Hiring an employee in Brazil involves much more than just their salary. Taxes, benefits, and other charges are essential parts of this equation. Understanding all the associated costs is crucial for effective payroll management. Let’s explore these aspects in detail.

What Are the Costs of an Employee for a Company?

Base Salary

The salary is the regular payment agreed upon in an employment contract. In Brazil, the standard workweek is 44 hours. In 2023, the minimum wage was adjusted to R$ 1,320 as of May 2023.

Labor Charges

13th Salary

The 13th salary is a mandatory payment made in two installments, in November and December.

Paid Vacation

After one year of service, employees are entitled to 30 days of paid vacation, with an additional one-third of the monthly salary.

Maternity and Paternity Leave

Maternity leave is 120 days, extendable to 180 days under the “Empresa Cidadã” program. Paternity leave is 5 days, extendable to 20 days under the same program.

Transportation Voucher

Mandatory since 1987, the transportation voucher covers the employee’s commuting costs, with the employer allowed to deduct up to 6% of the salary for this purpose.

Social Charges

FGTS

The Severance Indemnity Fund (FGTS) corresponds to 8% of the employee’s gross monthly salary, paid by the company.

INSS

The National Social Security Institute (INSS) contribution ranges from 7.5% to 14%, depending on the salary range.

Benefits

In addition to the charges, the company can offer benefits such as meal vouchers, health plans, daycare assistance, among others. These benefits are important tools for employee engagement and retention.

Costs for Performing the Activity

Uniforms and PPE

Uniforms and personal protective equipment (PPE) are necessary depending on the employee’s role.

Training

Investing in training increases productivity and attracts the best talent.

How to Calculate the Cost of an Employee for a Company? Brazil Payroll Insights

Companies Opting for Simples Nacional

Companies with annual gross revenue up to R$ 4.8 million are exempt from some charges, such as the employer’s INSS and SAT. However, they must still consider:

• 11.11% for vacations
• 8.33% for the 13th salary
• 8% FGTS monthly
• 7.93% for social security
• 4% FGTS for termination

Companies Opting for Presumed Profit

Companies with annual revenue above R$ 3.6 million follow the Presumed Profit regime and face additional charges, such as:

• 20% for the employer’s INSS
• 20% for weekly paid rest
• 11.11% for vacations
• 8.33% for the 13th salary
• 3.3% for the “S System” (SEBRAE, SENAI, SESI, INCRA)
• 1% to 3% for SAT
• 2.5% for education salary

Individual Microentrepreneur (MEI)

The MEI can hire one employee with an additional cost of 11% over the minimum wage or the category’s floor, distributed between FGTS and the employer’s social security contribution.

Who Pays the Severance Indemnity Fund (FGTS)?

The FGTS is paid by the employer and is not deducted from the employee’s salary. Deposits are made to Caixa Econômica Federal by the 7th of each month.

How Can HR Assist in the Company’s Financial Planning? Brazil Payroll Strategies

HR plays a crucial role in financial planning by aligning employee hiring and compensation with organizational goals. Close collaboration with the finance department helps optimize resources and increase operational efficiency.

Frequently Asked Questions

What charges are mandatory besides the salary?

Mandatory charges include the 13th salary, paid vacation, FGTS, and INSS, which must be paid by the company.

What is the difference between a CLT employee and a PJ?

CLT employees have a signed work card and are entitled to labor benefits, while PJs are hired as service providers without an employment relationship and benefits.

How to calculate the total cost of an employee?

Calculate by adding the base salary, labor and social charges, and additional benefits. The percentage of charges varies according to the company’s tax regime.

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