Category: Labor Law

4 MIN

READ

For a Brazilian company opening its first U.S. office, hiring American employees can feel deceptively simple compared to Brazil’s heavily codified labor system (CLT). There’s no equivalent of the carteira de trabalho, no single federal labor code governing every aspect of employment, and no 13º salário or mandatory FGTS deposits. But this apparent simplicity is […]

/ By Drummond Advisors

For a Brazilian company opening its first U.S. office, hiring American employees can feel deceptively simple compared to Brazil’s heavily codified labor system (CLT).

There’s no equivalent of the carteira de trabalho, no single federal labor code governing every aspect of employment, and no 13º salário or mandatory FGTS deposits.

But this apparent simplicity is misleading. U.S. employment law is fragmented, inconsistent across states, and largely built on unwritten expectations rather than a single statute.

An employee handbook is the tool that fills that gap and increases the employment relationships in US.

The U.S. Has No CLT — And That’s the Risk, Not a Relief

In Brazil, much of what protects both employer and employee is already written into national law. In the U.S., there is no single federal labor code. Employment law is a patchwork of:

  • Federal law (wage and hour rules under the FLSA, anti-discrimination law under Title VII, family/medical leave under the FMLA)
  • State law, which varies enormously — California, New York, and Texas each have different rules on overtime, meal breaks, paid sick leave, and termination
  • Local ordinances, since some cities impose their own minimum wage or scheduling laws on top of state and federal rules

Nothing tells a new employee — or a new employer — what the rules are unless someone writes it down. The handbook becomes the private substitute for the public code that doesn’t exist. Without one, a Brazilian parent company has no reliable way to make sure its U.S. subsidiary is operating within U.S. law, since there is no default rulebook to fall back on.

“Employment at Will” Is Unfamiliar — and Needs to Be Explained Carefully

One of the biggest conceptual differences from Brazilian labor law is employment at will. In most U.S. states, either the employer or the employee can end the employment relationship at any time, for almost any reason (or no reason), without notice or severance — a stark contrast to CLT’s aviso prévio, severance obligations, and just-cause requirements for termination.

This doesn’t mean a U.S. employer can do whatever it wants, however.

At-will employment has major exceptions: employers cannot fire someone for a discriminatory reason, in retaliation for a complaint, or in violation of a contract.

A handbook is where a company formally states it’s at-will policy and documents the legal boundaries around it — which protects the company from being accused of acting arbitrarily or unlawfully, while making the flexibility of the U.S. system clear to a Brazilian management team used to more rigid rules.

Image: Canva

U.S. Employment Disputes Are Driven by Documentation

Brazilian labor courts (Justiça do Trabalho) tend to rely on statute and established precedent to resolve disputes. In the U.S., outcomes are heavily driven by what a company can prove it told employees and how consistently it enforced its own rules. In a wrongful termination claim, a discrimination complaint, or a wage dispute, the first thing an agency or opposing attorney typically requests is the employee handbook and the signed acknowledgment that the employee received it.

A foreign parent company without a handbook — or with one copy-pasted from its Brazilian policies — is often unable to show it applied consistent, compliant policies.

That gap is exactly what create risks for the Company.

It Prevents Costly Missteps From Assuming Brazilian Practices Apply

Many Brazilian companies unintentionally import CLT-style assumptions into their U.S. operations — for example, assuming a “trial period” works the same way, or that severance/notice periods are legally required, or that a 40-hour week automatically qualifies an employee for the same overtime protections as in Brazil.

U.S. wage-and-hour law (overtime eligibility, exempt vs. non-exempt classification, meal-and-rest-break rules) works entirely differently and varies by state.

A handbook forces the company to research and create policies that reflect U.S. — and the specific state’s — requirements, rather than defaulting to what feels familiar.

It Builds Trust With U.S. Employees and Regulators

American employees generally expect a handbook as a normal part of onboarding — it’s read as a sign of a stable, well-run employer.

Its absence can raise questions regarding the understanding from the Company side about operate in U.S.

A clear, professionally prepared handbook signals that the U.S. entity is operating on equal footing with domestic competitors, not treating its American office as an afterthought.

The Bottom Line

For a Brazilian company entering the U.S. market, an employee handbook isn’t just good HR practice — it’s the primary way to translate an unfamiliar, decentralized legal system into a concrete, enforceable set of internal rules.

This article is for general informational purposes and does not constitute legal advice. Because U.S. employment law varies significantly by state, companies expanding into the U.S. should work with a U.S. employment attorney — ideally one experienced with foreign parent companies — to draft a handbook tailored to the specific state(s) where they operate.

4 MIN

READ

International careers are increasingly common today, as professionals may establish themselves and contribute for years to Brazil’s social security system before moving to another country and continuing their careers under a different social security system. International mobility, however, highlights an issue that is often considered only when retirement approaches: what happens to the contributions made […]

/ By Drummond Advisors

International careers are increasingly common today, as professionals may establish themselves and contribute for years to Brazil’s social security system before moving to another country and continuing their careers under a different social security system.

International mobility, however, highlights an issue that is often considered only when retirement approaches: what happens to the contributions made in each country?

The answer is not always straightforward, as contributing to social security systems in different countries does not automatically result in the conversion or combination of those contributions into a single benefit.

