Employer Of Record. Expand your market to Brazil by remotely controlling your operations. No direct hires. Without setting up a local company. With legal security.
By Julhi Almiron Bonespírito,
with Graziela Barreto Luchetti.
Portuguese >
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Legale Overseas, No. 243
As our international legal operations, continue to expand, one of the most common questions we receive is: «What’s the simplest, safest, and most cost-effective way to expand into the Brazilian market?»
Without beating around the bush, the answer is in the title itself. And it’s not difficult to understand why.
One of the outcomes of the social isolation brought about by the pandemic (2019-2021) was undoubtedly the decline of physical borders and the disappearance of distances in work relationships.
This elimination of barriers between employers and employees around the world, due to technological advances catalyzed during that period, has broken all paradigms related to physical distance, to become this same variable rather than an objection, a possible competitive advantage.
This is the context in which the solutions and concept of the Employer of Record (EOR) have gained global prominence. EOR is an expertise through which a company takes over the local execution of its operations and assumes legal responsibilities on behalf of another company, ― its client ―, in a country where the client does not have a presence. This ensures compliance with the country’s legislation and regulations.
In simpler terms, an Employer of Record (EOR) is a solution that enables a company to expand its business globally by establishing its operational presence in a new country, ― note ―, without physically setting up a presence there or directly hiring local professionals under its own name. Instead, it establishes its presence through remote management, entrusting the local operational responsibility to a specialized EOR provider. In essence, this provider acts as the «legal» employer, assuming all legal responsibilities and obligations related to workforce and applicable taxes, while the company maintains control over the remote operations.
This has been one of the most compelling structures to establish in Brazil, particularly for small and medium-sized foreign enterprises, companies seeking to develop specific projects, and large enterprises interested in lightweight «entry formats» prior to making more substantial investments.
Advantages
of EOR
There are many advantages to hiring an EOR.
While establishing legal branches (or new corporate entities) and building internal workforces in target countries for an expanding business offer substantial benefits, many companies adopt hiring an EOR as an «entry» strategy ― or even as a stable solution for medium and small-sized enterprises. This allows them to swiftly overcome local bureaucracy inertia and minimize the expenditure of time and resources devoted to in-depth understanding, for instance, of applicable legislation, agreements with local unions, and customary administrative procedures.
Conducting operations in a new country through an EOR is both rapid and evidently more cost-effective.
An EOR can surmount administrative bureaucracy hurdles, fulfill local legal obligations, save time, mitigate risks, and reduce costs more effectively than any other expansion-focused model.
This allows the Employer of Record solution to establish its presence primarily through operational control ― deep down, the only thing that really matters ― overseeing local production capacity and the performance of professionals contracted through the EOR.
Choosing
an EOR
To secure a legally sound and high-performance Employer of Record solution, a solid legal framework is paramount.
In all letters: it requires an exceptionally reliable law firm with technical maturity and international experience to legally navigate the journey from research to contracting an EOR solution provider.
With the support of an experienced law firm, the selection should also consider (a) the EOR’s experience in managing technically similar operations; (b) solid knowledge of local legislation, especially regarding labor relations, which includes legislative, jurisprudential, and accounting nuances, as well as local customs and practices; (c) the EOR’s reputation, including the quality of institutional relationships with local government, unions, the judiciary, and the community; (d) the track record of the EOR’s relationships with its employees; and even (e) whether the EOR has a history of respecting and upholding the intellectual property rights of its clients.
Borderless ― For Real
Given the absence of borders in today’s world, companies providing EOR solutions with international presence frequently establish international teams as well. They compensate each employee in accordance with the legislation of their country of residence, creating interdisciplinary multicultural teams, welcoming diverse professional profiles, and blending various employment contract models.
EOR in Brazil:
People Management
The services provided by an Employer of Record typically encompass all major processes of People Management. This includes recruitment and selection, onboarding, compensation, professional development, and, of course, terminations, all in accordance with their legal implications and the specifics of local contracts and regulations. This also involves fundamental human resources administration tasks such as tracking work hours (if applicable), payroll processing, strategic management of benefit packages, and profit-sharing programs.
Brazil, renowned for its vast market size, also possesses a rather unique legal framework when it comes to labor relations, company formation, and taxation.
Therefore, engaging an EOR provider with the appropriate legal support can be an especially fitting solution.
Lower Costs
Undoubtedly, hiring an EOR provider is an agile, lightweight, and economical solution for companies expanding internationally. It can be highly advantageous and relatively secure if the selection process is supported by experienced legal counsel and takes into account the EOR’s experience, fluency in applicable laws, track record of respecting its employees, and history of honoring commitments with its clients.
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Labour Relations, Global Mobility and People Management ― Our specialized unit for personal and labor relations advises administrative councils and business directors on how to handle continuous change, redesigning human capital management macroprocesses (integration, remuneration, development, accountability and global mobility); leading negotiations between unions and collective bargaining agreements; designing policies and facilitating workshops on inclusion, respect for diversity, observance of Human Rights and community relations; offering legal support for the leaders of Startups and the entrepreneurs of the emergent disruptive solutions; planning, implementing and monitoring Home Office and Anywhere Office arrangements; and providing legal support to labor relations involving Information Technology, digital connectivity, cybersecurity, professional secrecy, privacy agreements, non-competition agreements and protection of personal data (LGPD & GDPR).
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Focussing on what really matters ― We are an independent law firm, dedicated to providing legal support for the international operations and investments of foreign companies in Brazil and the internationalization of Brazilian companies, from preparation to support in the destination countries. Our Purpose is to identify and catalyze the best business opportunities, clearing the barriers that compromise our Clients’ time and energy, so that they can focus on the work that really matters: exceeding the expectations of their shareholders. We are not just lawyers. We are business consultants and strategists. Our ambition is to make the world a better place through our work and contribute to the improvement of the Brazilian business environment, positively influencing the leaders we deal with, as well as balancing, in a consistent and sustainable way, the creation of value for our clients with the creation of value for our professionals and the community.
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Non-negotiable boundaries ― Either one has integrity, or one has nothing. Our company prides itself of the care it gives to every ethical aspect of human relations and of everyday work, ensuring that our team never crosses the line of no return. That is why we hold the highest standard of internal demand, guaranteeing that every deal is made only for the advantages of its terms. We do not restrain ourselves to the strict observance of Brazilian Law and the Law of the countries of origin of the corporations and investors we deal with, alone. In addition, we follow all the indications of the «United Nations Convention against Corruption» as well as the «Convention on Combating Bribery of Foreign Officials in International Business Transactions» of the Organization for Economic Cooperation and Development (OECD). We also follow the guidelines about «Good Practice Guidance on Internal Controls, Ethics and Compliance» (2009), as well as the «Guidelines for Multinational Enterprises » (2011), both issued by the OECD. We believe, that doing the right thing is good for business, and that honest work strengthens the belief, that despair over the ways of the world shall not prevail.
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