Employer of record in Brazil: Operate in the country without setting up there

Companies can become active on the Brazilian market without setting up a business there. This is possible with the concept of the “employer of record” (EOR). Brazilian companies take over the activities of the company wanting to settle there. The Ecovis experts explain exactly how this works and how to create legal certainty.

One outcome of the social isolation brought about by the pandemic (2019-2021) was undoubtedly the removal of physical borders and the disappearance of distance in working relationships. This elimination of barriers between employers and employees around the world, which was driven by the technological advances made during that period, has broken all the paradigms related to physical distance and has become a possible competitive advantage.

Against this background, the solutions and concept of the employer of record (EOR) have gained global prominence. EOR is an expertise through which a company takes over the local execution of operations and assumes legal responsibilities on behalf of another company – the client – in a country where the client does not have a presence. This ensures compliance with the local country’s legislation and regulations.

We show you a legally secure and cost-effective way to expand in the Brazilian market.

Julhi Almiron Bonespírito, Vaz de Almeida Advogados – Member of ECOVIS International, São Paulo, Brazil

The concept of EOR

In simpler terms, an EOR is a solution that enables a company to expand its business globally by establishing its operational presence in a new country, without physically setting up a presence there or directly hiring local professionals under its own name. Instead, it establishes its presence through remote management, entrusting the local operational responsibility to a specialised EOR provider. In essence, this provider acts as the “legal” employer, assuming all legal responsibilities and obligations related to workforce and applicable taxes, while the company maintains control over the remote operations.

This has been one of the most compelling structures established in Brazil, particularly for small and medium-sized foreign enterprises, companies seeking to develop specific projects, and large enterprises interested in lightweight “entry formats” prior to making more substantial investments.

The advantages of an EOR

There are many advantages to hiring an EOR. While establishing legal branches (or new corporate entities) and building internal workforces in target countries offer substantial benefits for an expanding business, many companies adopt hiring an EOR as an entry strategy. It can even be a stable solution for small and medium-sized enterprises. It allows them to swiftly overcome local bureaucracy inertia and minimise the expenditure of time and resources devoted to in-depth understanding, for instance, of applicable legislation, agreements with local unions, and customary administrative procedures.

The EOR solution enables a company to establish its presence primarily through operational control – which in the end is the only thing that really matters – as well as overseeing local production capacity and the performance of professionals contracted through the EOR.

For further information please contact:

Julhi Almiron Bonespírito, Vaz de Almeida Advogados – Member of ECOVIS International, São Paulo, Brazil
Email: saopaulo-law@ecovis.com