Brazil

Mandatory employee benefits in Brazil include workers’ compensation, disability, life insurance, and Paid Time Off (PTO) in situations such as maternity and paternity leave, among others. Desired supplementary employee benefits in Brazil include medical and dental care, private retirement plans, and life and disability insurance.

Mandatory Benefits in Brazil

National Retirement Programs

• Retirement, Survivors, and Disability Pension – These programs are administered by the National Institute for Social Security (INSS). Social security benefits are based on the employee’s benefit salary, which is equal to the average of 80% of the two greatest contributive salaries from 1994 onwards. This applies to employees registered with the INSS before 28 November 1999. It also calculates the average of all years’ contributive salaries for those registered after that date. The maximum benefit is equal to the amount of 087,22 per month, depending on the analysis of contributions made by the body.
• Old Age Pension — Starting with the pension reform, to be eligible for old-age pension benefits, the insured must be at least 65 years of age if male or 62 years of age if female. The minimum number of contribution months has also changed, being a minimum of  180 contribution months required for both genres. The old-age pension is equal to 70% of the benefit salary plus 1% of the benefit salary for every 12 months of contributions, up to a maximum of 100%.
• Special Pension — A special pension is payable to employees who work in excessively fatiguing, unhealthy, or dangerous occupations if contributions have been paid for 15, 20, or 25 years. The benefit equals 100% of the benefit salary. The accumulated funds in the employee’s Guarantee Fund for Length of Service (Portuguese Fundo de Garantia por Tempo de Serviço – FGTS) account are payable upon retirement.

Pension for Death of the Deceased Insured

The pension for death is a benefit provided by the local government through the Brazilian social security system (INSS).

Eligibility

• The death benefit is payable to the dependents of the deceased insured, whether retired or not, from the date of death.
• Eligible dependents include spouses and companions, non-emancipated children under age 21 or disabled children and dependent minors, parents, and non-emancipated siblings under age 21 or disabled (depending on the eligible group, proof of dependency will be required).

Benefit Amount

• The eligible dependents will receive up to 100% of the retirement benefit that the retiree had been receiving or that the employee would be receiving if retired on the date of death.
• If there is more than one eligible survivor, the benefit is divided equally among all of them. If one of the survivors becomes ineligible, the benefit is then recalculated and divided among the remaining survivors.

National Disability Insurance

Disability Insurance in Brazil is provided by the Brazilian Social Security System (INSS). It applies to both occupational and non-occupational incapacity and can be supplemented by the private life insurance policy’s disability rider. The rider normally provides a lump sum benefit of 24x monthly base salary in the event of permanent and total disability.

The first 15 days of disability are fully sponsored by the company. After 15 days of paid sick leave, companies typically supplement the social security benefits to a total of 100% of an employee’s salary for the first three months of the event, then reduce it to a total of 75% for the next three months. Further payments may be made at the company’s discretion. In Brazil, benefits for occupational injury and illness are provided by the Brazilian social security system (INSS). Employees are covered for injuries incurred while working or commuting to and from work and for illnesses contracted due to working conditions. Medical expenses are covered by INSS as well.

Workers’ compensation pensions are paid 13x per year. Medical and dental care is provided in the case of short-term and long-term disability, as long as the employee is part of the company’s payroll.  In the initial phase of the accident or illness that renders the insured unable to work for more than 15 consecutive days, he/she is covered under the sick leave support (short-term disability aid) provided by the Brazilian Government. If the insured becomes partially or permanently disabled, he/she might retire under the disabling condition, and the expenses of such retirement are paid by the Brazilian social security system (INSS).

If the company owns supplemental group life insurance, the employee might also receive an indemnity partially or totally, depending on the disability that occurred. Cases that allow the employees to return to their normal working activities provide them with an indemnity by the private insurer only, according to the disability that occurred and under the limits established by the insurer.

For salary continuation, employers must pay for the first 15 days of leave due to a work-related accident or illness.

Paid Time Off Benefits and Conditions

Employees with up to five unexcused absences receive at least 30 calendar days of paid vacation every year after one year of service. Vacation days depend on the number of unexcused absences.

Vacation Bonus

• During vacation leave, a mandatory cash bonus equal to one-third of the employee’s monthly salary is payable in addition to the full pay. Employers must provide vacation pay, including bonuses, at least two days before the beginning of the vacation period.
• According to labor law, employees have the right to convert one-third (approximately 33%) of their paid vacation (generally up to 10 days) into pay in lieu of vacation, which the employer must pay no later than 15 days before the end of the accrual period.
• Any unused vacation time does not roll over, and employers must pay it out at double-time rates at the end of the calendar year.

Sick Leave

• Employees in Brazil are entitled to 15 days of sick leave paid by employers at full pay. Medical certification of illness is required, and employees must present signed doctor’s medical certificates to their employers for sick leave to be granted. After 15 days, social security pays cash sickness benefits to insured employees as long as the illness lasts, during which period employees are on unpaid leave.

Union Official Meetings

• All employees who are union representatives are entitled to paid leave for each day that they participate in official government meetings.

Bereavement Leave

• An employee is entitled to a paid bereavement leave of two consecutive working days in case of the death of a spouse, child, or direct relative, such as a parent or sibling. However, bereavement leave may last up to five days, depending on collective agreements, and may include grandparents as eligible relatives.

