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The Main Challenges Faced by Foreign Companies in Brazil
11.04.2025Understanding Employment Practices
One of the main challenges for international entrepreneurs is understanding labor conditions and their legal implications in Brazil, where there is strong protection for employees—especially in labor courts. Aiming to boost job creation and attract foreign investment, Law No. 13.467 introduced major reforms to labor legislation in 2017, modernizing the Consolidation of Labor Laws (CLT).
The flexibility of employee rights guaranteed to workers through individual negotiations, as well as outsourcing in all company activities, regardless of the sector or the nature of the contract, are among the topics included in the text.
Employee Rights
In Brazil, employees are entitled to:
- A minimum wage with annual adjustments;
- A work schedule of 8 hours per day and 44 hours per week, with 50% extra pay for overtime;
- An 8% deposit of the employee’s salary into the FGTS (Severance Indemnity Fund);
- A 13th salary, 30 days of paid vacation with an additional one-third bonus, and a weekly paid rest day;
- Additional compensation for night shifts, hazardous work, unhealthy conditions, or job transfers;
- Profit-sharing (PLR), transportation vouchers, and mandatory time tracking for companies with over 20 employees.
Types of Employment Contracts
Most employment contracts are for an indefinite term and may be in-person, hybrid, or remote. Outsourcing is also permitted, through which a third-party company becomes responsible for recruiting, supervising, and paying the workforce.
Termination of Employment Contracts
Employment contracts may be terminated in several ways, including unfair dismissal, mutual agreement, or for cause.
By way of example, in the event of an unfair dismissal by the employer, the employee is entitled to receive additional benefits such as a 40% penalty on the FGTS (Severance Indemnity Fund) balance, payment in lieu of or performance of prior notice, proportional 13th salary, unused vacation, and unemployment insurance.
Garantias do Empregado
In Brazil, some employees are legally protected from dismissal without just cause. This applies in cases such as work-related accidents, pregnancy, elected union representatives, and members of internal accident prevention commissions.
Labor Unions
Brazil’s union system is robust, and collective agreements often prevail over statutory law in many areas. The 2017 labor reform abolished mandatory union contributions and strengthened collective bargaining.
Right to Strike
Workers have the right to strike; however, the employer must be notified at least 48 hours in advance. In the case of essential services or activities, the notice period is extended to 72 hours. If the conflict that led to the strike persists and no agreement is reached, the Labor Judiciary may be called upon to intervene, including declaring the strike abusive and ordering employees to return to work under penalty of a daily fine.
Social Security
Social security in Brazil is based on a contributory system, with payments made by both the employee and the employer. Under the current system, companies are required to contribute monthly to social security in the amount of 20% of the total remuneration paid to employees, with no maximum limit established.
In addition to this, employers must contribute an extra 1%, 2%, or 3% of the employee’s remuneration to cover work accident insurance, currently referred to as GILRAT (Degree of Occupational Disability Due to Environmental Work Risks).
Companies are also responsible for an additional contribution of 6%, 9%, or 12% on the remuneration of employees working under conditions that may impact their health or physical integrity. This contribution is intended to fund early retirement benefits, which may be granted after 25, 20, or 15 years of contributions, respectively.
Custos sociais
Hiring costs are significantly impacted by social charges on payroll, which fund public services and programs such as education, healthcare, and social assistance.
Investing in Brazil can be a great opportunity to expand your business into an emerging and dynamic market. Understanding employment conditions and labor rights is essential for ensuring compliance and running a successful operation.
Vaz de Almeida has the expertise and experience to support foreign companies in structuring employment relationships within legal parameters, offering specialized legal advice at every stage of the process.
Useful Links
- Full Version of the CLT (Consolidation of Labor Laws)
- Brazilian Constitution (English Version)
- Brazilian Ministry of Labor and Employment (English Version)
- Brazil: New Law Reforms Labor Relations | Library of Congress (USA)
- Labor Law Glossary – Key Legal Terms in English
About the Authors
Julhi Bonespírito
Graziela Barreto
Key Considerations for Employers Hiring in Albania: Labor Law Compliance and Best Practices
10.04.2025Albania has an evolving labor market that offers opportunities for both local and foreign businesses. However, employers must navigate the country’s labor laws to ensure compliance and protect both their interests and those of their employees. This article outlines key legal considerations for employers hiring in Albania, covering employment contracts, working hours, employee rights, termination procedures, and hiring foreign workers.