Each country has its own requirements for granting and calculating retirement benefits, and the way each contribution period interacts with the other depends, among other factors, on whether an International Social Security Agreement is in place.

These agreements serve as instruments for coordinating and integrating the social security systems of different countries. Within the established rules, they may allow contribution periods completed abroad to be used to meet the requirements for eligibility for certain benefits.

Even so, the existence of an international social security agreement does not mean that contribution periods completed in the signatory countries will be automatically credited or combined. The use of these periods depends on an analysis of the conditions established in the applicable agreement and the specific rules of each country’s social security legislation, which continue to apply on a complementary basis. Accordingly, each country determines whether the applicable requirements have been met and, when appropriate, grants and pays the benefit for which it is responsible, in accordance with the agreement and its domestic legislation.

Image: Canva

The Social Security Agreement Between Brazil and the United States

As an example, the Social Security Agreement between Brazil and the United States may, subject to certain criteria, allow a professional who has worked in both countries to use periods completed under one system, in certain circumstances, to meet the eligibility requirements for retirement benefits under the other system, even though each country applies its own social security rules to determine the rights and benefits owed.

Therefore, the existence of the agreement does not, by itself, mean that all contribution periods will be used in the most advantageous manner. It is from this perspective that international social security planning becomes particularly important.

Likewise, the possibility of receiving social security benefits from more than one country is one of the most valuable aspects of an international professional career.

Depending on the individual’s contribution history and whether the requirements of each system are met, a professional may be entitled to separate retirement benefits, granted and paid independently by the respective countries. In this context, a strategic analysis can not only determine whether contribution periods may be used, but also evaluate the alternatives available under each system, helping ensure that social security rights built over the course of an international career are properly identified and utilized. This may even allow for the receipt of both Brazilian and U.S. retirement benefits.

From this perspective, rather than analyzing retirement only when the benefit is about to be claimed, planning makes it possible to assess the professional’s entire contribution history in advance and understand how the systems involved interact, allowing different scenarios to be compared and helping identify the most appropriate strategy.

For Brazilians living abroad, for example, one of the key questions is whether maintaining social security contributions in Brazil is necessary or advisable. There is no single answer to this question. The decision depends on several factors, including contribution history, the insured individual’s age, the country where they work, the existence of a social security agreement, and the requirements that remain to be met to qualify for benefits.

In certain situations, continuing to contribute in Brazil may be relevant to meeting eligibility requirements or obtaining more favorable retirement conditions. In others, however, making contributions without prior analysis may represent a cost that does not necessarily result in a corresponding social security advantage.

Planning also involves reviewing social security records. In Brazil, for example, the National Social Information Registry (Cadastro Nacional de Informações Sociais or CNIS) contains essential data regarding employment relationships, contributions, and earnings considered by the National Social Security Institute (INSS). Reviewing these records makes it possible to identify and correct missing information, inconsistencies, or outstanding issues, helping mitigate the risk that such problems could affect either recognition of eligibility or the calculation of benefits. Advance review and correction are particularly important for professionals with international career histories.

Ultimately, international social security planning is not limited to determining when an individual will be able to retire. It involves understanding how contributions made in different countries, international agreements, and future contribution decisions can be strategically organized according to each professional’s circumstances and objectives.

In this context, conducting this analysis in advance creates greater opportunities to correct inconsistencies, evaluate alternatives, and direct future contributions efficiently for professionals who have built or intend to build an international career, providing greater predictability and security in retirement planning.


Written by Daniel Rangel and Juliana Lins

2 MIN

READ

Brazilians who worked and contributed to Brazil’s social security system (INSS) before moving to the United States often have questions about whether those contribution periods can be considered when applying for retirement benefits. Since 2018, the Brazil–U.S. Social Security Agreement has allowed, under certain circumstances, periods of coverage in both countries to be considered when […]

/ By Drummond Advisors

Brazilians who worked and contributed to Brazil’s social security system (INSS) before moving to the United States often have questions about whether those contribution periods can be considered when applying for retirement benefits.

Since 2018, the Brazil–U.S. Social Security Agreement has allowed, under certain circumstances, periods of coverage in both countries to be considered when determining eligibility for social security benefits.

How Does It Work?

The agreement can help individuals who have not independently met the minimum eligibility requirements in Brazil or the United States.

However, it does not transfer contributions from one country to the other or combine the amounts paid to create a single retirement benefit. Each country:

  • reviews the claim according to its own laws;
  • calculates the benefit for which it is responsible; and
  • pays the corresponding amount.

Depending on an individual’s contribution history, they may be eligible for benefits paid by both Brazil and the United States. This does not, however, automatically mean they will receive two full retirement benefits.

Image: Canva

Should I Continue Contributing to the INSS?

The answer depends on each individual’s circumstances.

Before continuing or resuming contributions in Brazil, it is important to assess:

  • how much time has already been contributed in each country;
  • whether the records in the CNIS are accurate;
  • which social security rules may apply;
  • whether it will be necessary to totalize contribution periods;
  • which contribution category is appropriate; and
  • whether making additional contributions could actually improve the benefit.

Contributing without proper planning may result in payments that do not produce the expected benefit.

