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• Asinglefederallaborlaw• Multipleagreementswithlaborunions
• Numerouschangestolawandtostatutoryvalueseachyear
• Legislationsubjecttointerpretationrequiringsupportofalegaladvisor
• Monthlysalaryplusvariousallowancesandbenefits
• Incometaxwithholdingatsource• Mandatorysocialcontributionsforemployeeandemployer
• Ageneral-purposesocialsecurityandpublichealthcaresystemplusfundsforaccidentsandunemployment
Brazilian Payroll Highlights.
Payroll in Brazil.
Extreme complexity despite a single federal labor law
Ineachcountry,payrollprocessingisdrivenbylocallaborlaws,differentlayersoflegislationandspecificrules.Thismakesitachallengeformultinationalcompaniesorcompaniesexpandinginternationally.
Astheseventhlargesteconomyintheworld,Brazilisaveryattractivecountry.Butonceestablishedthere,companieshavetodealwithoneofthemostcomplexpayrollsystemsintheworldduetoconstantlychanginglawsandtheinfluenceoflaborunions.Usingalocalpayslipasareferencepoint,thisbrochuredeciphersthecomplexitiesofpayrollinBrazil.
2 Payroll in Brazil
Multiple levels of agreements TheConsolidationofLaborLaws(ConsolidaçaodasLeisdoTrabalho,orCLT)isthebodyoflawthatregulateslaborrelationsintheprivatesectoratthefederallevelinBrazil.Itservesasthecommonlegalbasefornegotiationsbetweenemployerassociations,laborunionsandcompanies.
Thereareabout10,000laborunionsinBrazil,organizedatthefederal,stateorcitylevel,orbytrade.Sincemostcompaniesperformavarietyofactivities–forexample,afoodcompanymayemploydriversandaccountants–theymustnegotiatewithmultiplelaborunions.Amulti-sitecompanymayfacenegotiationswithasmany20or30unions.
Constantly changing rules Thereareabout60legislativechangesand5statutoryvalueadjustmentseachyearthatallimpactpayroll.FrequentlegislativechangesandthemultitudeofcompanylevelagreementsmakepayrollcompliancearealchallengeinBrazil.AccordingtotheWorldBank,Brazilhasoneoftheworld’shighestratesoftime-to-complywithlabortaxes:490hours/yearcomparedto45hoursintheUKand55intheUSA.
The challenge of eSocial Brazilhasengagedincontinuousmodernizationinitiativestoboostthecompetitivenessofitseconomy.LegislativechangeshaveresultedinnewprogramswithnewobligationsthatdirectlyaffectpayrollprocessesandHRstructures.ThetwoprogramsthatcurrentlyrequirethemostknowledgeandexpertiseareGreaterBrazilandeSocial.
GreaterBrazil,activesince2013,isaninitiativedesignedtoboosttheappealoftheBrazilianeconomyandcreatemorejobsbyreducingthetaxburdenonpayroll.Itshiftedcompanytaxrulessocalculationswouldbebasedoncompanyrevenueandbusinessactivityinsteadofthepreviouscalculationbasedonpayrolltotals.
ButtheBrazilianmodernizationinitiativethatiscausingthebiggeststirinpayrollandHRiseSocial,whichdigitalizestheprocessofsubmittinglaborand
payrolleventsandsendsallinformationtoasinglegovernmentdatabase.eSocialopenscompaniesuptobroader,moredetailedauditinganddemandsstrictadherencetoreportingdeadlinesthatincursteepfinesifnotmet.Itaffects100%ofemployersinBrazil.
AlthougheSocialwasdesignedtoreducebureaucracybyminimizingmanualprocesses,itincreasestheworkloadofpayrollprofessionals,whoaretaskedwithenteringnotjustpayroll-relatedinformation,butHRandOccupationalHealthandSafetydataaswell.Timingisalsostrict–assame-dayreportingisrequiredformostemployee-relatedevents–andthismeanscontinualfinesforcompaniesthatcannotstayontopofreporting.
Atthestructurallevel,companiesneedtoadapttheirinternalprocessestocomplywithgovernmentSLAs,andalsoneedtoupdatetheirdatabasestobeabletocollectthenewdatarequiredbyeSocial.
How ADP resolves the eSocial challengeADPprovidescompanieswithasingleprovidersolutionthatadaptseasilytochangingneedsfordata,andhelpscompaniesfulfilltheireSocialcomplianceobligations.Itsteamoflocalandglobalpayrollandlegislativepersonnelarewell-versedineSocialrequirementsandtimelines.ADP’sintegratedtechnologyensuresthatallinformationrequiredbythegovernmentiscapturedandupdatedinyoursystem.
ADPcanhelpyougetahandleonpayrolloperationsinBrazil,sothatyourbusinessintheregionissuretocontributetotheoverallprofitabilityofyourorganization.
SalarySalariesarecalculatedandpaidonamonthlybasis,withadvancesusuallydisbursedbetweenthe15thand20thofeachmonth.Employeesareentitledtoa13thmonthofsalary,whichispaidintwoinstallments.
