2025 Guide to Hiring Remote Software Engineers in Brazil

Brazil’s booming tech sector, large talent pool, and (mostly) English-speaking workforce make it an attractive nearshore destination for US companies. However, hiring Brazilians (especially under the formal CLT labor regime) involves unique legal and administrative rules. This 2025 guide covers everything US employers need to know, from salaries and benefits to contracts, taxes, data privacy, and more, complete with up-to-date statistics and references to official/regulatory sources.

For more information on hiring remote software engineers, refer to our guide on where to hire LATAM developers.

1. Compensation and Benefits for Brazilian Developers

Brazilian developer salaries are far lower than US levels, but include generous mandated benefits. For example, Payscale reports a Software Developer in Brazil averages R$79,764/year ($15k USD), while a broader Software Engineer role averages R$120,791 (~$22k). (By contrast, the US average is ~$118k to $187.) Glassdoor suggests São Paulo software engineers make ~R$11k–12k/month ($2k) on average. Even senior Brazilian devs typically earn under $50k/year locally. Software developer salaries in Brazil vary by city and experience: São Paulo and Rio tend to be highest. Regardless, Brazilian compensation includes mandatory extras:

source: levels.fyi

 

• 13th Salary (Décimo Terceiro): Brazil law requires a “Christmas bonus” equal to one month’s pay each year. (It’s typically split into two installments by November and December.
• Vacation Bonus: Upon taking paid annual leave, employers must pay the employee an extra 1/3 of salary on top of regular wages.
• FGTS Pension Fund: Employers deposit 8% of gross wages into a government-managed severance fund (FGTS) each month. These contributions vest to the employee on termination.
• Other Taxes: Employers also cover payroll taxes: ~20% INSS (social security) on top of wages and small levies for work accident insurance (RAT) and social assistance (e.g. SESI, INCRA). These can bring total mandatory costs to ~30–35% above gross salaries.

source: payscale

US companies hiring in Brazil should factor in extras: an R$80?k/yr engineer actually costs about R$104?k with taxes and FGTS. Brazilian firms sweeten offers with perks like private health insurance, meal or food vouchers, and commuting allowances, plus generous paid leave. Even with these additions, local salaries run 30–50% below US levels, an attractive saving for US employers.

2. Employment Law, CLT Regime And Contracts

Brazil’s labor rules (CLT and the 1988 Constitution) grant formal employees extensive rights, written contracts must cover pay, hours, a 13th salary, vacation, FGTS deposits, and social contributions, and firing without cause incurs steep severance. Brazil has no “at?will” employment, and courts can reclassify disguised contractors as CLT hires if they exhibit employee?style subordination. True independent contractors (“PJ”) handle their own taxes and get no FGTS, vacation, or 13th salary. Many U.S. firms use an Employer?of?Record to put tech workers on genuine CLT payroll for full compliance.

Contract Types and Legal Considerations

Under Brazilian law you can hire Brazilians under:

• Open-term (indefinite) CLT contract – the default for full-time employment. These grant full labor rights (as above).
• Fixed-term CLT contract – allowed only for specific temporary needs. Law permits one renewal; thereafter the contract automatically becomes indefinite. Employers must justify any fixed-term use. Early termination of a fixed-term without cause incurs penalties (50% of remaining wages).
• Intermittent/part-time CLT – since 2017, part-time (up to 30h/wk) and intermittente (as-needed work) contracts exist, but are less common for high-skill roles.
• Independent contractor (“PJ”) – a civil-law services contract. Valid if the worker provides services on their own terms, without full subordination. No labor rights attach, but the company risks fines and liability if misclassification is found.

Key considerations: Brazil forbids forced full-time exclusivity for contractors. Any work arrangement that resembles employment (fixed schedule, using employer tools, etc.) should be done via CLT to avoid litigation. Also note that under CLT, probation (“experience period”) can be up to 90 days (see below). All contracts must be in Portuguese. Collective bargaining agreements (at the industry or regional level) can override default rules – for example, mandating meal vouchers or setting union-negotiated raises. US firms should review any applicable CBA (e.g. a “sindicato” for IT workers). Finally, contracts (CLT or PJ) should have clear IP and confidentiality clauses to secure software ownership (see IP section below).

3. Working Hours, Overtime, Holidays and Leave

Brazil’s CLT sets a normal workweek at 44 hours. In practice, this often means eight hours/day Monday–Friday plus a half-day Saturday (8×5 + 4h Saturday = 44h), or eight-hour shifts six days a week (48h was old law, CLT now caps at 44h/week in total). Many tech companies operate on a 40-hour (five-day) schedule, but legally up to 44 is allowed. Employers can request up to 2 hours extra per day as overtime; such overtime must be paid at 150% of the normal hourly rate (i.e. +50%). Work done on a Sunday or official holiday must be paid at 200% (double pay). By law, employees must have at least an 11-hour break between workdays and one full rest day per week (usually Sunday). Brazilian law also mandates at least a one-hour unpaid lunch break (breaks under 4h are 15 minutes).

