the costs of travelling to and from work.
Certain companies offer various perks for employees when it comes to wellness. Some provide those who go to an office with breakfast, drinks, video games, snacks, no dress code, and even pet days; others provide mid-day meditation sessions, yoga classes, discounted cinema tickets, gym memberships and other cultural attractions (allowance of BRL 50 monthly), Employee Assistance Program, and fertility assistance.
Recently, private pensions have become a very sought-after benefit since the government implemented a pension reform. It’s becoming a common market practice to provide employees with private pension plans in Brazil. Companies can choose to match employees’ contributions, usually about 3% – 6% of their salary, or simply offer a scheme where the employee contributes alone.
Tech startups often offer stock options to employees as a way to attract talent and make them feel empowered. The amount allocated for stock options varies by company but is usually around 0.01% to 0.1%, depending on the employee’s role and tenure.
It’s common for employees in high executive positions to be offered participation in an employee share plan.
Depending on the company’s industry and the employee’s role, some employers provide employees with commissions and yearly or semi-yearly bonuses for hitting targets or bonuses tied to the company's overall performance.
Bonuses are discretionary and don’t need to follow rules in relation to the beneficiaries, value (fixed or variable), and periodicity. However, depending on the manner and the frequency of the payments, this type of benefit may be considered as part of the employee’s compensation, thus becoming subject to payroll taxes and labour charges — INSS, FGTS, IRRF, 13th salary, vacation, overtime, night shift premium, and prior notice.
If employees need to use their phones for work, it’s common for companies to take over that cost and reimburse employees for it.
Although Brazil already has a generous statutory holiday entitlement, some tech companies adhere to the unlimited vacation days rules, with a statutory minimum that must be taken.
Many tech companies offer their employees discounted gym memberships or subsidise other sports activities of their choice.
Support for transgender employees
Although not very common, there are companies that go above and beyond to provide employees undergoing sex change with financial support to be spent on name change, hormones, medication and surgery, along with medical and psychological guidance.