Employer of Record in Brazil

An Employer of Record in Brazil acts as the legal employer of a company's workers, handling CLT contracts, payroll administration, and compliance obligations on that company's behalf. Setting up through an EOR typically takes two to five days, compared to the two to three months required to incorporate a Brazilian entity, and total employer costs generally run approximately 1.7 to 1.9 times gross salary.

Brazil's CLT framework imposes substantial mandatory employer contributions, including approximately 20% to INSS, 8% to FGTS, 1 to 3% for RAT, and roughly 5.8% to Sistema S. Employers are also required to fund a 13th salary and a vacation bonus each year, observe a standard notice period of 30 days plus three additional days per year of service, and comply with a 2026 federal minimum wage of $314 (BRL 1,621) per month.

What Is an Employer of Record in Brazil?

An EOR in Brazil holds a Brazilian CNPJ, signs CLT-compliant employment contracts, and bears all employer liability under Brazilian labor law on behalf of the client company.

Foreign companies entering Brazil without a local entity use an EOR to employ workers legally from day one.

In practice, the client selects the candidate, and the EOR issues a Portuguese-language CLT contract, registers the employee on eSocial and FGTS, runs monthly payroll including INSS, FGTS, and RAT remittances, and handles day-to-day HR queries. To understand how does EOR work in detail, see Gloroots' dedicated guide. The client retains full operational direction over the worker's tasks and output.

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Your Hiring Options in Brazil: EOR vs. Entity vs. PEO vs. Contractor

Companies hiring in Brazil can choose from four paths: an EOR, a directly owned Brazilian entity (Ltda. or S.A.), a PEO co-employment arrangement, or a PJ contractor engagement via EOR services. Each path carries distinct compliance ownership and cost structure.

An EOR suits companies with fewer than 10–15 employees in Brazil, those testing the market, or those where speed to hire is the primary constraint.

A directly owned entity makes sense for large, permanent teams where EOR fees exceed the fixed costs of running a local entity at scale.

A PEO co-employs workers alongside the client but requires the client to already hold a Brazilian CNPJ. It cannot substitute for an EOR when a company is entering Brazil for the first time without an entity.

PJ (Pessoa Jurídica) workers invoice through their own MEI or Simples Nacional entity. Brazilian courts reclassify PJ arrangements as CLT employment when subordination, exclusivity, fixed hours, or personal service are present. This practice is known as pejotização and carries significant retroactive liability.

How to Hire in Brazil Through an EOR: Step by Step

Hiring through an EOR in Brazil follows a defined six-step workflow. The process runs from the initial decision between EOR and direct entity through to compliant offboarding when employment ends.

Each step has a specific compliance action attached to it. Skipping or misordering steps creates gaps in eSocial registration, FGTS funding, or CLT contract validity that can trigger labor court claims.

The steps below cover the full employment lifecycle: entity decision, provider selection, contract issuance, eSocial registration, payroll execution, and offboarding. Following them in order keeps the engagement compliant from day one.

Step 1: Decide Between EOR and Own Entity

Assess three factors: headcount (under 10–15 employees favors EOR), timeline (EOR hires in 2–5 days versus 2–3 months for a Ltda. or S.A.), and budget (entity setup costs approximately $45,908 (R$237,000) upfront plus roughly $53,269 (R$275,000) in annual compliance costs, compared to a predictable EOR monthly fee). If long-term scale is planned, EOR employees can be converted to direct hires after entity formation.

Step 2: Vet and Select an EOR Provider

Confirm the EOR owns its Brazilian entity directly by requesting its CNPJ number. Verify the provider has an in-house compliance team fluent in CLT and eSocial, check its LGPD data protection practices, and confirm Portuguese-language HR support is available to your employees.

Step 3: Draft and Sign a CLT-Compliant Employment Contract

The EOR issues a Portuguese-language contract under its own CNPJ. It covers role, salary, working hours (max 44 hrs/week), probation (up to 90 days), benefits, and termination terms. Fixed-term contracts are capped at 2 years.

