Brazil: Operating a Business

Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labor | Management of Human Resources

Legal Forms of Companies

Types of Companies and Capital (Max/Min)	Number of Partners/Shareholders and Liability
La Sociedade a responsabilidade limitada is a limited liability company . No minimum capital.	2 partners minimum. Their liability is limited to the amount of capital contributed. They are also jointly liable for the company's commitments within the limit of the capital remaining to be paid up.
La Sociedade anonima is a public limited company. No minimum capital. NB: 10% minimum of the issue price of the subscribed shares must be paid up in cash.	2 partners minimum. The partners' liability is limited to the amount of capital contributed.
The general partnership. No minimum capital.	n.c. Their liability is joint and indefinite.
The limited joint-stock partnership. No minimum capital.	There are two types of partners, the active partners and the silent partners. The liability of the active partners is unlimited. The liability of the silent partners is limited to the amount of capital contributed as long as they do not participate in the management of the company.

Enterprises Federation: Union representation for trade in goods, services and tourism.
National Confederation of Industry
National agency for support for SMEs
Search a Company or a Financial Report: DNRC, Registro Mercantil

Business Setup Procedures

Setting Up a Company	Brazil	Latin America & Caribbean
Procedures (number)	15.00	9.30
Time (days)	120.00	56.70

Source: Doing Business.

For Further Information: Consult Doing Business Website, to know about procedures to start a Business in Brazil.
Register of commerce
Civil Register of legal entities
The Competent Organization: All necessary information is on the SEBRAE website. It is also possible to make an application for registration by Internet. It is advisable to call on a lawyer for assistance.

Recovery Procedures

Principle: Law 11 101 of 2005 simplified bankruptcy, recovery and repurchasing procedures in order to favor creditors and fluidify credit. The new system enables minority creditors who are too insistent to be marginalized and favors dialogue between debtor and creditor in order to perpetuate the activity of the company. The priorities in reimbursing debts in the case of bankruptcy are according to several categories: the employees (within a limit of 150 salaries minimum), then the fiscal administration, then the other creditors according to the preferential rank given to their claims.
Minimum Debt-to-Capital Ratio Triggering Liquidation: A creditor or an association of creditors can claim bankruptcy if the debtor cannot reimburse his debts at the required date, from an amount equivalent to 40 salaries minimum.
Bankruptcy Laws: LEI N o 11.101, DE 9 DE FEVEREIRO DE 2005. (Law 11.101 of 9 February 2005)
Reorganization and Rehabilitation Laws: Legal and extra-legal stabilizing procedures are always possible. In the first case, under the direction of a judge and with the agreement of some of the creditors (at least 1/3 of the claims in each category and the majority for two of them), all debts are suspended for a maximum of 6 months to leave the debtor company the time to reorganize the payment of its debts. In the second case, there is a simple renegotiation and rescheduling of the debt between the company and its creditors, but it requires the agreement of the creditors who hold at least 60% of each category of debt. The same law as for bankruptcies governs legal stabilizing.

The Active Population in Figures

	2010
Labor Force	103,600,000

Source: CIA - The world factbook

	2009	2010
Total activity rate	-	70.70%
Men activity rate	81.90%	-
Women activity rate	60.10%	-

Source: UN - United Nations

Employed Persons, by Occupation (% of Total Labor Force)
Fishing and agriculture	20.8%
Mining sector	0.3%
Industry	13.4%
Water, gas and electricity	0.4%
Construction	7.1%

Source: IPEA Data

For Further Statistics: IPEA Data
For Further Information About the Labor Market: Ministry of social providence
ILO, International Labor Organization

Working Conditions

Opening Hours
Legal Weekly Duration: 44 hours
Although the norm in Brazilian and foreign companies is 5 weekly working days of 8 hours.
Maximum Duration: Overtime is paid 50% more than the basic wage. The maximum number of hours per day and/or per week is 2 hours a day, with the agreement of both parties.
Night Hours: A maximum of seven consecutive hours is allowed in town (from 10 p.m to 5 a.m) and height hours in the countryside (from 9 p.m to 5 a.m). Hours worked over this are considered to be overtime.

Working Rest Day: Saturday and Sunday.
Paid Annual Vacation: 30 days of annual vacation granted at the end of the first year in the job.
Retirement Age: In the civil service, the minimum retirement age is 55 for women and 60 for men. In the private sector, men have to have contributed for 35 years to the retirement scheme and women for 30 years. If the number of years of contributions is lower than these figures but over 15 years, it is also possible to retire at 65 for men and 60 for women. Without these conditions, there is a minimum retirement pension accessible to everyone over 65.
Child Labor and Minimum Age For Employment: The minimum age for working is 16 and 14 for apprentices.
Informal Labor Market: Nearly 25% of the active population works in the informal sector, and almost as many are self-employed, 80% undeclared. In total, the informal sector represents almost half of the labor market in Brazil.

