If you're planning to hire remote employees and freelancers in Brazil, consider partnering with a professional employer organization (PEO). A PEO is a human resources (HR) outsourcing firm that can handle all of your HR tasks, including payroll, benefits, taxation, and legal compliance.
Read on to learn more about PEOs and the benefits of using a PEO provider. We'll also cover tips for choosing the best PEO service company.
What Is an International Professional Employer Organization (PEO)?
Before diving into the benefits of using a PEO provider, let's define international PEO.
As the name suggests, an international PEO is a PEO that offers HR services to companies with foreign staff. International PEOs can address tax, payroll, risk management, and other needs that come with hiring foreign contractors and employees. Depending on your PEO and the service you choose, you can either outsource some or all of your HR functions.
International PEOs vs. Global Employment Organizations (GEOs)
International PEOs are often confused with global employment organizations (GEOs). However, they shouldn't be confused with each other.
First, PEOs are co-employers of your employees, while GEOs are employers of record (EORs). EORs are third-party businesses that take on all of your HR work. Accordingly, if you partner with a GEO, your outsourced talent will sign employment contracts with your GEO instead of you. You will still be able to control employees' salaries and schedules, but your GEO will be listed as their employer on paper.
There are many advantages to a GEO arrangement. For one, you won't have to register your organization in every new country you expand into. GEOs also provide full employee coverage, including in-country equivalents of workers' compensation, general liability, and professional indemnity. You also won't be liable for any breaches of employment contracts since the GEO is the EOR, not you.
However, partnering with a GEO isn't always a bed of roses. GEOs often have many disadvantages, including:
- Too much automation: Most GEOs use a centralized system for payroll, which means that many processes are automated. As a result, your payroll will have a less individualized approach.
- No HR managers: GEOs don't usually assign local HR managers for your employees. Rather, they assign local account managers. This prevents your employees from getting the best possible experience.
- Too much outsourcing: Many GEOs outsource all or some of their services to local PEOs. This raises your costs and creates uncertainty around service delivery and quality.
What Are The Benefits of Using a PEO Provider?
GEOs are a great way to kickstart your business, but PEOs also have a lot to offer. In fact, they may be a better choice for you if you value flexibility and quality.
Here are the main benefits of using a PEO provider:
Built-in International HR Services
International PEOs let you pick and choose from a wide range of HR services. This will minimize your chances of misunderstanding and failing to comply with local laws.
Most PEO solutions offer the following:
- Benefits administration
- Compliance assistance
- Drug testing programs
- Unemployment administration
- Family and Medical Leave Act administration
- Workers' compensation administration
- Safety programs
- Training and development courses
- Retirement plans
Co-employment Structure
Unlike GEOs, PEOs are co-employers on record. Accordingly, they assume fewer of your employment administration tasks. This typically means more work for you, but you'll also get more control over HR operations.
Easier Legal Compliance
Say goodbye to reading and memorizing labor laws to remain compliant — PEOs will do all of the legal work for you. They will ensure that all of your employment practices and contracts comply with Brazilian laws.
Cost Savings
PEOs aren't just responsible for helping you comply with relevant laws. They'll also set up international payroll, manage risk, and get the right insurance for your company, all at cost-effective rates.
Time Savings
Hiring staff from another country means more paperwork and less time to focus on revenue-generating projects. A PEO can help you save time by managing all of these tasks for you.
First-Rate HR Technology Solutions
Many PEOs use leading-edge HR Information Systems (HRIS) and technologies that are unknown or inaccessible to startups. These solutions may include payroll analytics and systems capabilities for streamlining the HR work process.
High-Quality Service
Unlike GEOs, PEOs do all the work themselves. They usually hire local HR managers, so your local hires will have the best possible experience.
Improved Business Focus
Finally, a PEO can free up time, money, and energy to focus on core business objectives. This is especially true if you distribute HR functions across multiple departments.
Using a PEO in Brazil
A PEO in Brazil will help you hire, onboard, pay, and manage Brazilian workers according to local labor and tax laws. Specifically, they can help you address the following challenges:
- Bureaucracy: According to the World Bank's annual global report about the ease of doing business, Brazil ranks 124th out of 190 countries. High levels of bureaucracy mean that it may take months to create a company. Partnering with a PEO can accelerate the process.
