Hiring independent contractors in Brazil: Everything you need to know

With evolving technology and tools enabling the ability to create a thriving global workforce, many employers look beyond borders to grow their teams. Brazil, in particular, holds promise for a number of skills, especially when it comes to tech. The country is replete with expertise in software development and even has an area known as the Brazilian Silicon Valley thanks to its rich pool of talented tech workers.

For many organizations, hiring independent contractors is an economical and efficient way to grow their global workforce. If you’re looking to expand your team to Latin America, here’s everything you need to know about hiring independent contractors in Brazil.

Why hire independent contractors in Brazil?

With time zones comparable to North America, a vibrant tech startup scene, and a ready-and-waiting pool of skilled contractors and freelancers, Brazil is a popular place to source talent.

Whether you already have a contractor that you’re looking to onboard compliantly or you’re on the search for help from a wider talent pool, this guide will explain the ins and outs of how to hire independent contractors in Brazil.

For companies looking to grow quickly with skilled and experienced talent, hiring contractors globally represents a big opportunity. Because a contractor agreement is typically shorter than a traditional employment contract, you can enlist the help of skilled workers for a time frame that suits your company’s specific needs. For example, if you only need a batch of content translated into Portuguese, it would make sense to hire an independent contractor from Brazil for a set period of time.

Hiring independent contractors in Brazil is also an attractive option for companies based in North America. The country’s time zones are compatible with the U.S., for instance, simplifying the ability to coordinate meetings and deadlines. Time zone differences can be a barrier to collaboration, but with New York City and major Brazilian cities like São Paulo and Rio de Janeiro being just an hour apart, the overlap of working hours can streamline communication.

The workforce in Brazil is also well-known for their motivation and engagement. Working for an international company can be lucrative and help with career advancement for Brazilian professionals. You’ll therefore find that most candidates tend to be highly motivated and determined throughout every aspect of your working arrangement, from onboarding through project completion. 

What to think about when hiring contractors in Brazil

Every country has its own labor laws, and Brazil is no exception. Here are some considerations to bear in mind when hiring independent contractors in Brazil.

Employee misclassification

Employee misclassification occurs when you define workers improperly. Incorrect employee classification is an easy mistake to make, but it’s one that can result in back taxes, fines, and other penalties.

The Brazilian Labor Code classifies an employee as an individual who renders a service on a regular basis to an employer, also known as habitual work, according to the terms of an employment contract in exchange for compensation. This legal framework also establishes certain rights for employees, including minimum wage, overtime pay, minimum working hours, severance pay, vacation pay, sick leave, social security benefits, and a 13th-month salary.

Conversely, an independent contractor provides work for compensation on a non-permanent basis. These self-employed individuals can provide services to one or more clients. The relationship between your company and the contractor is outlined within a contract, which should include details about the work provided, payment terms, and any other relevant information. Contractors are not entitled to the same benefits or legal protections as full-time employees in Brazil.

One key difference that separates independent contractors from employees is that contractors cannot be engaged indefinitely under Brazilian law. Their contracts should have a definite start and end date or a per-project term. They also can’t be required to submit to non-compete agreements, as work arrangements cannot be exclusive. With that in mind, contractors can be freely terminated and do not have to undergo disciplinary action for misconduct. They are also not entitled to statutory benefits, though employers can choose to provide them if desired.

Making payments

Typically, contractors are paid on a per-project basis, compared to employees who are paid hourly, weekly, or monthly. While hiring a contractor versus a full-time employee does simplify pay to some degree, there are certain complexities that can arise when making payments across borders. For one, there are currency differences between countries. Understanding currency conversion is therefore critical to taking an economic approach when determining pay rates.

Employers must also be mindful of tax considerations when hiring independent contractors in Brazil. If the contractor is registered as a legal entity, the employer is not responsible for taxes or social security contributions. For contractors operating as individuals, however, employers must withhold income tax and make social security payments. The taxation landscape in Brazil can be challenging to navigate, so enlisting professional help is the best way to ensure compliance.

Understanding Brazilian labor laws and regulations

Staying on top of labor laws in any country can be a challenge, and Brazil is no different. Although contractors are not eligible for many of the benefits and protection full-time employees would receive, there are still labor laws and regulations that you must comply with. For example, Brazilian independent contractors should have the independence to perform work without being subordinate to the regulations of a company. Making sure you don’t fall foul of these rules can avoid headaches later.

Using Oyster to hire and pay Brazilian contractors compliantly and easily

Whether you’re thinking about hiring independent contractors in Brazil or elsewhere, there are complexities that can arise when it comes to managing a remote workforce. Oyster alleviates these challenges and simplifies hiring and making payments on your behalf. Access contractor management tools to streamline paperwork, onboarding, and payments in over 180 countries worldwide, including Brazil. Rest easy knowing you have a global employment partner that will keep your company compliant. Find out more about how we can help you hire independent contractors quickly and efficiently.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.