Step 4: Onboard and Register Statutory Requirements

The EOR registers the new hire on eSocial within 48 hours of the start date, updates the Carteira de Trabalho Digital (CTD), and enrolls the employee in INSS and FGTS.

Required documents: full legal name, Brazilian address, CPF, RG, bank account details, and a signed employment agreement. Foreign nationals must also provide a residence visa and RNE card.

Step 5: Run Compliant Monthly Payroll

The EOR processes gross-to-net payroll by the 5th business day. It remits INSS (~20% employer), FGTS (8%), RAT (1-3%), and Sistema S (~5.8%), files eSocial events S-1200 and S-1210 by the 15th of the following month, and issues Portuguese-language payslips.

Step 6: Manage Offboarding and Exit

The EOR calculates the finiquito, covering outstanding salary, proportional 13th salary, unused vacation plus the one-third bonus, and applicable severance. For termination without cause, it pays the FGTS balance plus the 40% penalty, files the eSocial termination event, and delivers compliant documentation within 10 days.

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How to Choose the Right EOR in Brazil

Choosing an EOR in Brazil requires checking six specific factors before signing a contract. The wrong provider can expose your company to CLT liability, payroll errors, and delayed onboarding.

Start by confirming whether the provider holds a direct Brazilian entity. Then assess payroll accuracy, eSocial filing capability, contract quality, benefits administration, and support response times. Each factor carries real compliance weight under Brazilian law.

Use this checklist alongside independent research. A best employer of record comparison can help you benchmark providers before committing.

Direct Entity Ownership in Brazil

Confirm the EOR holds its own Brazilian CNPJ rather than subcontracting to a local partner. Request the CNPJ number and verify it on the Receita Federal public registry. Partner-based models add liability exposure and slower response times.

In-House CLT and eSocial Compliance Expertise

Verify the EOR has in-house legal and payroll specialists fluent in CLT, eSocial filing deadlines (S-1200/S-1210 by the 15th), and CBA obligations. A generic global compliance team is not sufficient for Brazil's filing requirements.

LGPD Data Protection Standards

Confirm the EOR complies with Brazil's LGPD (Lei Geral de Proteção de Dados), has appointed a Data Protection Officer (DPO), maintains in-country data storage for employee records, and holds data processing agreements for any cross-border transfers.

Support Model and Language

Check whether the EOR offers Portuguese-language support for employees. Confirm whether a dedicated account manager or a shared support queue handles Brazil-specific queries. Response time SLAs matter given Brazil's labor court speed.

Pricing Transparency

Request a fully itemized quote showing the EOR management fee separately from statutory employer contributions: INSS, FGTS, RAT, Sistema S, 13th salary accrual, and vacation bonus accrual. Visibility into the total employer of record cost is essential before signing.

Integration and Automation Capability

Confirm the EOR's platform integrates with your HRIS and automates eSocial filings, payslip generation, and FGTS remittances. Manual processes in Brazil's high-volume compliance environment create audit exposure. Evaluate available employer of record software capabilities before committing.

Workforce and Talent Pool in Brazil

Brazil's workforce of approximately 100 million is one of the largest in the Americas, with a median age of 34 and a strong STEM graduate pipeline from USP, Unicamp, and FGV.

São Paulo leads in finance, IT, and startups. Rio de Janeiro concentrates energy and media talent. Porto Alegre and Campinas are centers for engineering and R&D.

Brazilian workplace culture is hierarchical yet relationship-driven. Personal trust accelerates business decisions. English proficiency is moderate but improving in IT and finance. Total employer cost runs approximately 1.7x to 1.9x gross salary, making Brazil a mid-cost emerging market relative to its talent quality. For a comparable Latin American market, see employer of record Colombia.

