Employees vs Independent Contractors Brazil

Updated as of 2017

Introduction

In Brazil, labor relations are a matter of Federal law, which gives Brazil's individual States and Municipalities no power to legislate over labor matters. Despite the huge dimension of the country, labor rights are nationally standardized. The same labor costs and principles will apply regardless of an employer's place of business.

The basic principles of Brazil's labor relations laws are set out in the Federal Constitution, Labor Code, the commonly referred to "CLT" (Consolidação das Leis do Trabalho) and a number of specific federal laws and regulations. Labor rights established by such laws are mandatory and cannot be negotiated between the parties if the end result of the negotiation is detrimental to the employees.

In addition to legislation, some basic principles implicitly or expressly provided by law will govern any employment relationship in Brazil. Among them, the principle of "Prevalence of Facts" is the most relevant in the analysis of an Employee versus Independent Contractor relationship. This principle provides that in the determination of labor issues, the relevant facts surrounding a relationship will prevail over any formal documents executed by the parties.

In Brazil, workers may be hired in several ways but the most common practice is the hiring of workers as employees. However, the parties may also structure the relationship in other ways, such as independent contractors/consultants, outsourced workers, temporary workers, interns and non-employed officers, among others, provided that the specific rules and regulations regarding such alternatives are complied with.