Brazil–U.S. Social Security Planning

An integrated review of an individual’s INSS and Social Security history can help identify the applicable requirements, correct inconsistencies, and organize the necessary documentation.

The Drummond Advisors team is available to assist clients who worked in Brazil and currently live or work in the United States.

For more information about Brazil–U.S. Social Security Planning, contact our team.


Written by Daniel Rangel, Head of Labor Law at Drummond Advisors

MIN

READ

For a Brazilian company opening its first U.S. office, hiring American employees can feel deceptively simple compared to Brazil’s heavily codified labor system (CLT).   There’s no equivalent of the carteira de trabalho, no single federal labor code governing every aspect of employment, and no 13º salário or mandatory FGTS deposits.   But this apparent simplicity is misleading. U.S. employment law is fragmented, inconsistent across states, and largely built on unwritten […]

/ By Drummond Advisors

For a Brazilian company opening its first U.S. office, hiring American employees can feel deceptively simple compared to Brazil’s heavily codified labor system (CLT).  

There’s no equivalent of the carteira de trabalho, no single federal labor code governing every aspect of employment, and no 13º salário or mandatory FGTS deposits.  

But this apparent simplicity is misleading. U.S. employment law is fragmented, inconsistent across states, and largely built on unwritten expectations rather than a single statute.  

An employee handbook is the tool that fills that gap and increases the employment relationships in US. 

The U.S. Has No CLT — And That’s the Risk, Not a Relief 

In Brazil, much of what protects both employer and employee is already written into national law. In the U.S., there is no single federal labor code. Employment law is a patchwork of: 

  • Federal law (wage and hour rules under the FLSA, anti-discrimination law under Title VII, family/medical leave under the FMLA) 
  • State law, which varies enormously — California, New York, and Texas each have different rules on overtime, meal breaks, paid sick leave, and termination 
  • Local ordinances, since some cities impose their own minimum wage or scheduling laws on top of state and federal rules 

Nothing tells a new employee — or a new employer — what the rules are unless someone writes it down. The handbook becomes the private substitute for the public code that doesn’t exist. Without one, a Brazilian parent company has no reliable way to make sure its U.S. subsidiary is operating within U.S. law, since there is no default rulebook to fall back on. 

“Employment at Will” Is Unfamiliar — and Needs to Be Explained Carefully 

One of the biggest conceptual differences from Brazilian labor law is employment at will. In most U.S. states, either the employer or the employee can end the employment relationship at any time, for almost any reason (or no reason), without notice or severance — a stark contrast to CLT’s aviso prévio, severance obligations, and just-cause requirements for termination. 

This doesn’t mean a U.S. employer can do whatever it wants, however.  

At-will employment has major exceptions: employers cannot fire someone for a discriminatory reason, in retaliation for a complaint, or in violation of a contract. 

A handbook is where a company formally states it’s at-will policy and documents the legal boundaries around it — which protects the company from being accused of acting arbitrarily or unlawfully, while making the flexibility of the U.S. system clear to a Brazilian management team used to more rigid rules. 

Image: Canva

U.S. Employment Disputes Are Driven by Documentation 

Brazilian labor courts (Justiça do Trabalho) tend to rely on statute and established precedent to resolve disputes. In the U.S., outcomes are heavily driven by what a company can prove it told employees and how consistently it enforced its own rules. In a wrongful termination claim, a discrimination complaint, or a wage dispute, the first thing an agency or opposing attorney typically requests is the employee handbook and the signed acknowledgment that the employee received it. 

A foreign parent company without a handbook — or with one copy-pasted from its Brazilian policies — is often unable to show it applied consistent, compliant policies.  

That gap is exactly what create risks for the Company. 

It Prevents Costly Missteps From Assuming Brazilian Practices Apply 

Many Brazilian companies unintentionally import CLT-style assumptions into their U.S. operations — for example, assuming a “trial period” works the same way, or that severance/notice periods are legally required, or that a 40-hour week automatically qualifies an employee for the same overtime protections as in Brazil.  

U.S. wage-and-hour law (overtime eligibility, exempt vs. non-exempt classification, meal-and-rest-break rules) works entirely differently and varies by state.  

A handbook forces the company to research and create policies that reflect U.S. — and the specific state’s — requirements, rather than defaulting to what feels familiar. 

It Builds Trust With U.S. Employees and Regulators 

American employees generally expect a handbook as a normal part of onboarding — it’s read as a sign of a stable, well-run employer.  

Its absence can raise questions regarding the understanding from the Company side about operate in U.S.  

A clear, professionally prepared handbook signals that the U.S. entity is operating on equal footing with domestic competitors, not treating its American office as an afterthought. 

The Bottom Line 

For a Brazilian company entering the U.S. market, an employee handbook isn’t just good HR practice — it’s the primary way to translate an unfamiliar, decentralized legal system into a concrete, enforceable set of internal rules.  

This article is for general informational purposes and does not constitute legal advice. Because U.S. employment law varies significantly by state, companies expanding into the U.S. should work with a U.S. employment attorney — ideally one experienced with foreign parent companies — to draft a handbook tailored to the specific state(s) where they operate. 


