When it comes to workforce management in the U.S., clearly there are some strict rules to follow and labor agreements that have to be upheld. But as often as not, the term is more about keeping your employees happy than it is about sticking within the boundaries of the law.
As companies start to expand into new markets abroad, however, many of them are finding that the rules are sometimes more complicated than they are at home, and they can face serious consequences for breaking them. Brazil, with its heavy emphasis on strong worker protections, has been one of the most common examples of these types of pitfalls, at least for companies that come in unprepared.
So what are some of the workforce management policies that tend to trip up foreign companies looking to expand into Brazil?
1. Payroll. Probably the simplest of the potential problems, but nonetheless a serious one, Brazilian labor law imposes a specific structure for all its wages. Salaries must be split into 13 equal paychecks – one for each month and then another for the Christmas bonus. While these holiday bonuses aren’t uncommon elsewhere around the world, Brazil requires that they equal a full month’s wages and that employers must also be willing to spread out the payments over the course the year if employees desire.
2. Hours. A more serious issue and a common point of contention for many companies, Brazil also sets a strict limit on how long employees can work in a given week, restricting workers to no more than 44 hours. Often, companies cannot ask employees to work much beyond eight hours per day without an official agreement from the union, though many people also choose to work more than five days a week. However, the issue arises in that the rule is difficult to monitor, even for companies themselves, making it fairly common for businesses to end up getting brought to court over workday violations despite their best intentions to work within the law.
3. Employee termination. Another of the strongest protections for workers, companies are also required to provide employees with a full 30 days of notice before terminating them. If they choose not to do that, they can fire an employee so long as they still pay the full wages for 30 days. Recent legislation further extended this protection, requiring companies to give as much as 90 days notice or 90 days of wages for employees who have been with the company for a long enough time.
4. Vacation. Much like a number of European countries, Brazil also sets strict standards for how much time off employees must be given, requiring companies to offer 30 days of paid vacation every year. Workers must also be partly compensated for any unused vacation time in the event that they are terminated before using it.
5. Vouchers. While it’s not unheard of for companies to provide compensation for transportation costs or to offer some amount of complimentary food, in Brazil both are required. Companies must pay the vast majority of transportation costs and offer vouchers worth at least R$5.40 (about US$2.40) for food, unless they offer complimentary lunches.
While some of these issues might seem more important than others, the strong labor presence in the Brazilian government ensures that all of them are taken seriously by the courts. Because courts are generally in favor of settlements rather than trials, any kind of violation can open a company up to serious legal costs. This makes it vital to invest in the necessary human resources solutions, finding qualified managed service providers to navigate through the complex web of labor laws.
A breakdown of some of the big risks posed by Brazilian labor law can be found in a recent white paper from Allegis Group Services.