Marriage Leave

• Employees are entitled to a paid leave for the marriage of three consecutive working days.

Voluntary Blood Donation

• Brazilian employees are entitled to one day of paid leave every 12 months for voluntary blood donations. To justify the absence, the employee must request a certificate from the donor’s center.

Electoral Registration

• Employees who provide service on Election Day are entitled to two days of paid leave, consecutive or not. Employees can choose to offer this service themselves, or the government may request their assistance.

Brazilian Military Service

• All male employees subject to mandatory military service are entitled to paid leave for the duration of said service.

“Vestibular” Examination

• All employees are entitled to paid leave during the days they can prove to have been taking university admission examinations (Exame Vestibular).

Court Proceedings

• Employees are entitled to paid leave for the duration of time they are required to participate in court proceedings.

Maternity and Paternity Leave

• Maternity Leave — Maternity leave is provided for 120 days. It may be extended for medical reasons by a maximum of two weeks before the expected childbirth and two weeks after childbirth.
• Maternity Protection — Protection from dismissal due to pregnancy is given from the date that the pregnancy has been reported to the employer until one month after confinement. If the employee is dismissed, she must be reinstated and paid for the time missed since termination.

Paternity Benefits and Family Allowances

• Employers must provide at least five days of paternity leave to employees who become fathers. Employers are required to pay for paternity benefits and family allowances. They are, however, later reimbursed by social security.
• Brazilian labor law requires employers with 30 or more female employees to provide daycare or payment in lieu thereof to employees with children less than six months of age. Collective agreements may require additional childcare credits, typically for children up to three years old.

Supplementary Employee Benefits

Medical and Dental Care (National Coverage and Supplemental)

• Via the Brazilian social security system, universal healthcare coverage is provided on a decentralized regional and local basis with coordination by the country’s Unified Health System (SUS).
• About 3/4 of the population receives their healthcare from the public system.
• In this contributory system, public healthcare is provided through the National Institute of Social Security’s (INSS) healthcare facilities or approved healthcare providers.
• The quality of care is generally considered poor in rural areas. In urban areas, it is generally adequate. There are often long waiting periods for some forms of medical care, such as routine examinations and non-emergency medical treatment.
• Due to the poor national service, most of the local employers provide supplemental medical and dental benefits as a differential, which is regulated by the National Regulatory Agency for Private Health Insurance and Plans (ANS). ANS determines the standard minimum coverage for every health insurance carrier in Brazil. As a result, coverage provided by every carrier is almost equal. What differentiates one carrier from another is the network of hospitals, clinics, and doctors provided. The value of refunds for procedures done outside the network is also a differentiator.

Private Retirement Plans

• If supplementary retirement plans are promised as part of the hiring package, the employer should provide them immediately. If not, the employer can wait and provide them later.
• Most employer-sponsored retirement plans integrate retirement benefits with Social Security benefits. A defined contribution plan integrates with Social Security by means of a step-rated formula and often provides a matching contribution.
• Typically, employees may contribute from 1% to 5%, and companies match 100% of employee contributions up to 5%. Employee contributions are tax-deductible up to 12% of salary, and employer contributions are tax-deductible up to 20% of salary. Benefits are generally taxed.
• Employers who established a plan after 2004 can elect an alternate tax regime. Private pensions utilizing defined contributions are typically paid as a combination of a fixed monthly lifetime annuity and a percentage of the account balance.

Private Group Life Benefit

• Group life insurance has become a standard benefit for employees in Brazil. Plans provide a lump-sum benefit based on the gross salary, as agreed at hiring. Salary updates must be informed on a monthly basis to the insurer, but bonuses and commissions should not be considered to the individual insured capital, given they are temporary. The common amount insured is equal to 12, 24, or 36 times the gross salary.
• Riders are often attached covering Accidental Death and Dismemberment and Permanent and Total Disability by accident or disease. Coverage may also include spouse and children, but exclusively to natural and accidental deaths, allowing the primary insured to receive a percentage of his insured capital.
• Most plans are not contributory, and the premium paid is tax-deductible for the employer. Some of the coverages are:
  • Natural Death – This rider provides the payment of an indemnity equivalent to the multiple of salary (12x, 24x or 36x) or agreed insured capital in contract.
  • Accidental Death – This rider provides for payment of double the death benefit in the event of accidental death. Coverage follows the multiple of salary (12x, 24x, or 36x) or the agreed-upon insured capital in the contract.
  • Total Functional Disability by Disease

This coverage provides a benefit of 100% of the individual insured amount.

Total or Partial Permanent Disability by Accident

• This coverage provides a benefit of up to 100% of the individual insured amount, depending on the level of disability and the conditions requested by the client.

Individual or Family Funeral Assistance

• When a claim occurs, assistance is provided to the primary insured and his immediate family (spouse and children). This coverage provides the family with the necessary funds to carry out the funeral.

This information about employee benefits in Brazil is provided by Sciath, Asinta’s employee benefits consulting Partner in Brazil.

Nothing in this report is intended to be legal, financial, or tax advice, and readers are advised to consult with their appropriate advisors regarding any legal, financial, or tax implications this information may address.