Employment Contracts in Albania
Albanian labor law requires that all employment relationships be formalized through a written contract. This contract must clearly define the job title and description, specify the salary and payment terms, outline working hours, rest periods and probation period, which is up to three months. Additionally, it should state whether the contract is for a fixed term or indefinite term. Employers who fail to formalize contracts in writing may face legal disputes and financial penalties, making it essential to ensure that employment agreements are properly drafted and legally compliant.
Working Hours and Overtime Regulations
The Albanian Labor Code sets clear parameters regarding working hours. The standard workweek consists of forty hours, typically distributed over five days. When it comes to overtime, employers must compensate extra working hours at an increased rate. Work performed on a weekly rest day must be compensated with at least a twenty-five percent wage supplement or equivalent paid leave, plus an additional paid rest of at least twenty-five percent of the hours worked. Work performed on public holidays that fall on a regular workday must be compensated with a wage supplement of at least twenty-five percent, along with paid leave equal to the hours worked.
Employers should carefully track employee working hours and ensure compliance with overtime regulations to prevent potential disputes and legal consequences.
Employee Rights and Employer Obligations
Employers in Albania must adhere to a set of regulations designed to protect employees’ rights. One key aspect is the minimum wage, which is set by the government and must be honored in all employment agreements. Employees are also entitled to 22 work days of paid annual leave, a crucial component of maintaining work-life balance. Parental leave is another significant benefit, with maternity leave extending for one year, including a mandatory period of thirty-five days before childbirth and sixty-three days post-birth. Fathers are also granted paternity leave. Furthermore, employers must contribute to the social security and health insurance schemes for their employees, ensuring that workers have access to essential benefits. Compliance with these obligations is crucial for fostering a fair and lawful workplace.
Termination of Employment
Terminating an employment contract in Albania must be handled carefully to comply with legal requirements and prevent wrongful dismissal claims. The notice period for termination varies depending on the length of employment but typically ranges from one to three months. In cases where an employee is dismissed without just cause and without following the procedures, they may be entitled to severance compensation. To avoid legal complications, employers should document any performance-related concerns and ensure clear communication before proceeding with termination.
Work Permits for Foreign Employees
Businesses seeking to hire foreign nationals in Albania must comply with visa and work permit requirements. The process generally involves obtaining a residence and work permit (unique permit) for the employee. It is important to note that Albanian citizens are given priority in employment opportunities. The National Agency for Employment and Skills reviews and approves the employment of foreign workers, ensuring that local labor market needs are met before allowing the hiring of non-Albanian employees.
Employers must also demonstrate that the foreign hire meets the necessary qualifications or experience required for the job. Additionally, the employer is responsible for registering the foreign employee with the Albanian tax and social security system. Failure to obtain the appropriate permits may result in fines and legal restrictions, making it essential for businesses to adhere to immigration and labor regulations when hiring foreign staff.
Employer Tax and Contribution Obligations
Employers in Albania are required to contribute to social and health insurance on behalf of their employees. These contributions are shared between the employer and the employee:
- Social Insurance Contributions: Employers contribute 15% of the employee’s gross salary, while employees contribute 9.5%.
- Health Insurance Contributions: Both employers and employees contribute 1.7% each.
Additionally, businesses must deduct personal income tax from employees’ salaries. Personal income tax is calculated based on the gross salary, as follows:
| Salary Income in ALL/month | Taxable Income in ALL/month | Tax Rate in Percentage/month | ||
| From | Until | From | Until | |
| 0 | 50.000 | 0 | 50.000 | 0% |
| 50.001 | 60.000 | 0 | 35.000 | 0% |
| 35.001 | 60.000 | 13% of the amount over 35.000 ALL | ||
| 60.001 | More | 0 | 30.000 | 0% |
| 30.001 | 200.000 | 13% of the amount over 30.000 ALL | ||
| 200.001 | More | 22.100 + 23% of the amount over 200.000 ALL | ||
Net Salary = Gross Salary – (9.5% of Gross Salary) – (1.7% of Gross Salary) – Personal Income Tax.
Proper calculation and timely payment of these contributions are crucial to ensuring compliance with Albanian tax laws and avoiding penalties.