Thefederallawsetsaminimumwage,buttheminimumsalarymaybehigherdependingonthestateinwhichemployeesworkortheirprofession(negotiatedbytradeunions).
Itisalsocommonforcompaniestoincludeprofitsharing(PPR/PLR)intheremunerationpackageontermsagreedtowithlaborunions.
Working time and overtimeInBrazil,workhoursarecappedat44perweek.Aregularshiftcannotexceed8hoursandamaximumof2hoursofovertimeisallowedperday.
Overtimeispaidataminimumrateof150%theregularsalary.Therateforextranighthoursworkedisatleast20%higherthanthedaytimeovertimerate.
Ratesmaybehigherdependingonthecollectivebargainingagreementsnegotiatedwithlaborunions.
Everycompanymustkeeptrackoftheiremployees’workinghours,recordingboththestartandendtimes,aswellasmealbreaksandrestgrantedduringtheworkday.Employeesareentitledto30consecutivedaysofpaidvacation,with1/3extrasalary.Employeescanchoosetoforgo10ofthe30vacationdaysandreceiveacashpaymentinstead.
AllowancesInadditiontocash(whichmustcompriseatleast30%oftheentireremunerationpackage),workerscanbecompensatedforexpensessuchashousingorvacation/travelcosts;whichshallberegardedassalaryfortaxpurposes.
Transportationvouchersareprovidedtoemployeeswhocommutebypublictransportation.Thecompanycandeductupto6%ofthesalaryforthisexpense,limitedtothevalueofthetickets.
TaxesEmployerscalculateandwithdrawfederalincometax(IR)fromtheemployeesalaryeverymonth.
IRisbasedontheemployee’snumberofdependents;thesamerulesapplythroughoutthecountry.
Companiessubmitannualinformationaboutincomeandbenefitstotheemployeeandthetaxauthority.
Social contributionsTheBraziliancontribution-basedsocialsecuritysystem(INSS)grantsinsuredemployeescoverageforretirement,publichealthcare,accidentassistance,familyallowance,maternityleave,andincaseofemployee’sdeath(familymonthlypension).Bothemployersandemployeescontributetothesocialsecuritysystem.
Companiesalsocontributetofundsforwork-relatedac-cidentsandtheearlyretirementofemployeeswhoworkinhazardousconditions.Finally,companiescontributetoamandatoryunemploymentinsurancefund(FGTS).
Additional benefits Companiesmayalsoprovideadditionalbenefitsthatarenotconsideredsalarycomponents:privatehealthinsuranceandpensionplans,lifeinsurance,educationalservicesforemployeesandtheirchildren,medicalassistance,culturalbonuses,foodstipends,andsoon.
Itisverycommonforlargercompaniestoalsooffersuchplansaspartoftheirbenefitspackagetoremainattractivetoemployeesinthelabormarket.
TherulesthatgovernlaborrelationsinBrazilareacomplexcombinationofthefederallaborlawandagreementsnegotiatedwithunions,sometimesatthestateandcitylevel.Thisleadstoavarietyofallowances,socialbenefitsanddeductionsonthepayslipsofBrazilianemployees.Companiesmustalsocalculateandwithholdsocialcontributionsandincometaxesfromemployeesalaries.
TheBrazilianpayrollsystemisoneofthemostcomplexintheworld.Legislationiseverchanging,andcompaniesmustreachagreementswithmultiplelaborunions.Newprogramsaimedatmodernizationalsogreatlyimpactthewaycompaniesmanagepayrollinthecountry.
54 Payroll in Brazil – A complex system with frequently changing rules Payroll in Brazil – A complex system with frequently changing rules
A variety of allowances and social benefits.
Compliance is a constant challenge.
Do you know approximately how many legal changes happen in Brazil every year?
60%of which have an impact on payroll
922
The total yearly cost of work accidents in
Brazil is Brazilian Reals70 billion
This represents 9% of the yearly payroll amount for workers in the formal sector, which amounts to 800 billion Brazilian Reals
9%
Anin-depthdescriptionofthemostspecificcategoriesonaBrazilianpayslipoffersadditionalkeystounderstandthecountry’spayrollsystem.
SampleBrazilianpayslip
6 Payroll in Brazil – A complex system with frequently changing rules
Behind a Brazilian payslip.
