• Insights

Preparing for the year-end in Brazil: what should employers do?

Written by
Veirano Advogados, one of the leading and most renowned Brazilian business and employment law firms.
This article provides a short ‘to do’ list for employers in Brazil before the end of 2019.

Review next year’s variable compensation eligibility targets

Variable compensation plans with annual targets require the company to review and adjust them in a timely way, or the previous year’s will apply by default. If the targets remain the same for several years, the chances are that they will become a permanent condition of the plan. In this case, the company would only be able to review the targets in employees’ favour, that is, give a higher payout.

Check if the applicable CBA needs a salary adjustment on 1 January

Collective Bargaining Agreements provide, among other things, for mandatory salary adjustment to compensate for inflation losses. Many have 1 January as the base date for this adjustment, which often coincides with performance reviews and merits increases. It is important to keep in mind that the company cannot grant a merit increase in lieu of the CBA increase, because they are different kinds of payment. If the CBA negotiations are delayed and the adjustment is behind schedule, the company can grant a voluntary increase to all employees in anticipation and in consideration of the imminent CBA adjustment. Then, when the CBA increase finally comes out, the company will be able to offset the previously granted voluntary increase.

Pay the second installment of 13th salaries

The due date for this payment is 20 December and all payroll systems will be prepared to make it. The key thing to note about it is that its calculation is based on total compensation, not on base salary only. It includes, overtime, bonuses and commissions and statutory premiums.

José Carlos Wahle
Partner - Brazil
Veirano Advogados