Major international companies with Brazilian offices include Google, Amazon, Microsoft, and Uber. Local unicorns include Nubank and PagSeguro in fintech, iFood and Loggi in e-commerce, QuintoAndar in real estate, and Arco Educação in edtech. Key incubators include Cubo Itaú and Startup Farm.

Brazil has approximately 7.3 million remote workers, supporting distributed hiring across regions without requiring a local entity.

Employment Law Essentials in Brazil

Brazil's employment law is governed by the CLT (Consolidação das Leis do Trabalho), one of the world's most protective labor codes.

The CLT sets binding rules on contracts, working hours, overtime, leave entitlements, and severance. Every employer operating in Brazil must comply with these rules, regardless of company size or industry.

Collective Bargaining Agreements (CBAs) negotiated by sector-specific unions can expand on CLT minimums. Where a CBA applies, its terms override the statutory floor if they are more favorable to the employee.

• Employment contracts must be in Portuguese and CLT-compliant.

• Standard working hours are capped at 44 per week.

• Overtime rates, leave entitlements, and severance contributions are all set by statute.

• Labor courts in Brazil consistently rule in favor of employees in disputes.

Gloroots manages CLT compliance across contracts, payroll, and benefits, so your team in Brazil operates within a governed employment structure from day one.

Employment Contracts

CLT requires all employment contracts to be in Portuguese, covering role, salary, hours, and termination terms, and to comply with any applicable CBA. Fixed-term contracts are capped at two years. Gloroots provides bilingual CLT-compliant contracts as part of its standard onboarding.

Working Hours and Overtime

CLT caps standard hours at 44 per week (8 hours per day Monday through Friday, 4 hours on Saturday). Overtime is paid at 150% on weekdays and 200% on Sundays and public holidays.

Work between 10 p.m. and 5 a.m. attracts a minimum 20% night-shift premium (adicional noturno). Under CLT, night hours are calculated as 52.5 minutes equaling one hour.

Where a CBA permits, employers may use a banco de horas arrangement. Overtime hours are banked and offset against future leave rather than paid out at premium rates.

Minimum Wage

Brazil's national minimum wage for 2026 is $314 (BRL 1,621.00) per month, approximately $10 (BRL 54.04) per day or $1 (BRL 7.37) per hour. This took effect on January 1, 2026, under Federal Decree No. 12,797/2025, a 6.79% increase over the 2025 figure of $294 (BRL 1,518).

State minimums in São Paulo and Rio de Janeiro may exceed the federal floor. Employers must apply whichever rate is higher. Gloroots monitors annual minimum wage updates and adjusts payroll automatically.

Leave and Statutory Benefits in Brazil

Brazil's CLT guarantees a broad set of paid leave entitlements and statutory benefits. Employers must administer these correctly or face financial penalties, including double-pay obligations for vacation scheduling failures.

Beyond standard annual and sick leave, CLT provides paid time off for bereavement (2 days for immediate family), marriage (3 days), voluntary blood donation, electoral registration, military service, university admissions exams (vestibular), and court proceedings.

Vale-transporte (transport vouchers) is mandatory upon employee request. The employer covers commuting costs that exceed 6% of the employee's base salary. Many union CBAs also require meal or food vouchers (vale-refeição/vale-alimentação).

Companies employing more than 30 female employees must provide or reimburse childcare costs under the CLT-derived daycare assistance obligation (auxílio-creche). This is a statutory requirement, not an optional benefit.

Employees may also sell back up to 10 of their 30 vacation days for cash under the abono pecuniário provision. Employers who fail to schedule vacation within 12 months of accrual owe double pay.

Annual Leave

CLT entitles every employee to 30 days of paid annual leave after 12 months of service, plus a vacation bonus equal to one-third of monthly salary. Employees may sell back up to 10 days under the abono pecuniário provision. Employers who fail to schedule vacation within the following 12 months owe double pay.