The Cost of Labor

Pay

Minimum Wage: 545 BRL monthly. The payment of an annual bonus in the form of a 13th month is obligatory. A transport allowance is also imposed.
Average Wage: Average monthly gross earnings in Brazil is BRL 1,113 (USD 573).
Other Forms of Pay
Pay For Overtime: 150% of the basic wage.
A maximum of six consecutive hours is allowed. Hours worked over this are considered to be overtime.
Pay For Rest Days Worked: Considered to be overtime (50% more than the basic wage).
Pay For Night Hours: In urban areas, there is an increase of 20% within a limit of 8 hours of daily work, equivalent to 7 hours at night (a night hour lasts 52 min 30s). In rural areas the increase is 25%, but the legal limit is 8 hours per night.
Pay For Overtime at Night: The increase for night work is added to the increase for overtime.

Social Security Costs

The Areas Covered: Contributions to a fund for the duration of work (8.5%), the national social security institute (retirement scheme) (20%) and 8.8% maximum for other retirement savings contributions.
Contributions: Contributions Paid By the Employer: 28.5% minimum.
Contributions Paid By the Employee: 7.5-11%
Competent Organization: Ministry of social providence

Management of Human Resources

Recruitment

Method of Recruitment: In spite of the cost of labor in Brazil, the job market is very dynamic especially for managers. Adverts are put in the newspapers, on specialized web-sites, and by word of mouth. For high level management, methods of recruitment are basically the same as those of European or American firms. For less qualified personnel, a simple interview is enough.
Recruitment Agencies: Brazilian and international recruitment agencies are taking a growing place on the job market.
Recruitment Websites: Recruitment website
Manager online
People consulting

The Contract

Type of Contract: Legal measures govern work contracts; collective agreements and individual negotiation complete them.
The formality of work contracts and constraints of dismissal are very rigid, while hiring conditions are rather flexible.
The two types of contract which are mainly used are fixed term and open ended. A variation on the fixed term contract is a contract with no hierarchical relation for carrying out a particular task.

Breach of Contracts
Retirement: Workers can retire according to the terms described above.
Dismissals: In the case of fixed term contracts the employer can part with an employee without penalty when the contract runs out. In the case of an open ended contract or before the end of a fixed term contract, either of the parties can terminate the work contract with 8 or 30 days' notice, according to whether the worker is paid weekly or monthly. If the employer has no valid motive for dismissal, half of the wages remaining until the expiry of the fixed term contract must be paid. In all cases, the balance of remaining vacation must be paid, as well as the balance of the fund into which the company pays contributions every month for the employee, the FGTS, up to 8.5% of gross salary, increased by 40 to 50% when an employee with an open ended contract is dismissed without a valid motive. The Brazilian Labor Code is very rigid, so a serious motive is necessary to dismiss an employee, or a difficult economic situation must be proved.
Other Possible Methods: Direct negotiation with the employee concerned.
Labor Laws: Labor Law in Brazil

Dispute Settlement

Conciliation Process

Cases of Dispute: Disputes regarding working conditions, misuse of power and moral harassment, individual or collective negotiation.
Legal Framework: The creation of a conciliation commission ("juntas de conciliação prévia") before which any decision concerning the dispute must be taken. One of the two parties can appeal to this conciliation court whose decisions must be accepted.
Procedure: Law 9 985 of February 2000 promotes conciliation in disputes between companies and their employees.

Judicial Structures

Competent Legal Body: There are industrial tribunals in each State where disputes not settled by conciliation are heard. There are Magistrates' courts in the four macro-regions of the country and a Higher Industrial Tribunal settles the last appeal procedures.
The Higher Industrial Tribunal (the Constitution of 1988, title 4, chapter 3, section 5, article 111 governs the role of the Higher Industrial Tribunal).

Social Partners

Social Dialogue and Involvement of Social Partners: Labor unions, especially in sectors such as metalworking and banking, tend to be well-organized and aggressive in defending wages and working conditions. Unions in various sector engage in industry-wide collective bargaining negotiations mandated by federal regulation.
The Labor Code prohibits having too many unions for a single profession and in each region. Although the law has not created a central institution, either, representing the unions, four groups have tried to provide this but without legitimacy; they are: the Unitarian Workers Group (CUT), the General Confederation of Workers (CGT) and the Força Sindical (FS). Some industrial and mining sectors have powerful unions, and ex-President Lula came from there. However, the unions are more or less absent from the rural areas where the great landowners still hold sway.
Unionization Rate: The Ministry of Labor estimates that there are 16,000 labor unions in Brazil, but these figures are considered inexact. Labor unions account for approximately 19% of the official workforce according to the Brazilian Institute of Geography and Statistics (IBGE).
Union dues are obligatory for all workers in the formal sector, and are set at one working day's income per year.
Unions: Unitarian Workers Group
CGT Brazil
Força Sindical
Regulation Bodies: Ministry of Labor

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