Typical Brazilian tech work hours are similar to US companies, but managers must approve any overtime and account for overtime pay. Some companies use banco de horas (hour-bank) agreements allowing time off in lieu instead of immediate overtime pay, but this must be formalized. Note that CLT employees get paid time off (sick leave, vacation, etc.) instead of accumulating PTO in lieu.

Public Holidays and Observances

Brazil observes roughly 12 national holidays each year (plus many regional/city holidays). Key national days include New Year’s Day (Jan 1), Tiradentes Day (Apr 21), Labor Day (May 1), Independence Day (Sept 7), Our Lady of Aparecida (Oct 12), All Souls’ Day (Nov 2), Republic Proclamation Day (Nov 15), and Christmas (Dec 25). 

Carnival (February/March) and Corpus Christi (May/Jun) are widely observed (lots of businesses close for the whole week of Carnival) even though only Good Friday is a legal holiday nationwide. 

In addition, cities and states often have regional holidays: e.g. São Paulo’s Revolution Day on July 9, Amazonas Day in June, or Afro-Brazilian “Black Awareness Day” on Nov 20 (recognized in many states). (In practice, some companies give extra days off or floating holidays for these observances.) Employers should obtain each hire’s location and check local calendars.

Vacation, Sick Leave & Paid Time Off

Brazilian law guarantees generous leave. After 12 months of employment, a worker earns 30 calendar days of paid vacation. The employer decides when vacation is taken (during the following 12 months), but must allow at least one 14-day consecutive break per year Vacation pay includes the extra 1/3 salary bonus (paid 2 days before leave starts). Employers may allow splitting vacation into up to 3 periods (one of at least 14 days, others at least 5 days). Employees with unexcused absences accrue proportionally fewer days (down to 12 days if >24 absence days). Up to 10 of the 30 vacation days can be “sold” by the employee (? of vacation) back for cash; otherwise they must take at least 20 days off.

Sick leave is also mandated: employees are entitled to 15 days of paid sick leave per illness. (Employers pay salary for the first 15 days of any medical leave. From day 16 onward, the National Social Security Institute (INSS) pays disability benefits instead.) There is no cap on total sick days, chronic illness beyond 15 days is covered by public benefits.

Other leave: Brazilian law also grants 5 days of paid bereavement leave, paid by the employer, for a death in the immediate family; this typically runs from 2 to 5 days based on circumstances. Paternity leave is 5 days for fathers (paid by employer), extendable up to 20 days in some companies or with union agreement. Mothers get 120 days (4 months) of paid maternity leave (paid through social security) with job guarantee; many large employers voluntarily grant 6 months. (Maternity leave can start up to 28 days before due date.) Adoptive parents get the same leave rights as birth parents. Voting leave is not mandatory (Brazil only has elections periodically). All these leaves count as paid leave in CLT contracts.

Maternity and Paternity Leave Policies

Brazil offers extensive parental leave. Female employees are entitled to 120 days of paid maternity leave (extendable to 180 days with employer agreement), paid by INSS. The first 120 days are fully covered (the employer is reimbursed by social security via payroll reporting). Mothers enjoy job protection from pregnancy through 5 months after birth. Paternity leave is 5 days by default (paid by the employer), though some companies offer up to 20 days as a benefit. Adoptive mothers/fathers get the same leave duration as birth parents. Note: employees on maternity leave cannot be terminated except for extreme cause.

4. Probationary Periods, Contracts and Termination

CLT contracts may include an experience (probation) period. The maximum probation is 90 days total. This can be one 90-day term or two sequential 45-day terms (commonly written as “45+45”). During probation, the employer can terminate with just cause or mutual agreement with minimal notice (see below).

For terminations without cause, Brazilian law requires advance notice: at least 30 days plus 3 additional days for each year of service, up to 90 days total. The notice can be worked or paid out. All final pay (unpaid salary, accrued vacation with bonus, 13th-salary pro-rata) must be paid at termination. If notice is not given, the employer must pay the equivalent salary in lieu. Termination for just cause (severe misconduct, e.g. fraud or serious breach of duty) is allowed without notice, but forfeits many severance entitlements (the employee keeps earned wages, vacation/13th up to date, and FGTS deposits but without any penalty pay).

Severance and Termination Requirements

A CLT dismissal without cause triggers substantial severance. In addition, to notice pay (see above) and any unused leave, the employer must pay a FGTS withdrawal indemnity of 40% on all FGTS balances (the 8% monthly deposits) accrued during employment. For example, if 8% of each salary (plus interest) totals R$20,000 in FGTS when someone is fired, the employer pays an extra 40% of R$20k (i.e. R$8k) into the employee’s FGTS account at termination. (If the parties agree to terminate by mutual consent, this penalty is 20% instead) Severance also includes any proportional 13th-salary and accrued vacation plus 1/3. Employers must issue a written Termination Letter and pay all amounts in cash immediately. If a CLT employee is dismissed and the employer fails to comply with these rules, the worker can sue for reinstatement or double damages.

For fixed-term contracts, if the employer ends it early without just cause, the employer must pay 50% of remaining wages as a penalty. 