How we can help
Navigating labor law requirements in Albania can be complex, but ECOVIS Albania is here to assist businesses in ensuring compliance and optimizing their employment practices.
It is crucial for employers to establish well-drafted contracts, comply with working hour regulations, respect employee rights, follow proper termination procedures, and manage foreign hires appropriately.
By staying informed and seeking legal guidance, businesses can create a lawful and efficient work environment while avoiding costly labor disputes.
Labor & Employment Law in Croatia – 2025 Edition
10.04.2025Croatia at a Glance
- Capital: Zagreb
- Area: 56,594 square kilometers (21,851 square miles)
- Population: Approximately 4 million (as of 2023)
- Location: Croatia is located in Southeast Europe, bordering the Adriatic Sea to the west. It shares land borders with Slovenia to the northwest, Hungary to the northeast, Serbia to the east, and Bosnia and Herzegovina and Montenegro to the southeast
- Political System: parliamentary republic
- Head of State: The President, currently Zoran Milanović (as of 2025)
- Head of Government: The Prime Minister, currently Andrej Plenković
- EU Membership: Croatia has been a member of the European Union since 01st July 2013
- Currency: EURO as of 01st January 2023
- Official Language: Croatian
- Economy:
- GDP: Croatia’s GDP in 2023 was approximately $73 billion USD.
- GDP Growth Rate: The economy has shown steady growth over the past years, with a growth rate of around 4.5% in 2023.
Hiring in Croatia at a Glance
General premises and requirements
- Written contract
- Gender equality
- Protection of pregnant employees, protection of employees on maternity/paternity leave
- Protection from harassment
- Protection from discrimination
- Protection of whistleblowers
- Minimum rights guaranteed by law
- Employer may always grant more benefits than set by law
Minimum salary (gross)
- 970,00 EUR (gross)
Minimum salary (total cost for the employer)
- 1.130,05 EUR (health contribution calculated)
Standard working week
- 40 hours
Annual leave
- 4 full weeks minimum
Types of employment
- Full time
- Part-time
- Indefinite period
- Definite period (maximum of 3 years)
- Combinations of all the above possible.
Mandatory (statutory) benefits
- Pension insurance
- Health insurance
Common non-mandatory benefits
- Public transportation allowance
- Warm meal allowance
- Bonuses
- Work from home options
- Supplementary health and/or pension insurance
Notice periods
- Between 2 weeks and 3 months
- Increased for employees over 50
Employment of foreigners
- EU and EEA citizens – allowed to work in Croatia without any type of permit; have certain obligations regarding registration of residence
- Third (non EU/non EEA) countries – work and residence permit required
Key regulations
- Labour Act
- Employment by-laws (mandatory for employers with 20 + employees)
- Collective bargaining agreements (for industries, professions, big companies)
- Foreigners’ Act (for employment of third-country citizens)
Employment Contract
As set by the provisions of the Labour Act, employment relations are established by the employer and employee entering into a written employment contract.
Mandatory minimum content of the employment contract as set by the Labour Act:
- names, addresses and Personal identification number (OIB) of the parties;
- date of the conclusion of the employment contract and date of commencement of work;
- place of work;
- work position, i.e. job description, nature and type of work the employee will be performing,
- whether the contract is concluded as an open-ended or a fixed-term contract, and the date of termination or the expected duration of the contract in the case of a fixed-term employment contract;
- duration of paid annual leave;
- procedure in case of dismissal and the notice periods that the employee or employer must comply with;
- gross salary, including the gross amount of the basic or contracted salary, allowances and other payments and payment periods, and other payments to which the employee is entitled;
- daily and weekly working hours duration;
- whether full-time or part-time work is contracted;
- right to education, training and professional development;
- duration and conditions of the probationary period, if contracted (maximum is 6 months).