Written by Daniel Rangel and Vicky Alvarez Phillips 

6 MIN

READ

The proposal to change working hours in Brazil has reached a significant milestone in the legislative agenda. The Chamber of Deputies has approved, in two rounds of voting, the Constitutional Amendment Proposal (PEC) that eliminates the traditional 6×1 work schedule (six working days followed by one day off). The approved text reduces the maximum weekly […]

/ By Marcos Ferreira

The proposal to change working hours in Brazil has reached a significant milestone in the legislative agenda. The Chamber of Deputies has approved, in two rounds of voting, the Constitutional Amendment Proposal (PEC) that eliminates the traditional 6×1 work schedule (six working days followed by one day off). The approved text reduces the maximum weekly workload from 44 to 40 hours, establishing a limit of five working days and two days of rest per week.

For the corporate environment, this moment demands immediate attention and strategic planning. Although the measure still depends on approval in the next legislative stages before it can be enacted, the proposal’s approval by the Chamber’s Special Committee by a vote of 34 in favor and 4 against signals the rapid advancement and consolidation of a structural change in Brazilian labor relations.

Given this imminent regulatory transition, anticipating compliance measures is essential for companies to mitigate operational risks and ensure legal certainty. Below, we analyze the transition timeline, the practical impacts on collective bargaining agreements, and the regulatory and contractual actions organizations should adopt.

1. The Transition: Stages of the New Work Schedule

In order to reduce the immediate financial and operational impact on the productive sector, the final text includes a phased transition rule following the future enactment of the constitutional amendment.

Phase I (60 Days After Enactment)

The definitive end of the 6×1 schedule takes effect. Employees become entitled to two paid weekly rest days, with one of them preferably falling on Sunday.

Within the same timeframe, the maximum weekly workload is reduced from 44 to 42 hours.

Phase II (14 Months After Enactment)

The final reduction takes effect, establishing a maximum workload of 40 hours per week and a strict limit of 8 working hours per day.

It is important to note that the PEC explicitly prohibits any salary reduction, whether nominal or proportional, resulting from the reduction in working hours. This protection also applies to collectively negotiated minimum salary levels.

2. Next Steps in the Legislative Process

Following approval by the Chamber of Deputies, the PEC will move to the Federal Senate.

As a constitutional amendment, the proposal must be approved in two rounds of voting by at least three-fifths of the senators (49 votes).

Employer associations have already begun mobilizing in the Senate to seek additional adjustments, and there is a possibility of debates surrounding parallel proposals, such as compensation based on hours worked. Nevertheless, the political timeline suggests that the matter could receive final consideration later this year.

If the Senate modifies the substance of the proposal, it will return to the Chamber of Deputies for further review.

3. Structural Impact: Collective Bargaining Agreements and Time Banks

The flexibility of the transition will depend heavily on union negotiations. Companies will need to review their internal policies based on the following guidelines established in the proposal.

The Role of Collective Bargaining Agreements During the Transition

During the 12-month period between the implementation of the 42-hour workweek and the final 40-hour limit, the PEC expressly allows Collective Bargaining Agreements (CCTs) and Collective Labor Agreements (ACTs) to authorize daily working hours beyond the standard 8-hour limit.

This measure is intended to facilitate the compensation of working hours during the transition, provided that the two-day weekly rest requirement is strictly respected.

Expiration of Existing Provisions

The proposal establishes that, 60 days after enactment, any provisions in existing collective agreements or conventions related to working hours or weekly rest that are incompatible with the new limits will automatically become invalid.

As a result, companies should carefully review the contents of their collective agreements and conventions. Early assessment is critical to identify conflicts with the new framework and begin planning the regulatory transition.

Time Bank Adjustments

As weekly working hours decrease first to 42 hours and later to 40 hours, overtime calculations and time bank policies will change.

Hours previously considered part of the standard 44-hour workweek will become overtime hours. Companies will need to recalculate accumulation limits and optimize time-tracking systems to avoid labor liabilities.

Organizations currently operating under a 44-hour workweek and relying heavily on overtime should immediately review their practices to avoid future labor claims and excessive labor costs.

Image: Canva

4. Legal Compliance: The Need to Revise Contracts and Agreements

One of the primary areas requiring attention will be the review of all employment-related documentation.

The constitutional reduction in working hours will render existing practices obsolete and legally vulnerable if not properly formalized.

Amendments to Individual Employment Contracts

All active employment agreements based on a 44-hour workweek will require formal amendments.

These amendments should specify:

  • The new workload (first 42 hours, then 40 hours);
  • The revised distribution of workdays and rest days;
  • Explicit confirmation of salary preservation.

Updates to Individual Compensation Agreements

Individual working-time compensation agreements will remain valid.

However, companies will need to review and update these arrangements to ensure compliance with the new weekly limits of 42 and later 40 hours.

Alignment Between Contracts and Collective Agreements

Individual employment contract provisions must align with the terms established in future collective bargaining agreements.

Flexible arrangements implemented unilaterally by employers or without appropriate union support may be deemed invalid during inspections or labor disputes.

5. Special Regimes and Relevant Exceptions

The approved text includes important provisions designed to protect certain business models and professional categories.

