What Is CLT in Brazil? How Brazilian Employment Contracts Work

CLT stands for Consolidação das Leis do Trabalho, Brazil’s Consolidated Labor Laws, enacted in 1943. In everyday business use, a CLT contract means the standard formal employment contract in Brazil, which comes with a registered work record, mandatory benefits and defined costs at termination.

What does CLT mean in Brazil?

CLT is the main body of Brazilian labor law. It sets the rules for working hours, wages, vacation, dismissal and workplace rights. When someone is hired under CLT, they are a registered employee, as opposed to a contractor who invoices through a company, known as PJ.

What does a CLT contract guarantee?

• A registered employment record (Carteira de Trabalho, now digital)
• A maximum of 44 working hours per week, with overtime paid at least 50% above the regular rate
• A 13th month salary, paid in two installments
• 30 days of paid vacation per year, plus a bonus of one third of the salary
• Monthly FGTS deposits by the employer, equal to 8% of gross salary, into a fund the employee can access in specific cases
• Paid weekly rest, public holidays and maternity leave of 120 days, extended to 180 days for companies in the Empresa Cidadã program

What does a CLT employee cost beyond salary?

Employer costs include social security contributions (INSS), the 8% FGTS, the provisions for the 13th salary and vacation, and benefits set by law or by union agreements, such as transport vouchers. The total is well above the gross salary, and the exact amount depends on the company’s tax regime, sector and collective agreements.

What happens when a CLT employee is dismissed?

Dismissal without cause triggers notice of 30 days plus 3 days for each year of service, up to 90 days, a penalty of 40% on the FGTS balance, and payment of proportional 13th salary and vacation. This is why termination costs should be planned from the first hire.

Can a foreign company hire under CLT without a Brazilian entity?

Not directly. A CLT employer must be a legal entity registered in Brazil. A foreign company has two routes: open a subsidiary, or use an Employer of Record that hires the employee under CLT on its behalf.

Frequently asked questions

Is a CLT employee the same as a contractor? No. A contractor (PJ) invoices as a company. If the relationship has subordination, regularity, personal service and fixed pay, Brazilian courts can reclassify the contractor as an employee.

Is CLT mandatory? For an employment relationship, yes. Companies cannot waive the rights it guarantees.

What is the CLT probation period? Up to 90 days, through a fixed term experience contract.

Need to hire in Brazil without opening a company? Gescon’s PEO/EOR service hires under CLT on your behalf and handles payroll and compliance. Learn more on our services page.