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Employment Agreement Essentials

Understand the key elements of employment contracts in Brazil

Types of employment agreements

In Brazil, the labor law framework outlines several types of employment agreements, each catering to different work arrangements. These variations are crucial for both employers and employees to understand. Here's a breakdown of the most common types:

Indefinite Term Contract (Contrato por Tempo Indeterminado)

This is the most common type of employment agreement in Brazil, offering long-term employment with no predetermined end date. It provides stability for employees and flexibility for employers in terms of staffing needs. Termination can occur by mutual agreement, without a notice period in specific cases outlined by law, or with notice periods defined by the Consolidation of Labor Laws (CLT) depending on the initiative for termination.

Fixed-Term Contract (Contrato por Tempo Determinado)

Fixed-term contracts have a predefined end date specified in the agreement. These are typically used for temporary projects, seasonal work, or probationary periods. The maximum duration for a fixed-term contract is generally two years. Extensions are possible upon mutual agreement, but the total duration cannot exceed the two-year limit. Termination during the fixed term usually requires justification based on specific legal provisions. Early termination without cause by the employer may incur severance pay obligations.

Intermittent Work Contract (Contrato de Trabalho Intermitente)

Introduced by a recent labor reform, this type of contract allows for episodic work with alternating periods of service provision and inactivity. This can be suitable for tasks with fluctuating demand. Key characteristics include a mandatory written agreement, a maximum period of inactivity between work assignments that cannot exceed three months, and limited employee rights during inactive periods compared to a regular employment contract.

Additional Considerations

Part-time work arrangements can fall under any of the categories mentioned above, with working hours less than the standard established by law (typically 44 hours per week). A trial period can be included within a fixed-term or indefinite-term contract, with a maximum duration of three months.

Essential clauses

Brazilian employment agreements, governed by the Consolidation of Labor Laws (CLT), should incorporate specific clauses to ensure clarity, compliance, and protection for both employers and employees.

Identification of Parties

The agreement should include the full legal name, CNPJ (National Registry of Corporate Taxpayers) number, and registered address of the employer. It should also include the full name, CPF (Cadastro de Pessoas Físicas - Individual Taxpayer Registry) number, work address (if applicable), and home address of the employee.

Job Description and Remuneration

The agreement should provide a clear and concise description of the employee's duties and responsibilities. It should also outline the base salary amount, payment frequency (typically monthly in Brazil), overtime pay rates (if applicable), and any benefits offered such as health insurance, vacation pay, and 13th month salary (additional bonus mandated by law).

Working Hours and Leave

The agreement should define the regular working hours per week or day, including rest and meal breaks. It should specify the annual leave entitlement and method for calculating leave accrual. It should also reference national public holidays and employee entitlements regarding these days.


The agreement should outline the notice period required for termination by both the employer and the employee, following the provisions of the CLT depending on the initiative for termination and contract type. It should also briefly mention severance pay requirements in case of termination without cause by the employer.

The agreement may include a clause protecting confidential company information if applicable to the role. It may also address ownership of any intellectual property created by the employee during their employment. It should specify the process for resolving any disagreements arising from the employment agreement.

Probationary period

The probationary period, or "prazo de experiência" as it's known in Brazil, is a standard part of employment agreements. This period allows both the employer and the employee to assess their suitability for a long-term working relationship.

Key Points on Probationary Periods

  • Maximum Duration: In Brazil, the maximum duration for a probationary period is three months. This applies to both indefinite-term and fixed-term contracts. Employers are not allowed to extend the probationary period beyond this limit.
  • Purpose: The probationary period acts as a trial phase. It allows employers to evaluate an employee's skills, work ethic, and fit within the company culture. Employees can also use this time to determine if the role aligns with their career goals and expectations.
  • Early Termination: During the probationary period, either the employer or the employee can terminate the contract with a shorter notice period compared to a confirmed employee. No severance pay is required in these cases unless there's evidence of discrimination or another illegal termination reason.

While the Consolidation of Labor Laws (CLT) doesn't explicitly mention probationary periods, court rulings have established their legality and general parameters.

Considerations for Employers

  • Legitimate Purpose: The probationary period should be used to assess job-related skills and not for discriminatory purposes.
  • Clear Communication: The terms and expectations of the probationary period should be clearly outlined in the employment agreement and during the onboarding process. This includes the performance evaluation methods used to assess the employee's suitability.

Considerations for Employees

  • Negotiation: While the maximum duration is three months, there may be some room for negotiation during the contract acceptance stage, especially for senior positions.
  • Performance: Employees should actively seek feedback and demonstrate strong performance during the probationary period to increase their chances of confirmation in the role.

Confidentiality and non compete clauses

In Brazilian employment agreements, confidentiality and non-compete clauses can be incorporated to safeguard an employer's legitimate business interests. However, these clauses must adhere to specific legal principles to be enforceable.

Confidentiality Clauses

Confidentiality clauses aim to protect an employer's sensitive business information from unauthorized disclosure by employees. These clauses are particularly relevant for roles with access to trade secrets, customer data, or proprietary information.

Key Points:

  • Permissible Scope: Confidentiality clauses can restrict the disclosure of confidential information during and even after employment. However, the definition of "confidential information" needs to be clear, specific, and reasonable to be enforceable by courts. Broad restrictions encompassing general knowledge or publicly available information may be deemed unfair and unenforceable.
  • Employee Obligations: The clause should outline the employee's obligations regarding maintaining the confidentiality of protected information. This may include restrictions on sharing information with unauthorized individuals or using it for personal gain.

Legislative References:

There are no explicit legal provisions regarding confidentiality clauses in Brazil's Consolidation of Labor Laws (CLT). However, general contractual principles and obligations of good faith apply. Courts will consider the reasonableness of the clause's scope and its adherence to these principles.

Non-Compete Clauses

Non-compete clauses restrict an employee's ability to work for a competitor or pursue similar business activities after leaving the company. These clauses can be helpful in protecting an employer's client relationships, trade secrets, or specific know-how.

Legal Recognition:

  • Non-explicit but Enforceable under certain conditions: Non-compete clauses are not explicitly addressed in the CLT. However, court rulings suggest they may be enforceable under certain circumstances.

Enforceability Criteria:

  • Reasonableness Test: Similar to confidentiality clauses, reasonableness is the key factor for enforceability. Courts will consider factors such as:
    • Geographic Scope: The restricted geographic area should be reasonable in relation to the employer's legitimate interests.
    • Duration of Restriction: The time period for which the employee is restricted from competing should be reasonable and not excessively hinder their ability to find new employment in their field.
    • Nature of the Work: The clause's limitations should be proportionate to the employee's role and level of access to confidential information.
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