Non-compete Clauses and Enforceability

Brazilian law allows non-compete clauses, but only after employment ends (during employment a non-compete is invalid). For a post-employment covenant to hold, it must be reasonable and limited: typically no more than 24 months, with clear geographic scope and restricted activities. Crucially, any non-compete must include compensation to the worker during the restricted period. Courts generally require that compensation equal the employee’s normal salary for each month restricted. In practice, this means an employer promising an ex-employee 12 months of salary (or half-salary per month, etc.) in exchange for a year of non-compete. Without such compensation, non-competes can be struck down. (By contrast, confidentiality/trade secret clauses are always enforceable: Brazil’s Industrial Property Law makes it illegal for ex-employees to disclose a former employer’s secrets under pain of unfair competition.)

5. Taxation, Payroll Obligations, and Privacy for US Employers

When paying Brazilian workers, US companies face specific tax rules. If hiring via a Brazilian entity/EOR, the employer simply deducts Brazilian payroll taxes: the employee’s INSS (7.5–14% progressive PIT) and employer’s INSS (~20%), plus the FGTS deposit (8%). The EOR also withholds Brazilian income tax on salaries (up to 27.5% progressive) and remits it to Receita Federal. US employers without a local entity who pay Brazilians as contractors must consider withholding tax (IRRF) on foreign service payments: Brazil generally imposes 15% withholding on fees paid to nonresident companies or individuals (25% if in a tax-haven). (For example, if a US firm hires an independent Brazilian contractor without an EOR, the US firm must withhold IRRF and send it to Brazil on behalf of the contractor unless the payments meet one of the treaty exemptions.)

Brazil also levies an IOF tax on foreign exchange operations. Any international money transfer into Brazil (e.g. sending USD to pay a Brazilian) can incur IOF (often 0.38% for service transfers). Companies should use licensed financial intermediaries or bank transfers in compliance with Central Bank rules.

Data Privacy under LGPD

Brazil enacted the LGPD (Lei Geral de Proteção de Dados, Law 13,709/2018) in 2020, mirroring the EU’s GDPR. It covers any processing of Brazilian personal data, regardless of where the company is based. Hiring Brazilian developers means handling sensitive data (ID documents, payroll info, medical leave records, etc.) subject to LGPD. US employers must ensure lawful processing (consent or legal basis), inform employees of data use, and secure data. Importantly, cross-border transfers of personal data from Brazil to the US require compliance measures (e.g. the US company must have appropriate safeguards or rely on an approved framework). For instance, sending Brazilian payroll data or storing resumes on US servers triggers LGPD obligations. Many companies appoint a local DPO or use an EOR that maintains Brazilian data centers for HR. In summary, treat Brazilian employee data carefully: a breach of LGPD can result in fines up to 2% of revenue (capped at R$50M) and orders to delete data. 

Intellectual Property and Ownership

By default, Brazilian employees own any work they create unless their contract assigns it to the employer. U.S. companies should include clear IP?assignment clauses, often via a PIIA, to transfer all rights to the employer, plus confidentiality/NDAs to guard trade secrets.

Brazil also has a specific “Industrial Property Law” that criminalizes unauthorized use of a former employer’s confidential information indefinitely. This means you don’t need a separate non-compete to keep trade secrets, the law itself does that. However, general IP created (software, patents, designs) must be explicitly assigned. In short: always have Brazilians sign an IP assignment/“PIIA” agreement during onboarding to ensure your US company retains ownership of all code and inventions.

Foreign Exchange and Paying Remote Developers

When paying Brazilian remote developers, firms usually remit BRL to a local bank account. Converting USD via Wise or PayPal incurs the IOF tax but sidesteps complex bank transfers; banks or payroll providers then register each remittance with the Central Bank. Employers may pay in USD to a U.S. account to avoid IOF, but under CLT rules, salaries must be paid in BRL to a Brazilian account, USD payments risk noncompliance.

Key point: Cross-border payments are another compliance headache. CloudDevs streamlines this by handling all currency exchange and IBAN transfers. They pay Brazilians in local currency on your behalf and handle IOF reporting.

Union Roles and Collective Bargaining

Brazil’s unions remain strong: dues were mandatory until 2017 but are now voluntary unless ratified by members. Many workers still join sindicatos, and collective bargaining agreements (CBAs) common in IT and commerce, set standards on raises, insurance, meal vouchers, etc. U.S. employers must honor CBA terms for unionized staff (even if extended industry?wide) and can’t unilaterally alter them. Tech unions are generally less militant than in manufacturing but still active.

Conclusion: Simplify Hiring with CloudDevs

Hiring Brazilian software engineers offers great advantages, skilled talent in close time zones and at competitive rates of $45 to $75 per hour if you hire through CloudDevs. They simplify the entire process of  CLT regulations on pay, hours, benefits, and termination; payroll tax remittance; LGPD data rules; IP assignment and more. With CloudDevs you get pre-vetted Brazilian developers and full employment services in one platform. 

In short, CloudDevs bridges the gap between US companies and Brazilian talent. Simply schedule a call with us here and dive into your remote software engineer hiring process.

Learn about hiring Brazilian developers with CloudDevs here.