Sick Leave

Employers pay full salary for the first 15 days of illness. From day 16, INSS covers the employee via a sickness benefit calculated on the contribution salary. A medical certificate is required. Gloroots manages the INSS handover to prevent gaps in pay.

Maternity and Paternity Leave

CLT guarantees 120 days of fully paid maternity leave. Companies enrolled in the Empresa Cidadã program extend this to 180 days. Paternity leave is 5 days, extendable to 20 days under the same program.

Maternity pay is funded by the employer and reimbursed through INSS credits. The Empresa Cidadã extension is a tax incentive, not an additional cost to the employer. Gloroots tracks enrollment status and manages INSS reimbursement claims on your behalf.

Public Holidays

Brazil has 12 national public holidays. States and municipalities may declare additional local holidays, which are legally binding for employers in those jurisdictions. Work on public holidays must be compensated at 200% or offset with a compensatory day off.

Payroll, Tax and Statutory Contributions in Brazil

Brazilian payroll runs monthly. Employers must remit INSS, FGTS, RAT, and Sistema S contributions and file all payroll events via eSocial.

The highest-risk compliance issue is eSocial deadline adherence. S-1200 and S-1210 events must be filed by the 15th of the following month. New hires must be registered within 48 hours of their start date. Late or incorrect submissions trigger daily stacking fines that compound quickly.

The total employer cost multiplier is approximately 1.7x to 1.9x gross salary, combining INSS (~20%), FGTS (8%), RAT (1-3%), Sistema S (~5.8%), annualized 13th salary (~8.33%), and vacation bonus (~11%).

Employers handling employee personal data in payroll must comply with Brazil's LGPD (Lei Geral de Proteção de Dados). This requires appointing a Data Protection Officer (DPO), maintaining in-country data storage, and executing data processing agreements for any cross-border transfers.

IRRF income tax slabs

Employer and employee contributions

Work Visas and Permits in Brazil

Brazil offers four main work visa categories. Only a Brazilian legal entity can sponsor a foreign worker, and processing typically takes one to three months.

An EOR can act as the sponsoring entity for foreign employees. Gloroots prepares CLT-compliant contracts for visa applications and manages filings with the Ministry of Justice and Public Security. This removes the requirement for a client to hold its own Brazilian entity before hiring foreign nationals.

Visa types

Equity and ESOP Consulting in Brazil

Equity compensation is increasingly common in Brazil's technology and fintech sector, particularly among São Paulo-based startups competing for senior engineering talent.

Stock options granted to Brazilian employees are taxed as ordinary income at the point of exercise under Receita Federal rules. The employer must withhold IRRF on the spread between the exercise price and the fair market value. Vesting schedules and plan documentation must be structured carefully to avoid reclassification as salary, which would trigger INSS and FGTS contributions on the option value.

Misclassification Risk in Brazil

Misclassification occurs when a company engages a worker as a PJ contractor to avoid CLT obligations, but the relationship meets the legal criteria for employment.

The practice known as pejotização requires workers to incorporate as MEI or Simples Nacional entities and invoice for services. Brazilian labor courts actively scrutinize this arrangement and regularly reclassify such workers as employees.

Criteria courts use to identify employment

• Worker operates under employer direction and follows a fixed schedule set by the company.

• Worker is integrated into company operations and cannot delegate or subcontract the work.

• Worker receives regular fixed payments that resemble a salary in structure and frequency.

• Relationship involves exclusivity or personal service delivered to a single client only.

Penalties for misclassification

• Retroactive INSS contributions (20% employer, 8–11% employee) calculated from the start of the relationship.

• FGTS contributions plus a 40% employer penalty applied to the full retroactive FGTS balance.

• Back pay of 13th salary, full vacation entitlement, and the mandatory one-third vacation bonus.

• Fines issued by labor inspectors and potential reinstatement orders issued by labor courts.

An EOR employs workers directly under CLT contracts, with all statutory contributions remitted from day one, eliminating misclassification risk entirely.

