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Brazil Employment Law
The Employment Relationship in Brazil
The employment relationship in Brazil remains under the governance of the Law Decree no. 5452 of May 1st, 1943, Consolidação das Leis do Trabalho (CLT). At least two thirds of the employees of any employer, whether of a resident corporation or other business form, must be Brazilian nationals.

The Employer
It is required that an employee in Brazil be employed by an employer registered to do business in Brazil. Direct employment by a foreign company is not permitted. A foreign company wishing to hire Brazilian employees for service in Brazil must complete formation of a Limitada or other company form prior to entering into an employment relationship.

Engaging “Consultants”
Engaging services as a “consultant” as an alternative to direct employment must be viewed with great caution. An employment occurs whenever there is direct rendering of services to a legal entity; payment of remuneration in a regular and consistent manner; the prolonged sequence of the service rendering; and mainly, subordination, (ex. strictly follows orders and procedures). In the event an employment bond is found, the “consultant” may file a labor claim in court, claiming the sums he or she deems to be entitled, including vacations, 13th salary, contributions for the Unemployment Guarantee Fund, etc. At the same time labor authorities may draw up infraction notices against the company in light of the fact that the “consultant” has not been registered as an employee. Establishing
“consultant” relationships with individuals who are not incorporated, do not have other clients, and who will not function with great autonomy, receiving compensation on a “non-salary” basis should be avoided.

STOCK OPTION PLANS
While stock options may be
granted to employees, their
exercise requires the plan to be
registered with Banco National
and specific arrangements made
for currency to be sent abroad
for exercise.

ACQUIRED RIGHTS
Continuous and invariable payment of a remuneration form (ex. bonus) results in the inability of the employer to discontinue its payment.

SALES COMMISSION
Sales commission is subject to
DSR (weekly rest remuneration)
and 13th month payment which
substantially inflates quarterly
incentive plan payouts.

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