(a) No, except in case of employment misclassification.
(b) No, the social security and income tax legislation sets out the specific rules applicable to contingent workers.
(c) Same as (b).
(a) No. As a rule, substance prevails over form for labor matters in Brazil. If employment elements are present, contingent workers could be considered as employees for employment purposes.
(b) If the requirements of an employment relationship are not present, the social security and income tax legislation sets out the specific rules applicable to contingent workers.
(c) Same as (b).
The issue of platform workers' labor rights is currently under discussion in Brazil, mainly considering the proposed agenda of the newly elected government. With the rise in digital platform services, we are seeing an increasing global trend in case law and legislation aimed at protecting platform workers' labor rights. For more insight on these developments, along with other employment law updates, click here.
The main risks are misclassification of workers and related consequences (i.e., individual and class actions).
On average, penalties are approximately BRL 3,000 per offense or per individual who should be registered as an employee. This does not include the retroactive payment of wages, benefits and taxes, plus monetary adjustment/interest.
The following are the main risks from a tax perspective: • There is a risk of contingent workers being reclassified as employees, leading to a tax assessment claiming the payment of social security contributions upon compensation. • There is no issue related to income tax, because the withholding tax rates are the same for contingent workers and employees.
For a tax assessment that considers the contingent workers as employees, the authorities may claim the payment of social security contributions and a 75% penalty upon the contributions due.
For a tax assessment that considers the contingent workers as employees, the authorities may claim the payment of social security contributions.
There would be a penalty of 75% of the contributions due. If the tax authorities consider that the contingent worker was only hired to avoid the contributions due on the employee's compensation, via the use of fraud or simulation, the administrators (finance, accounting or human resources) may be considered as jointly liable.
There is no mandatory private pension in Brazil, meaning the hiring of contingent workers may not lead to pension-related risks.
Yes, if the tax authorities consider that the contingent worker was only hired to avoid the contributions due on the employee's compensation, via the use of fraud or simulation, the administrators (finance, accounting or human resources) may be considered as jointly liable.