Brazilians abroad: companies must be mindful of legal requirements

Salaries, expatriate allowances, vacations, insurance, return expenses and enforcement of social security agreements are a few points of attention during expatriation

By Luciana Lupinucci

Is your company in Brazil going to transfer an employee to work abroad? Well, it is necessary to start this process through a well-thought-out planning that considers the legal requirements for this type of situation.

Scheduling the numerous details for expatriation and paying attention to labor, social security, and tax-related aspects is important to minimize risks and avoid unnecessary costs.

Brazilians relocated abroad

Being legally responsible for expatriate employees, the company has the responsibility to ensure all the rights set forth in Law No. 7,064/1982, which provides for the situation of workers hired or relocated to provide services abroad for more than 90 days.

Below are the rules that need to be complied with in cases where employees are:

• transferred abroad while their employment contracts were being performed in Brazil;
• assigned to a company abroad while maintaining an employment relationship with their Brazilian employers;
• hired by a company headquartered in Brazil to provide services abroad.

Enforcement of the most favorable rule for employees

Companies must ensure that employees are granted every right provided for in Law No 7,064/1982. However, the same law states that the law of the country that provides more labor rights to the employee takes precedence over any other.

Labor and social security rights

In general, it is important to bear in mind that the Brazilian laws on Social Security, FGTS (Workers' Severance Fund), and Income Tax are enforceable abroad.

Compensation

Employment agreements must state the employee’s base salary and expatriate allowances in Brazilian currency. During the transfer period, compensation may be paid abroad – in full or in part – in foreign currency.

Note, however, that salary adjustments agreed upon by Labor Unions for the employee’s category must apply.

Expatriate allowance

As a rule, whenever an employee’s transfer is temporary, an expatriate allowance amounting to 25% on the worker's salary should be paid.

Although Law No. 7,064/1982 does not prescribe such a requirement, the Brazilian Consolidation of Labor Laws (CLT) provides for this payment, thus employers who comply with the latter will be on the safe side.

Vacation

After two years abroad, employees must be given the option to take their annual vacation in Brazil, with the company bearing their travel expenses. This benefit extends to the employee's spouse and legal dependents.

Life insurance and health care

Companies must provide life and personal accident insurance for expatriate employees, covering the period ranging from their date of departure until their permanent return to Brazil.

Insurance coverage cannot amount to less than 12 times the employee’s monthly compensation. In addition, companies must ensure that workers have access to free health care and social services in and around their workplace abroad.

Return

Companies can opt to send expatriate employees back to Brazil at any time if their services are simply no longer needed abroad or in case of termination for cause.

Employers must ensure that workers return to Brazil at the end of their transfer period or in the following situations:

• after three years of continued service;
• to meet urgent family needs, duly proven;
• for health reasons, as attested by a medical report;
• employment termination for cause;
• when the service performed abroad is no longer needed.

The company must bear the expenses of the employees’ return to Brazil, except in cases where the return occurs at their own request or if they have been dismissed with cause.

International Social Security Agreements

Brazil has signed International Social Security Agreements with several countries. These treaties are aimed at enforcing the social security rights provided for in the laws of the countries involved.

These agreements represent ways to avoid social security double taxation, as they relieve the company from paying contributions during an employee’s temporary shift to the destination country.

It is essential to take into account international agreements for a better tax and social security planning, as this may save significant costs during the expatriation process.

Of note is that this practice benefits Brazilians leaving the country temporarily to work abroad, as calculating their time for retirement in Brazil is rendered easier.

Certificate of Initial Temporary Relocation of Work

This document allows workers leaving to another signatory country to remain affiliated with the Social Security system of their country of origin.

This way, double taxation is avoided and, in case of Brazilians living abroad, they will remain entitled to rights such as maternity leave and public health care.

Expatriate consulting: lower costs, optimal performance

The expatriation of professionals is a cost-intensive practice and requires in-depth knowledge of the rules related to workers hired or transferred to provide services abroad.

Therefore, relying on labor and social security consulting services is crucial to take full advantage of this process. DPC's experts assist companies all the way from the early planning of the transfer to the employee's return, ensuring compliance with legal requirements and avoiding unnecessary risks.

This assistance also involves guiding workers through implications regarding their income taxes, helping expatriates remain confident and achieve optimal performance during their international experience.