Last updated: April 14, 2026
CLT (Brazil)
GemmWork DefinitionCLT (Consolidação das Leis do Trabalho) is Brazil's comprehensive labor code, originally enacted in 1943 and extensively reformed through 2017. It governs every aspect of employment in Brazil and applies to all workers, regardless of whether they are employed directly or via EOR.
Why CLT Makes Brazil the Most Expensive Country to Exit
CLT mandates a series of statutory benefits that cannot be contractually waived:
| Benefit | Requirement |
|---|---|
| FGTS contributions | 8% of monthly gross salary, deposited monthly |
| FGTS 40% penalty | On the full accumulated balance, upon without-cause termination |
| 13th salary | Mandatory 13th month payment, paid in two installments |
| Aviso prévio | 30+ days notice (3 additional days per year of service, up to 90 days) |
| Férias (vacation) | 30 days paid vacation + 1/3 bonus |
| Vale-transporte | Transportation allowance |
CLT and EOR Arrangements
EOR providers handle CLT compliance on behalf of US companies — payroll, contributions, and statutory benefits are administered locally. However, EOR does not eliminate CLT exit costs. When an employment relationship ends (whether via EOR or direct entity), CLT obligations are triggered in full.
This is the core of the Hotel California problem in Brazil: the exit costs are not EOR fees — they are statutory CLT obligations that follow the worker, not the employer structure.
The 2017 Reform
Brazil's 2017 labor reform (Lei 13.467) introduced some flexibility:
- Permitted collective bargaining to override some statutory minimums
- Enabled "green and yellow" contracts for new hires (reduced FGTS obligations)
- Expanded scope for intermittent work contracts
However, the core CLT protections — FGTS, 13th salary, vacation — remain unchanged.
In the GEMM Framework
CLT is the primary reason Brazil scores 🔴 High on Compliance Stickiness in the GEMM Scorecard. GemmWork strongly recommends planning exit strategy before entering Brazil, not after.
Related Terms
- Compliance Stickiness— A GemmWork scoring variable measuring how difficult and expensive it is to termi...
- FGTS (Brazil)— Brazil's mandatory severance guarantee fund: employers deposit 8% of monthly gro...
- Hotel California (EOR)— The phenomenon where exiting an EOR arrangement triggers mandatory statutory sev...
- Employer of Record (EOR)— A third-party company that becomes the legal employer for workers in foreign cou...
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Country data based on: August 2025.