Exception for High-Income Professionals

Working-hour limitations and time-tracking requirements will not apply to employees who:

  • Hold a university degree; and
  • Earn more than 2.5 times the Brazilian Social Security ceiling (currently equivalent to BRL 21,188.87 per month).

For this group, working-hour controls will only apply if required by collective bargaining agreements or voluntarily adopted by the employer.

The entitlement to two weekly rest days, however, remains guaranteed.

Alternative Work Schedules (Such as 12×36)

For essential sectors—including healthcare, security, transportation, and urban sanitation—collective agreements may establish exceptional compensation arrangements.

The objective is to preserve the equivalent of two weekly rest days over the course of a calendar month, allowing rest periods to be accumulated and taken later.

6. Practical Recommendations for Companies

Drummond Advisors recommends that companies begin preventive planning immediately.

Audit Contracts and Agreements

Identify all employment agreements and individual compensation arrangements that will require legal amendments once the PEC is enacted.

Model Operational Costs

Assess the financial impact of reduced working hours on productivity.

Determine whether additional hiring will be necessary or whether operational demands can be addressed through automation and task redistribution.

Prepare for Labor Negotiations

Coordinate with employer associations and labor unions regarding upcoming collective bargaining discussions, focusing on compensation agreements, time banks, and shift schedules.

Update Internal Systems

Prepare electronic time-tracking and payroll systems to support the transition from 44 to 42 hours and eventually to 40 hours per week, preventing payroll discrepancies and compliance issues.

Conclusion

Proactively adapting to this new labor framework not only reduces legal risks and labor liabilities but can also become a competitive advantage in talent management and retention within the Brazilian market.

Organizations that begin planning now will be better positioned to navigate the transition efficiently, maintain compliance, and preserve operational stability as the new rules take shape.

Written by Daniel Rangel, Head of Labor Law at Drummond Advisors

3 MIN

READ

The debate surrounding the reduction of working hours has become a significant point of tension in Brazil’s political, business, and economic landscape. The traditional 6-on-1-off work schedule, widely adopted in retail, commercial, and service sectors, has come under increasing social pressure and legislative scrutiny, with proposals aimed at reducing the current 44-hour workweek.  Although no definitive legislative change has yet been enacted, this issue is no longer merely a labor union agenda. It has become a critical concern for businesses that rely heavily on continuous operational workforces.  Current discussions primarily focus on reducing the standard workweek from 44 hours to 40 hours, while some proposals advocate for even more substantial reductions, potentially bringing the workweek down to 36 hours.  Moreover, the ongoing debate is already generating consequences beyond the prospect of legislative change itself.  Companies whose operations depend heavily on the 6-on-1-off schedule may soon face significant challenges if they fail to prepare for a reduced legal workweek. Potential impacts include increased operating costs, workforce restructuring, revisions to time-bank policies, adjustments to collective bargaining agreements, and greater exposure to labor liabilities related to overtime and break compliance, among other issues.  In this context, expanding headcount is not necessarily the only solution. Greater emphasis is being placed on operational efficiency initiatives and internal process optimization.  Even so, if working hours are ultimately reduced, businesses already operating near their maximum capacity are likely to experience the most significant impacts, particularly those that rely on extended operating hours and continuous customer service.  Recent legislative developments also indicate that the productive sector recognizes the need for gradual and proactive preparation. During a public hearing held by Brazil’s Chamber of Deputies, representatives from various industries advocated for any reduction in working hours to be implemented primarily through collective bargaining agreements and accompanied by a transition period that would allow businesses to adapt operationally.  The discussion highlights growing concerns regarding the financial, operational, and structural impacts of a potential reduction in weekly working hours, especially in industries that depend on continuous operations, large workforces, and extended shifts. As a result, initiatives focused on operational efficiency, workflow optimization, shift restructuring, and productivity analysis have become increasingly relevant, particularly for organizations already facing high overtime levels and capacity constraints.  At the same time, collective bargaining is expected to play an increasingly important role as a mechanism for flexibility and sector-specific adaptation, enabling industries to develop transition strategies aligned with their operational realities.  Consequently, businesses are finding that simply monitoring legislative developments is no longer sufficient. Strategic workforce planning has become essential to reduce financial exposure, mitigate labor risks, and improve predictability in the event of future changes to working-hour regulations.  Although legislative reform remains under discussion, many organizations have already begun conducting preventive assessments to better understand the potential financial and operational impacts of a shorter workweek. This preparation process is becoming increasingly important not only from a legal standpoint but also as a strategic business initiative.  Through workforce mapping, shift reviews, and the identification of recurring overtime patterns, companies can determine where the greatest impacts are likely to occur and evaluate the operational feasibility of alternative scheduling models. These measures represent an important aspect of labor governance and risk management.  In this context, the greatest risk does not necessarily stem from a reduction in working hours itself, but rather from the lack of preparation to absorb its effects effectively.  Organizations that monitor the debate strategically are more likely to gain greater predictability when restructuring operations, reduce future risks, and negotiate internal adjustments more effectively.  While the issue remains under development within Brazil’s legislative framework, it already warrants close attention from businesses. In practice, once changes are enacted, the cost of inadequate preparation may prove significantly greater than the investment required for proactive planning.  Written by Daniel Rangel and Juliana Lins 

/ By Drummond Advisors

The debate surrounding the reduction of working hours has become a significant point of tension in Brazil’s political, business, and economic landscape. The traditional 6-on-1-off work schedule, widely adopted in retail, commercial, and service sectors, has come under increasing social pressure and legislative scrutiny, with proposals aimed at reducing the current 44-hour workweek. 