What our clients are saying

“Managing 15 contractors across multiple countries was time-consuming and at times frustrating. Things like invoices and payment confirmations were all over email.”

Julio Arias

Co-founder, Sketchnote

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Hiring, Onboarding, Termination and Offboarding in Brazil

Hiring in Brazil requires a CLT-compliant employment contract, eSocial registration, and enrollment in INSS and FGTS before the employee's first day of work.

Every stage of the employment lifecycle carries specific legal deadlines. Missing them exposes employers to fines, labor court claims, and retroactive contribution liabilities that compound over time.

Gloroots manages each phase: contract preparation, eSocial filings, payroll setup, termination calculations, and offboarding documentation. Employers retain full visibility through a centralized dashboard while Gloroots executes local compliance obligations.

The sections below cover onboarding, termination, and offboarding in detail. Each phase has distinct filing requirements, payment timelines, and document obligations under Brazilian law.

Employers hiring across multiple Latin American markets can also review the employer of record Colombia and employer of record Mexico guides for regional compliance context.

Onboarding

Before day one

• Collect CPF, RG, bank account details, and Brazilian address from the new hire before the start date.

• Prepare a Portuguese-language CLT-compliant employment contract covering role, salary, hours, and termination terms.

• Confirm the applicable collective bargaining agreement (CBA) and any union registration requirements for the role.

• Verify the employee's Carteira de Trabalho Digital (CTD) is active and ready for the new employment registration.

Day one

• Register the new hire on eSocial within 48 hours of the employment start date as required by law.

• Update the employee's Carteira de Trabalho Digital to reflect the new employment relationship and employer details.

• Enroll the employee in INSS and FGTS and confirm the applicable contribution rates for the role.

• Deliver required equipment, system access, and health and safety orientation materials on the first day.

First week

• Confirm payroll setup is complete and the employee appears correctly in the eSocial system records.

• Verify vale-transporte request status and set up the transport voucher if requested by the employee.

• Confirm private health insurance enrollment if the benefit is included in the employee's package.

• Introduce the employee to applicable union contacts if the role falls under a collective bargaining agreement.

Beyond the first week

• Run the first monthly payroll by the 5th business day, remitting INSS, FGTS, RAT, and Sistema S contributions.

• File eSocial S-1200 and S-1210 events by the 15th of the month following the payroll period.

• Track the probation period end date (up to 90 days) and confirm permanent employment or initiate exit.

• Schedule annual leave within 12 months of accrual to avoid the double-pay Abono Pecuniário penalty.

Termination

CLT permits termination for just cause (misconduct, dishonesty) or without cause. Without-cause termination requires a notice period of 30 days plus 3 days per year of service (capped at 90 days), payment of the FGTS balance plus a 40% employer penalty, and settlement of all accrued entitlements within 10 days. Gloroots calculates and executes all termination payments and eSocial filings to minimize litigation exposure.

Offboarding

Settlement phase

• Calculate the finiquito: outstanding salary, proportional 13th salary, unused vacation plus the one-third bonus, and any applicable overtime or allowances.

• Pay the FGTS balance plus the 40% employer penalty for termination without cause within 10 calendar days.

• Issue unemployment insurance eligibility forms (Seguro-Desemprego) for employees who meet the qualifying criteria under Brazilian law.

• File the eSocial termination event and update INSS and FGTS systems within the required statutory deadline.

Documents and exit phase

• Deliver the signed termination receipt (Termo de Rescisão) and proof of all payments to the departing employee.

• Issue the employment certificate by updating the Carteira de Trabalho with the end date and reason for termination.

• Collect company equipment, revoke system access, and confirm secure handover of any company or client data.

• Retain all payroll and employment records for a minimum of 5 years as required by Brazilian law.

What's New: Recent Regulatory Changes in Brazil

Federal Decree No. 12,797/2025, effective January 1, 2026, raised Brazil's national minimum wage from $294 (BRL 1,518) to $314 (BRL 1,621) per month, a 6.79% increase that directly affects all CLT payroll calculations, FGTS contributions, and INSS floors.