Earnings • SalárioBase:basesalary•Quinquenio:senioritybonusforeveryfiveyearsworkedatthecompany.Notmandatory:dependsoncompany’spolicyandthecollectivebargainagreementwiththelaborunion
•D.S.R.:weeklypaidleavecompensationforextraornighthours•Averageadjustment–13thmonth•HorasExtras:overtime,whoseratemustbeatleast50%morethanregularhours;ratecanbenegotiatedwithtradeunions(here,100%)
Employee & Company information•CompanyCompanyID(C.N.P.J.)Pageno.• EstablishmentIDEmployeeIDEmployeenamePositionDEP/FILH:thenumberofeconomicallydependentpersonsisusedtocalculateincometax
•CostcenterBankBankbranchAccountno.BasesalaryPayrollmonth
• Paydate•Hiredate
Reference values/Other• Incometaxreferencefor13thmonthsalary• Incometaxreference• Socialsecuritycontributionreference• Basesalaryforcontributions•Unemploymentcompensationfundcontributionbytheemployer•Unemploymentcompensationfundreference•Unemploymentcompensationfundcontribution−over13thsalary•Unemploymentcompensationfundreference−13thmonth• Socialsecuritycontributionreference−13thmonth
Referencesalariesforvariouscontributionsandtaxes:IR(incometaxes),INSS(socialsecurity),FGTS(unemploymentinsurance).TheDecemberpayslipIncludesbasesforregularsalariesaswellasthe13thmonthbonus(13Sal.)
FGTS:“FundforGuaranteedTimeofService”Companiescontribute8%oftheemployee’ssalarytotheFGTS,agovernmentfundthatprovidesunemploymentinsurancetoworkers.Incaseofemployer-initiatedtermination,theemployerpaysadditional40%overthewholeaccumulatedFGTScontribution
7Payroll in Brazil – A complex system with frequently changing rules
Deductions• Adiantamentoquizenal:bimonthlyadvancepaymentofsalary•DescontoIdioma:employeecontributiontolanguagelessons(whencompanieshaveanagreementwithlanguageinstitutes)
•Combustivel:deductionsoffuelpurchases(ifthecompanyhasanagreementwithgasstations)
•IRRetido13°Sal:incometaxwithholdingon13thmonthsalary•IRRetido:incometaxwithholdingCalculatedandwithheldeverymonthusingaprogressiverateandtakingintoaccountthenumberofeconomicallydependentpersons
•INSS:socialsecuritycontributionEmployeescontributeapercentageoftheirsalary,calculatedaccordingtoaprogressiverate(between8%and11%).Employer’scontribution(notvisibleonpayslip)is20%ofthesalary.
•Othercontributions(notvisibleonpayslip):Companiesalsocontributetoafundforwork-relatedaccidentsatarate(1%to3%)thatdependsontheirlineofbusinessandinvestmentsinoccupationalsafety.Anadditionalcontribution(6%,9%or12%)ispaidtocoverearlierretirementwhenemployeesworkinhazardousconditions.
•Refeiçoes:employeecontributiontowardmealvouchers–upto20%ofactualvalue
•MensalidadeSindic:monthlyunionduesAlthoughtheyarenotlegallymandatedtobeactivelyinvolvedinunionactivities,allemployeesmustberepresentedbyalaborunion.
•AssistMedica:contributiontoprivatehealthinsuranceplan(companyspecific)
•ContribAssistencial:unionassistancecontributionUnionsprovideemployeeswithadditionalservices.
•Farmacia:deductionsofmedicationpurchases,(ifthecompanyhasanagreementwithdrugstores/pharmacies.)
•PensaoJud.Salario:alimonyandchildsupportinBrazilarededucteddirectlyfromwageswhencourtordered
Totals•Earnings•Deductions•Netpay
The information contained in this Payroll in Brazil brochure is to be used for informational purposes only. ADP is not a legal labor or tax adviser, and this information should not be considered legal, tax or labor advice, nor is it intended to provide specific advice about labor, tax and/or legal questions. This information should not be used to replace consultation with a trained legal professional, or any other qualified expert. ADP assumes no liability for the use or interpretation of information contained in this Payroll in Brazil brochure. ADP has made considerable efforts to present accurate and reliable information in this Payroll in Brazil brochure. However, ADP does not take any responsibility for the accuracy, completeness, or usefulness of the information herein. Such information is by nature subject to revision and may not be the most current information available. This Payroll in Brazil brochure should not be considered a substitute for a reader’s own independent research and evaluation.
ADP and the ADP logo are registered trademarks of ADP, LLC. ADP – A more human resource. is a service mark of ADP, LLC. Copyright © 2016 ADP, LLC. All rights reserved.
Asaleaderofamultinationalorganizationmanagingaglobalworkforce,youfacemultiplechallengeseveryday.DisparateHRsystemsaddcomplexitytoyourglobalemployeedatamanagement,andthousandsoflegislativeupdateseveryyearincreaseyourorganization’sriskofnon-compliance.
ADPhasbeeninthebusinessofmanagingsomeoftheworld’smostcomplexpayrollprocessesandfast-changingcompliancechallengesforover65years.Drawingonthisvastexperience,weofferaunifiedsolutionthatgoesfarbeyondjusttechnologytohelp
youachievescalabilityandreliability.ADPGlobalPayrollServicesgivesyouglobalvisibilityacross111countriesandterritoriesthroughacentralizedcloud-basedsoftwaresolution,andsupportedbythousandsofon-the-ground,dedicatedlocalexperts.
Whateverthesizeofyourworkforce,ADPGlobalPayrolldeliverscomprehensivemanagementstandards,alongsidecontinuousinnovation,andacutting-edgeuserexperienceforprofoundnewlevelsofworkforceengagement.
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