Duration of employment
- As a rule, employment is contracted for an indefinite period
- Labour Act specifies situations where definite duration of employment may be contracted (fixed-term employment) e.g. replacement of a temporarily absent worker, performance of work duration of which, due to the nature of its performance, is limited by a deadline or an occurrence of a particular event
- Maximum duration of fixed-term employment is 3 years
- Probationary period up to 6 months may be contracted for both indefinite employment and fixed-term employment
Working hours
- Regular working week is 40 hours (8 hours per day, distributed over the course of 5 days)
- employee working at least 6 hours per day is entitled to a minimum 30 minutes break each day, included in the working hours
- employees are entitled to a daily minimum rest period, i.e. daily rest between two successive working days of at least 12 consecutive hours
- employees are entitled to a weekly rest period, i.e. at least 24 consecutive hours – to which a daily rest is added – which generally means that they do not work on Sundays
- in case of rescheduled working hours, which must be justified by special business needs, working week may be extended to 48 hours. Exceptionally, the working week may be extended to 56 hours per week, but only if the employee gave his consent and if that possibility was foreseen by the collective bargaining agreement.
- different regulation for seasonal work
- overtime work is only allowed under special circumstances and at the employer’s written request, with a cap of 10 hours of overtime work per week and 180 hours per year
- for some categories of employees, their consent is required for overtime work
- overtime work is to be compensated for
- working on weekends and public holidays must be justified by a special business need in order to be lawful and is paid extra (in cases of work on Sundays, the minimum increase is 50%)
- heavy-duty work and night-shift work is also paid extra.
Salary
- Government-mandated minimum wage – Regulation on the minimum wage rendered by the Government, once per year
- In 2025, minimum wage is 970,00 EUR; gross amount (so called “gross 1”)
- To the gross 1 amount, health contribution is added, thus making the complete cost for the employer (so called “gross 2”) 1.130,05 EUR
- Paying salary lower than the minimum is an offence
- Certain professions have regulated minimum wage
- Collective bargaining agreements for industries, professions and/or companies often set minimum wages for the area they regulate
- Any decrease in the salary must be agreed by both parties, employer and employee
Paid annual leave (holiday)
- employee is entitled to a paid annual leave of at least 4 weeks per year
- public holidays and statutory non-working days are not included in the annual leave
- employees working on jobs with harmful consequences and under-age employees are entitled to 5 weeks of paid annual leave per year
- increased annual leave may be stipulated by the collective bargaining agreements, employment by-laws or individual employment contracts
- if the employment contract is terminated, the employee is entitled to compensation for the unused part of their annual leave
- payment in lieu of holiday is not permitted
- unused annual leave is transferred to the next year and must be spent until 30th June
- in addition, employees are entitled to up to 7 days of personal leave due to reasons such as the death of a family member, moving, wedding etc.
Sick leave
- employees are required to notify their employer immediately on their temporary inability to work due to illness
- employee are also required to provide a medical certificate within a period of 3 days
- during the period of sick leave the employee is entitled to receive sick pay based on their average salary, but not less than 70%
- if the employee´s sick leave lasts longer than 42 days, then sick pay is to be paid by the Croatian Health Institute.
Termination of employment
- An employment contract may be terminated:
- by the death of the employee;
- by the death of the employer who is a natural person
- by the death of the employer who is a sole proprietor, if there has been no transfer of sole proprietorship in accordance with a special regulation
- by the cessation of sole proprietorship by force of law in accordance with a special regulation
- by the expiry of the time for which the fixed-term employment contract has been concluded
- when the employee reaches 65 years of age and 15 years of pensionable service, unless otherwise agreed by the parties
- by mutual agreement of the employee and the employer
- on the day of notification to the employer of the finality of the decision on the recognition of the right to disability pension due to complete loss of working capacity
- by dismissal (termination, notice)
- by a decision of the competent court.
- Notice (dismissal) must be in written form and stating the reasons therefore, as well as the payments to be made to the employee upon the termination of the employment
- Notice periods are proportional to the employee’s duration of service with the same employer and range from a minimum of two weeks to three months; after 20 years of service, the notice period increases by two weeks for employees aged at least 50 years and by one month for employees aged at least 55 years.
- During the notice period the employee is entitled to receive their salary and all other entitlements under statute.
- 3 types of notices – business-caused notice, personal notice and summary notice; all require valid and specific reasons
- Certain categories of employees are protected from notice
- Severance pay is compulsory with business-caused and personal notice and after 2 years of service with the same employer
Summary
Employment is a heavily-regulated field in Croatia. Employees are well protected in comparison to other countries and dismissing employees is challenging. Employers are also subject to numerous heavy fines in case of non-compliance with the legislation; consequently requiring them to invest in human resources and legal support.