• All CLT payroll calculations must be updated to reflect the $314 (BRL 1,621) minimum wage from January 1, 2026.

• FGTS contributions (8% of salary) and INSS employer contributions (20%) are recalculated on the new minimum wage floor.

• Employers using the Simples Nacional regime face updated contribution tables aligned with the new minimum wage.

• eSocial payroll events filed after January 1, 2026 must reflect the updated minimum wage or trigger validation errors.

• LGPD enforcement by the ANPD (Autoridade Nacional de Proteção de Dados) has intensified since 2023, with fines of up to 2% of Brazilian revenue (capped at $9,685,230 (BRL 50 million) per infraction) now actively imposed.

Employers should review payroll configurations and LGPD data processing agreements in Q1 2026. Assign a named HR or legal team member to own Brazil compliance monitoring, with the next scheduled review in Q2 2026.

Costs and Financial Planning for Hiring in Brazil

Hiring in Brazil costs significantly more than gross salary alone. Statutory contributions and mandatory benefits add 70–90% above base pay.

Two costs catch most first-time employers off guard. The annualized 13th salary equals roughly 8.33% of gross pay, paid in two installments in November and December. The vacation bonus adds approximately 11% of gross when the one-third bonus and 30-day entitlement are annualized. Both must be accrued monthly to avoid year-end cash-flow strain. For a detailed breakdown of what EOR pricing covers, see our employer of record cost guide.

Total employer cost in Brazil runs approximately 1.7x–1.9x gross salary. A Software Engineer earning USD 48,000 gross costs approximately USD 81,600–91,200 annually. An Operations Manager at USD 36,000 gross costs approximately USD 61,200–68,400 annually.

Common Challenges and How Gloroots Solves Them in Brazil

Brazil's compliance environment creates six recurring operational challenges for foreign employers. Each has a specific solution rather than a generic workaround.

Why Gloroots Is a Strong EOR Partner in Brazil

Gloroots is well suited for global companies hiring small or growing teams in Brazil without establishing their own local entity, particularly those that need CLT-compliant employment, eSocial administration, and employee data management aligned with LGPD requirements.

Country-specific capabilities include employing workers through a Brazilian legal entity, Portuguese-language support, eSocial administration covering applicable events such as S-1200 and S-1210, LGPD-aligned employee data management, and tracking of statutory payroll items including FGTS and 13th salary.

Gloroots can support accelerated Brazilian employment onboarding and manages the core employment lifecycle, including contracts, payroll, social-security and statutory contributions, leave administration, benefits, and offboarding.

Gloroots is a practical fit for market-entry teams, distributed technology hiring, and companies testing Brazil before committing to their own local entity. An EOR can allow companies to hire locally without first establishing and maintaining their own Brazilian corporate and employment infrastructure.

Teams evaluating EOR for startups can consider the model for early-stage Brazil operations. Companies expanding across Latin America can also review employer of record Mexico for multi-country hiring context.

Buyers evaluating multiple EOR providers should ask each vendor for its Brazilian employing-entity details, eSocial compliance track record, and documentation explaining its LGPD governance and data-protection responsibilities before making a final decision. A comparison of the best employer of record providers can support that evaluation.

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Conclusion

Brazil's total employer cost of approximately 1.7x–1.9x gross salary and CLT's strict termination rules make compliance the defining challenge for foreign employers.

Companies entering Brazil should decide between EOR and direct entity based on headcount, timeline, and long-term commitment. For teams under 15 employees or those testing the market, an EOR avoids the 2–3 month entity setup delay and the approximately $45,908 (R$237,000) one-off incorporation cost while maintaining full CLT compliance.

Frequently Asked Questions About Employer of Record in Brazil

The questions below address the most common compliance, cost, and operational concerns for foreign employers hiring in Brazil under CLT.

