What's the Real Cost of an Employee?
To hire an employee in Brazil, it’s important to consider that there are some costs involved, such as paid vacations, governmental fees and some other. Most of them, are not amounts that the employee will receive directly every month, but it’s responsibility of the company to save the specific amount or pay it to the government on behalf of the employee. Also, in Brazil, the company has to pay one vacation per year to the employee, therefore this will be a cost of one entire month of work of the employee (1 month salary) + ⅓ of the salary when the employee goes on vacation.
Below, we will go through the costs that the company needs to pay directly or on behalf of the employee:
1/12 Vacations: This is part of the value that the employee doesn't receive directly (the company puts it in a separate account), unless if the employee is dismissed. When the employee is in the company for 1 year (= 12/12) he has the right to get integral vacations and the company needs his monthly salary plus 1/3 of the salary. If the employee is dismissed before completing 1 year without vacations, he receives the number of months divided by 12 as vacations.
Example: The employee worked 9 months and was dismissed, so he will receive 9/12 + 9/12 related to the 1/3 of the vacations.
1/3 Vacations: On the month on the employee's vacation, he should receive 1/3 of his monthly salary.
1/12 13th Salary: Always in the end of the year, the company pays one extra salary to the employee (in this case, it can't be paid monthly).
Example: if the month of december arrives and the employee has been working for the last 6 months, it will be calculated 6/12 (related to the employee's salary) and the employee will receive this value. the same applies if the employee is dismissed.
FGTS (8%): It's a monthly deposit, corresponding to a percentage of 8% of the salary of the employee, that the employer is obligated to deposit in the bank account in the name of the employee that should be opened in the Federal Saving Bank.
INSS Company's part on vacation and 13th salary: it's 1/12 of the 20% of the salary of the employee.
INSS on Salary: 20% of the salary of the employee (If 20% of the salary is above R$ 608,44, the company will only pay R$ 608,44 since this is the limit).
Transportation Voucher: Obligatory benefit. If the employee lives more than one kilometer from the office, it’s obligatory that the company pays the transportation. The client has the option to receive the transportation voucher and have 6% of the salary deducted or choose not to receive the transportation voucher and have nothing of the salary deducted. Decide having or not having the transportation voucher will depend on the salary.
Meal Voucher: Obligatory benefit. Each company has a Collective Convention, which is an agreement between labor unions and employers. This document stipulates the minimum value that employees must be paid for meal vouchers.
Below, we will go through the direct costs that will be deducted monthly from the salary of the employee:
Transportation Voucher (6%): 6% of the salary of the employee is deducted. If the employee has a high salary (one in which 6% would be higher than value spent on transportation) the employee can choose not to have the Transportation Voucher and the 6% deduction.
INSS Retido (8% to 11%): It's discounted from 8% to 11% of the salary of the employee for the collection of the social security contribution of individual taxpayers, the percentage depends on the salary of the employee. Obs: link da tabela oficial.
IRRF: Net salary below R$ 1.903,98 don't need to pay this. For the salaries above this value, it’s necessary to check this table
Union: The employee needs to pay one day of his salary to the Syndicate that his position belong to.
Example 1: Gross salary of R$ 1.500
The total cost of the employee for the company will be R$ 736,67 per month, not considering the salary. The net salary that the employee will receive will be R$ 1.285,83.
Example 2: Gross salary of R$ 3.000
The total cost of the employee for the company will be R$ 1.473,33 per month, not considering the salary. The net salary that the employee will receive will be R$ 2.481,67.
Example 3: Gross salary of R$ 6.000
The total cost of the employee for the company will be R$ 2.305,81 per month, not considering the salary. The net salary that the employee will receive will be R$ 4.963,33.
Important Note: When the employee is dismissed from the company, there is a value that needs to be paid to him for the time that he worked in the company, it’s called Contingency for Termination. So, this is the value will be paid for the employee when he is dismissed.
Access here to calculate the costs that your company will have with the employee and check the descriptions of the tool in this Article.