Spotlight on Brazil – A guide to implementing employee benefits technology

In this global spotlight, we venture to Latin America and Brazil… Brazil has become a leading hub for start-ups and tech growth, resulting in strong competition for talent. Salaries have increased and with this, the range of benefits and choices for employees. With that, of course, comes the challenge of managing those options and ensuring that the workload doesn’t outweigh the advantages of a competitive benefits offering. 

Mandatory benefits

Brazil’s social security system is funded through both employer and employee contributions, ensuring fundamental protections for workers. These mandatory contributions go towards:

Social security contributions (INSS – Instituto Nacional do Seguro Social)

Employers contribute 20% of an employee’s salary to the national social security system, while employees contribute between 7.5% and 14%, depending on their income level. These contributions cover pensions, disability benefits, and survivor benefits.

Severance fund (FGTS – Fundo de Garantia do Tempo de Serviço)

This fund acts as a type of severance pay, accessible if the employee is dismissed without cause. Employers must contribute 8% of an employee’s monthly salary to the FGTS fund.

Paid annual leave (Férias Remuneradas)

Employees are entitled to 30 days of paid vacation per year after completing one year of service. Employers are required to pay an additional one-third of the employee’s monthly salary as a vacation bonus.

13th salary (Décimo Terceiro Salário)

Employers must pay an extra month’s salary, split into two installments (November and December). This is to ensure employees receive additional income during the holiday season, helping them cover year-end expenses.

Health benefits (Public Healthcare – SUS)

Brazil provides universal healthcare (SUS – Sistema Único de Saúde) and employers are not required to provide private health insurance, but many do as an additional perk.

Maternity and paternity leave

Employees on maternity leave receive 120 days of paid leave, covered by social security, while employees on paternity leave receive five days of paid leave, with some employers extending it to 20 days.

Unemployment insurance (Seguro-Desemprego)

Employees dismissed without cause may receive three to five months of unemployment benefits, depending on their work history.

Core benefits

To attract and retain employees, many Brazilian companies provide additional benefits beyond legal requirements:

Private health insurance

Although not mandatory, most employers offer private health plans to provide faster access to medical care. Some companies also extend the coverage to family members, typically at the employees’ own cost.

Supplementary pension plans (Previdência Privada)

Employers may offer private pension plans as a supplement to the public pension system. Contributions vary, but employer matches often range from 3% to 7% of the employees’ salary.

Life insurance (Seguro de Vida em Grupo)

Many companies offer Group Life Insurance as part of their benefits package, which typically covers one to three times the employee’s annual salary.

Meal and food vouchers (Vale Refeição & Vale Alimentação)

Employees can select if they would like to receive their allowance by meal voucher or food voucher. Meal vouchers are widely used and can be partially exempt from payroll taxes, while food vouchers help employees purchase groceries and other essentials. Using a benefits platform for this replaces paper or email processes, saving HR teams significant time. It also helps make the choice very clear for employees, providing them with additional information so they can make the right decision for them.

Popular benefits

Brazilian employers increasingly offer benefits focused on wellbeing and work-life balance, including:

• Flexible work arrangements: Hybrid work models, remote work options, and flexible hours
• Wellness programs: Gym memberships, mental health support, and stress management programs
• Education and professional development: Tuition reimbursement for higher education, certifications, and language courses
• Transportation allowances (Vale Transporte): Employers are often required by local bargain agreements to subsidize public transportation costs for employees commuting to work
• Extended parental leave: Some employers offer additional paid maternity or paternity leave beyond legal requirements

Key considerations for implementing employee benefits in Brazil

1. Stay compliant with local labor laws. Employers in Brazil must adhere to the Consolidation of Labor Laws (CLT) as well as any applicable collective bargaining agreements. These regulations set strict standards for employee entitlements, so staying up to date with legal requirements is critical when designing or updating your benefits offering.
2. Structure benefits strategically to manage costs. Statutory benefits in Brazil – such as the 13th salary, paid vacation, and transportation assistance – can be a significant financial commitment. To remain competitive while managing budgets, employers are increasingly looking to strategically structure their benefits mix with a balance of mandatory and optional offerings.
3. Understand and meet employee expectations. Brazilian employees place high value on healthcare coverage, retirement savings plans, and flexible work arrangements. These benefits are not just appreciated – they’re often expected. Meeting these expectations can help employers attract and retain talent in a competitive market.
4. Leverage tax-efficient benefits. Certain benefits, such as meal vouchers and pension contributions, can offer tax advantages for both employers and employees.

To learn more about how to navigate the complexities of the employee benefits landscape in Brazil, or for help prioritizing your global rollout, speak to one of our benefits experts.