Is it legal to use an Employer of Record in Brazil?

Yes. Using an EOR in Brazil is fully legal. The EOR holds a Brazilian CNPJ, employs workers under CLT contracts, and bears all employer-of-record liability. The client company directs the work but has no direct employment relationship with the Brazilian worker, which also reduces permanent establishment risk under Brazilian tax law.

How much does an Employer of Record in Brazil cost?

EOR fees in Brazil typically range from USD 299 to 599 per employee per month, depending on the provider and headcount.

The larger cost is the total employer burden. Statutory contributions (INSS, FGTS, RAT, Sistema S) plus the annualized 13th salary and vacation bonus bring total employer cost to approximately 1.7x to 1.9x gross salary.

An illustrative EOR annual management fee of approximately R$39,377 compares favorably to approximately $53,429 (R$275,827) in annual direct entity compliance costs. For companies with fewer than 10 employees, the EOR model is the more cost-predictable option. See Gloroots pricing for country-specific rates.

How long does it take to hire an employee in Brazil through an EOR?

An EOR can onboard a Brazilian employee in 2 to 5 business days once the employment contract is signed and onboarding documents are collected.

Required documents include CPF, RG, and bank account details. The EOR registers the new hire on eSocial within 48 hours of the start date and updates the Carteira de Trabalho Digital.

By contrast, setting up a direct entity in Brazil takes a minimum of 2 to 3 months. For companies that need to place talent quickly, entity-free employment through an EOR is the faster, lower-risk path.

What employee benefits are mandatory in Brazil?

Brazilian CLT mandates several statutory benefits that every employer must provide.

• 13th-month salary, paid in two installments in November and December.

• 30 days of paid annual leave plus a vacation bonus equal to one-third of monthly salary.

• FGTS contributions of 8% of salary, deposited monthly into the employee's fund account.

• Employer-paid sick leave for the first 15 days; INSS covers benefits after that.

• Maternity leave of 120 to 180 days, depending on participation in the Empresa Cidadã program.

• Vale-transporte (transport voucher) on employee request.

• Daycare assistance for employers with more than 30 female employees.

• Bereavement and marriage leave as defined under CLT.

Gloroots manages all statutory benefit obligations and integrates them into payroll, reducing the risk of missed filings or underpayments.

What is the difference between an EOR and a PEO in Brazil?

An EOR is the sole legal employer and does not require the client to hold a Brazilian entity. The EOR operates under its own CNPJ and employs workers directly under CLT contracts.

A PEO co-employs workers but requires the client to already hold a Brazilian CNPJ. For companies entering Brazil without a local entity, only an EOR can provide compliant employment. A PEO cannot substitute for an EOR in this scenario.

To understand how the model works in practice, see how does EOR work.

Can an EOR sponsor work visas in Brazil?

Yes. Because the EOR holds a Brazilian CNPJ, it can act as the sponsoring entity for foreign employees applying for a work visa in Brazil.

Supported visa types include the Temporary Work Visa (VITEM-V), the Intra-Company Transfer Visa, and the Permanent Work Visa. The EOR prepares CLT-compliant employment contracts for the visa application and manages filings with the Ministry of Justice and Public Security.

Processing typically takes 1 to 3 months regardless of whether an EOR or a direct entity sponsors the visa. Gloroots manages the full sponsorship process so employees can start work without delays caused by entity setup.

When should I switch from an EOR to my own entity in Brazil?

Most advisors recommend considering a direct entity when your Brazilian headcount exceeds 10 to 15 employees and the operation is permanent rather than exploratory.

At that scale, EOR management fees may exceed the annual cost of running a direct entity, estimated at approximately $53,429 (R$275,827). Entity setup is a one-off cost of approximately $45,911 (R$237,014) and takes 2 to 3 months to complete.

EOR employees can typically be converted to direct hires after entity formation, making the transition manageable. For a detailed cost comparison, see employer of record cost.