Although no definitive legislative change has yet been enacted, this issue is no longer merely a labor union agenda. It has become a critical concern for businesses that rely heavily on continuous operational workforces. 

Current discussions primarily focus on reducing the standard workweek from 44 hours to 40 hours, while some proposals advocate for even more substantial reductions, potentially bringing the workweek down to 36 hours. 

Moreover, the ongoing debate is already generating consequences beyond the prospect of legislative change itself. 

Companies whose operations depend heavily on the 6-on-1-off schedule may soon face significant challenges if they fail to prepare for a reduced legal workweek. Potential impacts include increased operating costs, workforce restructuring, revisions to time-bank policies, adjustments to collective bargaining agreements, and greater exposure to labor liabilities related to overtime and break compliance, among other issues. 

In this context, expanding headcount is not necessarily the only solution. Greater emphasis is being placed on operational efficiency initiatives and internal process optimization. 

Even so, if working hours are ultimately reduced, businesses already operating near their maximum capacity are likely to experience the most significant impacts, particularly those that rely on extended operating hours and continuous customer service. 

Recent legislative developments also indicate that the productive sector recognizes the need for gradual and proactive preparation. During a public hearing held by Brazil’s Chamber of Deputies, representatives from various industries advocated for any reduction in working hours to be implemented primarily through collective bargaining agreements and accompanied by a transition period that would allow businesses to adapt operationally. 

The discussion highlights growing concerns regarding the financial, operational, and structural impacts of a potential reduction in weekly working hours, especially in industries that depend on continuous operations, large workforces, and extended shifts. As a result, initiatives focused on operational efficiency, workflow optimization, shift restructuring, and productivity analysis have become increasingly relevant, particularly for organizations already facing high overtime levels and capacity constraints. 

Image: Canva

At the same time, collective bargaining is expected to play an increasingly important role as a mechanism for flexibility and sector-specific adaptation, enabling industries to develop transition strategies aligned with their operational realities. 

Consequently, businesses are finding that simply monitoring legislative developments is no longer sufficient. Strategic workforce planning has become essential to reduce financial exposure, mitigate labor risks, and improve predictability in the event of future changes to working-hour regulations. 

Although legislative reform remains under discussion, many organizations have already begun conducting preventive assessments to better understand the potential financial and operational impacts of a shorter workweek. This preparation process is becoming increasingly important not only from a legal standpoint but also as a strategic business initiative. 

Through workforce mapping, shift reviews, and the identification of recurring overtime patterns, companies can determine where the greatest impacts are likely to occur and evaluate the operational feasibility of alternative scheduling models. These measures represent an important aspect of labor governance and risk management. 

In this context, the greatest risk does not necessarily stem from a reduction in working hours itself, but rather from the lack of preparation to absorb its effects effectively. 

Organizations that monitor the debate strategically are more likely to gain greater predictability when restructuring operations, reduce future risks, and negotiate internal adjustments more effectively. 

While the issue remains under development within Brazil’s legislative framework, it already warrants close attention from businesses. In practice, once changes are enacted, the cost of inadequate preparation may prove significantly greater than the investment required for proactive planning. 

Written by Daniel Rangel and Juliana Lins 

4 MIN

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Brazil is a signatory to several International Social Security Agreements, and this practice has expanded significantly over the years. But what does this mean in practice? Social Security Agreements are essential tools that govern obligations, benefits, and social security costs for expatriates, digital nomads, entrepreneurs, and anyone who has contributed to more than one social […]

/ By Drummond Advisors

Brazil is a signatory to several International Social Security Agreements, and this practice has expanded significantly over the years. But what does this mean in practice?

Social Security Agreements are essential tools that govern obligations, benefits, and social security costs for expatriates, digital nomads, entrepreneurs, and anyone who has contributed to more than one social security system.

For purposes of this text, we will focus exclusively on the Social Security Agreement between Brazil and the United States, analyzing in depth the provisions agreed upon by both countries.

Totalization of Contribution Periods: Brazil and the U.S.

At the outset, it is important to highlight that the agreement allows for the totalization of coverage periods, enabling individuals who have not met the minimum contribution requirement in one country to combine periods worked in both countries to qualify for benefits such as retirement, disability, or survivor benefits.

This structural coordination ensures continuity of social security coverage in a globalized world, protecting the contributor’s accumulated benefits and those of their dependents over decades of cross-border employment.

In practical terms, a professional who has earned 30 credits toward retirement in the U.S. (where 40 credits are required) may use their contribution time in Brazil to complete the required period and qualify for retirement benefits under current rules.

The same applies in Brazil. If a contributor has not yet met the minimum contribution period required for benefits in Brazil, they may use periods of contribution in the U.S. to help meet eligibility requirements under Brazilian law.

To activate the totalization mechanism, the individual must meet minimum contribution thresholds in each system.

