Terms & Conditions of Employment in Brazil
Equal pay, equal opportunity
The Brazilian Labour Legislation states that companies with employees doing similar jobs in similar working conditions and locations must pay those employees equally, including expats. Moreover, two-thirds of the company workforce must be reserved for Brazilian employees.
Contact outside working hours
Although this rule is rarely enforced, employees who are contacted by their employers outside working hours, either through a text message or a phone call, are entitled to one-third of their hourly pay if they engage in work.
Employees have the right and the duty to get and to give a notice period. Employees have the right to be served a notice if they are dismissed without cause and must also serve the notice if they resign. Notice period is 30 days, with 3 additional days for every one year of tenure, capped at 90 days.
If the employer doesn’t want the employee to work through their notice period, they must pay them in lieu. If the employee doesn’t want to work through their notice period, the employer has the right to deduct the amount from the employee’s pay.
Work history booklet
In Brazil, every working citizen must have a work history booklet called Carteira de Trabalho e Previdência Social(CTPS), which they carry with them throughout their work life. This book retains all the information related to each job the employee ever had and serves as a base for employment rights (such as FGTS, unemployment benefit).
It’s a right of every worker to have their work history booklet duly signed by their employer when onboarded, including all the information regarding the role. Employers must return the document to the employee within 48 hours.
In Brazil, invention ownership varies depending on the circumstances, as follows:
If the invention was done while its inventor (employee) was working under a Brazilian employment contract, and happened as a result of the activities that the employee was hired for, the employer exclusively owns the rights.
If the invention was done as a result of the inventor’s (employee’s) personal efforts but while the employee was using the employer’s premises or equipment, both own the rights equally (unless the contract says differently). If the employer uses the invention, they should pay the employee fair compensation (no rules apply on how to make the calculation).
If the invention has no relation with the employment contract and was created without an employee’s using the employer’s premises or equipment, the employee exclusively owns the rights over it. The employer has no right to exploit the invention unless the employee has previously authorized it.
Restriction of activities
The legislation doesn’t provide expressly for the obligations or consequences related to restriction of activities. Therefore, employers who would like to impose them should include them in the employment contract.
The following guidelines apply:
(a) Non-compete agreements must be set for a fixed term, usually no longer than 2 (two) years.
(b) Non-compete agreements must also specify a territory (country or region).
(c) Non-compete agreements must also define objectively the industry or activities the employee must not engage in.
(d) More importantly, non-compete agreements must also provide for a consideration. That consideration is usually seen as acceptable by local courts in a range between 50% and 100% of base salary through the whole non-compete term.
The duties of confidentiality and non-disclosure of information are inherent to the employment relationship not only during the contract but also after its term. Employees can also be subject to non-compete obligations during the employment contract simply as a result of receiving salary from the employer.
Breach of these duties authorises the employer to terminate the employment contract with cause. The employee can also be liable for damages caused to the employer.
Post-employment restrictive covenants
Brazilian law doesn’t restrict employees from working for a competitor after employment termination and doesn’t recognise such clauses. As a matter of fact, it’s a fundamental right in Brazil for individuals to work freely. Even though such clauses may be common abroad, they can be frowned upon in Brazil. However, employers can still choose to include the clause in the employment agreement. For post-employment restrictive covenants to be valid, they must include a fair indemnification to the employee (usually the employee’s latest base salary) for every month of restriction and be very specific on the scope of restrictions, providing the duration of the restriction (no more than two years), territory limits (such as a state), and the list of activities the employee performed.