Brazil's Consolidação das Leis do Trabalho (Consolidation of Labour Laws – Brazil's primary labour legislation) has undergone a series of significant amendments that took effect in early 2025. Foreign employers operating in Brazil – whether through local subsidiaries, service contracts, or directly seconded employees – face material changes to dismissal notice requirements, employment contract formalities, and social security contribution obligations. Companies that fail to adapt their workforce practices before the applicable compliance deadlines risk exposure to labour claims, administrative penalties, and reputational damage in one of Latin America's most active employment litigation environments.
Brazil's updated employment regulations, effective from the first quarter of 2025, revise the rules governing termination procedure, collective agreement recognition, and social security registration for employees of foreign-controlled entities. The changes apply to any employer with at least one locally registered employee or a formally constituted business presence in Brazil. International companies must audit existing employment contracts and update internal HR procedures within 90 days of the regulations' effective date.
This alert explains which business categories are affected, what the threshold criteria are, and the immediate steps your organisation should take now.
What changed – the regulatory developments and their effective dates
Three interconnected changes define the 2025 update to Brazilian employment legislation.
Termination procedure and dismissal notice. The updated rules clarify the minimum dismissal notice period for employees on indefinite employment contracts. The base notice period – previously subject to inconsistent application across different collective agreement regimes – is now standardised. Employers must calculate notice entitlements by reference to both the statutory minimum and any applicable collective agreement, whichever is more favourable to the employee. Failure to honour the correct dismissal notice period exposes the employer to an obligation to pay compensation in lieu, calculated on the employee's full salary and benefits package.
Employment contract documentation. All employment contracts – including those for seconded foreign nationals and fixed-term engagements – must now include an explicit clause specifying the applicable collective agreement. Where no sector-specific collective agreement exists, the contract must state this expressly. Contracts that omit this clause are treated as non-compliant under the updated labour legislation and may be challenged by employees or labour inspectors.
Social security registration and contribution reporting. The updated rules expand the scope of employers required to register with Brazil's social security system. Foreign companies that deploy employees in Brazil under service agreements. even where no formal subsidiary exists – are now subject to mandatory social security registration if the engagement exceeds 60 days in any 12-month period. Contribution reporting must follow the revised electronic filing schedule introduced alongside the substantive changes.
All three changes carry a single compliance deadline: 90 days from the date of publication of the implementing regulations in early 2025. For most foreign employers, this window has either closed or is closing shortly. Acting without delay is essential.
Who is affected – threshold criteria and business categories
The updated rules apply broadly. Any of the following triggers coverage:
- A foreign company with a registered subsidiary, branch, or representative office in Brazil employing at least one worker under a local employment contract.
- A foreign company that seconds employees to a Brazilian entity for a cumulative period exceeding 60 days within any 12-month period, regardless of whether a formal employer-employee relationship is established under Brazilian law.
- A foreign company that is party to a service agreement with a Brazilian counterparty where the foreign company's personnel perform work on Brazilian territory.
- A foreign employer whose employees are covered by a Brazilian collective agreement, whether by operation of law or by contractual incorporation.
Notably, the size of the foreign company is not a threshold criterion. A single-employee presence triggers the full set of obligations. Multinational groups that have historically treated Brazil as a minor operational outpost – and managed local HR matters informally – are at particular risk. Labour inspectors in Brazil have broad authority to audit employment records without prior notice. Undocumented or non-compliant employment contracts are among the most frequently cited findings.
Companies operating across Latin America should note that Brazil's updated approach to collective agreement documentation differs from practice in comparable markets. For context on how employment regulation changes in other jurisdictions may intersect with your regional workforce strategy, see our analysis of updated employment regulations in the United States.
To receive an expert assessment of your Brazilian workforce exposure and what the updated rules mean for your organisation, contact us at info@ferrazwhitmore.com.
Immediate actions for international companies
The following five steps should be initiated without delay.
1. Audit all existing employment contracts. Review every employment contract covering employees in Brazil. Confirm that each contract identifies the applicable collective agreement or expressly states that none applies. Contracts predating the 2025 changes must be updated by addendum. Engaging a lawyer in Brazil with experience in local employment legislation is strongly recommended for this review.
2. Recalculate dismissal notice entitlements. Cross-reference your standard termination procedure against both the updated statutory notice requirements and any sector-specific collective agreement in force. Where the collective agreement provides greater entitlements, that instrument governs. Recalculate severance exposure across your active headcount and update your financial provisions accordingly. Companies that discover underprovision at this stage are in a significantly better position than those who discover it after a dismissal dispute reaches the labour courts.
3. Register with Brazil's social security system if not already registered. If your company deploys personnel in Brazil under service agreements and has not yet registered as an employer for social security purposes, initiate registration immediately. The 60-day threshold applies cumulatively. Retroactive contribution obligations may arise if registration is delayed beyond the compliance deadline.
4. Review secondment and service agreement structures. Many foreign employers use secondment arrangements or intercompany service agreements as the primary vehicle for deploying people in Brazil. These structures must now be reviewed against the updated rules. Where the arrangement results in a deemed employment relationship under Brazilian employment legislation, full compliance obligations apply – including contract documentation, dismissal notice, and social security contributions. Our corporate law advisory team in Brazil can assist with restructuring intercompany arrangements to achieve the appropriate legal classification.
5. Train your HR and payroll teams on the updated rules. Internal HR procedures must reflect the changes. This includes updated contract templates, revised termination checklists, and refreshed payroll calculations for notice pay. Where your HR function sits outside Brazil – as is common in regional hub structures – ensure that local-law obligations are explicitly documented and assigned to a named compliance owner in Brazil.
Foreign employers with established operations in Brazil should also review their broader employment compliance position. Our employment law practice in Brazil covers the full range of obligations applicable to international companies, from contract drafting and collective agreement compliance to termination procedure and labour dispute resolution.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our Americas practice supports international companies operating in Brazil and across Latin American markets. Combining Portuguese civil law expertise with English common law tradition to deliver practical cross-border solutions in employment law, corporate structuring, and commercial disputes. Our team has advised multinational clients on employment contract compliance, collective agreement obligations, and termination procedure matters across both civil law and common law systems. As a law firm in Brazil-facing matters, we work directly with international entrepreneurs, in-house legal teams, and institutional investors who need results-oriented counsel at the intersection of multiple legal systems. To discuss how the updated Brazilian employment regulations affect your organisation, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.
Published: March 19, 2026 | Author: Marco Reyes, International Counsel, Americas & Iberian Markets
Marco Reyes is an International Counsel at Ferraz & Whitmore advising clients on legal matters across Latin American jurisdictions and Iberian markets. He specialises in commercial litigation, investment disputes, and cross-border contract enforcement in civil law systems.