The agreement establishes that the individual must have at least:
• 6 U.S. Social Security credits (approximately equivalent to one and a half years of work, depending on earnings), or
• 1 year of contribution in the Brazilian system

Periods below these minimums cannot be totalized and remain within the originating system until additional contributions are made or eligibility is met independently in one jurisdiction. This rule prevents fragmentation into minimal benefits that would create disproportionate administrative costs for the contracting states.

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Is It Possible to Retire in Both Countries?

Yes, receiving retirement benefits from both countries is possible.

To do so, the individual must meet the eligibility requirements under each country’s rules.

If all requirements are met except for the contribution period, totalization can be used to supplement the missing time.

For example, if an individual needs 4 additional credits to qualify for U.S. retirement and has sufficient contribution time in Brazil, those periods may be used to complete the requirement.

Once eligibility is achieved in both countries, even through totalization, the individual may receive benefits from both systems, in accordance with each country’s regulations.

From a retirement planning perspective, it is essential that individuals understand their social security scenario as early as possible in order to define next steps and develop a strategy that maximizes their benefits.

Disability Benefits

Regarding disability benefits, the agreement ensures protection in cases of total and permanent incapacity to work.

An individual who becomes disabled while covered under the U.S. system may use their Brazilian contribution periods to meet eligibility requirements set by the Social Security Administration (SSA).

In Brazil, this benefit corresponds to what was formerly known as disability retirement and requires confirmation of permanent incapacity through medical evaluation.

It is important to note that maintaining insured status is a strict requirement for disability benefits, and totalization plays a key role in preserving this status even after international relocation.

Survivor Benefits

Survivor benefits provide financial support to dependents of a deceased contributor.

If the worker contributed in both countries, surviving dependents may apply for benefits through both Brazil’s INSS and the U.S. SSA, using totalized contribution periods to meet eligibility requirements.

This benefit is designed to replace the deceased’s income and follows the allocation and duration rules established by each contracting country.

Protection of dependents is considered a fundamental and non-transferable right, forming a core element of the social protection framework established under the international agreement.


Written by Daniel Rangel, Associate Attorney at Drummond Advisors

2 MIN

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The recent Cosit Ruling No. 10/2026 issued by the Brazilian Federal Revenue Service provided important clarifications on the social security treatment of amounts paid as performance bonuses for superior results. The ruling reinforces the possibility for companies to use results-based recognition programs as a strategic people management tool, with the additional benefit of exemption from […]

/ By Drummond Advisors

The recent Cosit Ruling No. 10/2026 issued by the Brazilian Federal Revenue Service provided important clarifications on the social security treatment of amounts paid as performance bonuses for superior results.

The ruling reinforces the possibility for companies to use results-based recognition programs as a strategic people management tool, with the additional benefit of exemption from social security contributions, provided that the legal requirements are met.

What is a “performance bonus”?

The performance bonus, introduced into the Brazilian Labor Code (CLT) by the Labor Reform, is an amount paid by the employer, in cash, goods, or services, to an employee or group of employees for performance that exceeds expectations. It does not have a salary nature and, therefore, does not integrate salary for labor or social security contribution purposes.

What has changed?

The Brazilian Federal Revenue Service consolidated the understanding that, as of November 11, 2017, bonuses granted at the employer’s discretion, whether in goods, services, or cash, do not integrate the calculation base for social security contributions when paid due to performance that exceeds what is ordinarily expected.

This position confirms the spirit of the Labor Reform: to allow companies to reward extraordinary results without those amounts being treated as salary, thus avoiding impacts on INSS, FGTS, and other payroll charges.

Image: Canva

Essential requirements

For a bonus to be considered exempt from payroll charges, some key points must be observed:

  1. Recipients – Payment must be made to employees (individually or as a group), and does not apply to independent contractors.
  2. Form of payment – The bonus may be paid in cash, goods, or services.
  3. True employer discretion – The bonus cannot arise from a legal obligation, employment contract, or collective bargaining agreement that removes the employer’s autonomy.
  4. Proven superior performance – The company must objectively demonstrate what the expected performance was and how it was exceeded.

Opportunity for companies

The ruling represents an excellent opportunity for organizations that wish to:

  • Encourage productivity and innovation;
  • Recognize talent through merit-based criteria;
  • Structure variable compensation policies with a lower social security burden.

When properly designed, a bonus program aligns business objectives with employee motivation, reducing labor costs without increasing tax risk.

Practical considerations

It is essential that internal policies be built with clear performance criteria, measurable metrics, and robust documentation. Poorly structured rules or bonuses tied to ordinary performance targets may lead to the loss of the discretionary nature of the payment and trigger labor and social security charges.

The Drummond Advisors team is ready to assist your company in creating or reviewing bonus programs, ensuring compliance with Brazilian legislation and the safe use of available tax benefits.

Want to know how to implement this strategy in your business? Talk to our specialists.


Written by Daniel Rangel, Senior Associate at Drummond Advisors

MIN

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Law No. 15.177/2025 was enacted in Brazil on July 23, 2025, amending current legislation to promote greater diversity and gender equity in the composition of the boards of directors of business corporations and state-owned companies. The new law mandates that at least 30% of full board member seats be held by women. This obligation will […]

/ By Drummond Advisors

Law No. 15.177/2025 was enacted in Brazil on July 23, 2025, amending current legislation to promote greater diversity and gender equity in the composition of the boards of directors of business corporations and state-owned companies.

The new law mandates that at least 30% of full board member seats be held by women. This obligation will be phased in beginning in fiscal year 2026, in accordance with a schedule to be defined by the Executive Branch. 

The legislation amends parts of the Brazilian Corporation Law (Law No. 6,404/1976) and the State-Owned Companies Law (Law No. 13,303/2016), establishing the gender quota as a matter of corporate governance and legal compliance. 

This change reflects a global movement toward increased female representation in leadership positions and aligns Brazil with international best practices already adopted in other countries.  

Image: Canva

Who is subject to this new rule: 

  • State-owned enterprises, mixed-capital companies, their subsidiaries and controlled entities, and other companies in which the government (Federal Union, States, Federal District, or Municipalities) holds the majority of the voting share capital; 
  • Publicly held companies: adherence to the board seat reservation is optional. However, the law provides that the Executive Branch may create incentives for companies that voluntarily adopt the measure; 

Recommendations: 
We recommend that all potentially impacted companies take proactive steps to: 

  • Review the current board composition; 
  • Evaluate internal diversity and inclusion policies; 
  • Prepare any necessary contractual or corporate amendments in advance. 

We are available to provide further clarification and legal support to ensure full compliance with Law No. 15.177/2025. 

Contact us via chat or email info@drummondadvisors.com.

Written by Arthur Manetta, Associate Attorney at Drummond Advisors

3 MIN

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In the United States, preventing workplace harassment is both a strict legal requirement and a strategic priority for companies aiming to foster safer, more ethical, and productive work environments. Harassment in the workplace is regulated both at the federal and state levels, and it is a form of violation of civil and labor rights, with […]

/ By Drummond Advisors

In the United States, preventing workplace harassment is both a strict legal requirement and a strategic priority for companies aiming to foster safer, more ethical, and productive work environments. Harassment in the workplace is regulated both at the federal and state levels, and it is a form of violation of civil and labor rights, with the potential to compromise the worker’s physical, emotional, and professional integrity.

From a federal perspective, the U.S. Equal Employment Opportunity Commission (EEOC), defines harassment as any unwelcome conduct based on legally protected characteristics — such as race, color, religion, sex (including pregnancy, gender identity, sexual orientation), national origin, age, disability, or genetic information — that negatively affects working conditions or creates a hostile, intimidating, or offensive work environment (EEOC.gov). For example, among the most worrisome conduct, sexual harassment includes unwelcome advances, comments, gestures, touching, or any behavior of a sexual nature, especially when linked to threats, promises of preferential treatment, intimidation, or retaliation. It is important to note that harassment can be perpetrated by supervisors, co-workers, clients, vendors, or any other person connected to the work environment.

Internal guidelines from the U.S. Department of Labor (DOL) emphasize that the mere existence of a workplace policy is insufficient if not supported by effective training, secure reporting mechanisms, and appropriate responses. Institutional omission — even in the absence of direct involvement by managers — may lead to strict legal liability, in accordance with the policies of the Office of the Assistant Secretary for Administration and Management (OASAM).

Through its internal policy DLMS 4-0700 the DOL also reinforces the view that organizations must not only prohibit harassment but also implement effective prevention programs, secure reporting mechanisms, continuous employee training, and clear investigative procedures. The focus is not only on punishing misconduct but, above all, on fostering an organizational culture that does not tolerate any form of discrimination.

Further to the above-mentioned regulation, Federal law, primarily represented by Title VII of the Civil Rights Act of 1964, establishes that harassment based on race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age, disability, and genetic information constitutes a prohibited form of discrimination.

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In addition to federal guidelines, most U.S. states have their own legislation on preventive practices such as training, internal protocols, and reporting obligations. At the state level, significant differences arise for companies that operate nationally. While not all states mandate formal training, the absence of preventive policies may result in employer liability if institutional omission or tolerance is proven.

Several U.S. states have mandatory training requirements for employees and supervisors, with specific formats and renewal intervals. For example:

  • California: requires training every 2 years for all employees, including temporary workers.
  • New York: mandates annual training, even for remote or visiting workers.
  • Illinois (Chicago): up to 3 hours of annual training, including bystander intervention.

Beyond training, many states require comprehensive internal policies, accessible complaint systems, and clear investigation and resolution procedures that protect all parties.

The most effective corporate approaches go beyond mere compliance. According to the EEOC (Equal Employment Opportunity Commission), best practices include:

  • Committed and engaged leadership;
  • Clear and comprehensive policies;
  • Trusted and accessible complaint systems;
  • Regular, interactive, and customized training.

This reinforces the need for proactive, tailored strategies that integrate legal compliance with a healthy organizational culture.

Employers need to be aware of the legislation, regulation and best practices to avoid harassment at the workplace and the resulting liability. Drummond team is ready to support your company in implementing or revising harassment prevention programs aligned with current legal standards.


Written by Daniel Rangel, Senior Associate at Drummond Advisors, and Julia Soares, Associate Lawyer at Drummond Advisors