- Complex and expensive labor legislation: Brazil's labor laws have over 900 articles, and non-compliance is punished with reputation damage and sky-high fines. Employees are also quick to sue if your work policy doesn't follow local laws. Working with a PEO will ensure that you're adhering to relevant laws and standards, including rules for:
- Minimum salaries and wages
- Average workweek hours, which may not exceed 44 hours per week
- Overtime considerations
- Probation periods
- Bonuses, such as the 13th salary, which is equivalent to one month's salary and paid out to workers in two installments in November and December
- Termination and severance
- Maternity leave
- Paternity leave
- Earned leave
- Vacation
- Other leave
- Sick leave
- High tax burdens: Brazil has the highest taxes of all of the BRIC countries, boasting over 90 taxes, contributions, and duties. Entrepreneurs often spend a large portion of their profits dealing with taxation requirements.
- Risk of corruption: Unfortunately, bribery and corruption are commonplace in Brazil's business landscape. According to Transparency International, Brazil ranked 38/100 in 2021, with zero being the most corrupt. Although the government started the "integrity program" to tackle corruption and increase transparency, it's an ongoing battle. A reliable PEO can use its connections and business knowledge to reduce the risk of corruption.
- Cultural expectations: To retain and attract Brazilian hires, you must know how business is done in Brazil. PEO HR managers can help you with all of this. Specifically, they'll provide pointers for:
- Conducting business
- Interviewing potential candidates
- Communicating with hires
How Does a Professional Employer Organization in Brazil Work?
A PEO in Brazil works by analyzing your job or project requirements. They will then work with you to achieve your goals.
Unlike GEOs, you can pick and choose which HR functions to outsource, so you can retain as much control as you'd like. Most PEOs price their services as a flat monthly fee per worker or as a percentage of payroll.
How To Choose the Best PEO Service Company
If partnering with a PEO sounds like the right choice for you, here's how you can pick the best PEO company for your Brazilian hires.
1. Evaluate Your Company To Determine Your HR Needs
First, you need to analyze your workplace to determine how much HR help you need.
If you only need to hire a few freelancers and your in-house HR team can handle your needs, you don't need to partner with a PEO. However, if you're hiring a full-time remote development team, you probably should work with a PEO.
2. Use the Right Keywords to Locate Your Dream PEO
Don't just hire the first PEO you see on Google. Do a thorough search using relevant keywords, such as:
- Brazilian PEO
- Brazil PEO
- PEO remote human resources help in Brazil
- PEO service company in Brazil
- Professional employer organization for payroll in Brazil
Then, make a list of the most promising PEOs.
3. Ask The Right Questions
Once you have a list of PEOs, reach out to them. Tell them about your HR needs and ask the following questions:
- How long has your company been paying and managing Brazilian workers? If the company doesn't have much experience working with Brazilian employees, move on.
- What services do you offer? The PEO should offer all of the services you want.
- May I see the resumes and portfolios of your team? This will give you a clear idea of who's working for the PEO and whether they have the experience to hire, pay, and manage your hires.
- Do you hire Brazilian HR managers or account managers to manage my hires? As covered above, local HR managers can provide a much better experience for your hires. They also know more about local laws than account managers.
- Who are your investors and what are their motivations? This question reveals whether your PEO is self-sustaining. Stay away if the company has too much private equity financing or venture capital. Remember, your partnership with the PEO can make or break your reputation and ability to pay hires on time. As such, you should avoid working with an organization whose main motivation is to attract new investors by making as much money as possible. You also need to determine whether your company has sufficient cash reserves.
- Do you hire third-party partners for certain services? If yes, how do you choose your third-party partners? Many global PEOs use local third-party partners for specialized HR services like legal services and intellectual property (IP) protection. This question will reveal how your PEO selects third-party partners and whether their partners meet your standards. Ideally, your PEO should have a reliable internal vetting process for choosing third parties. They should also take responsibility for the decisions of their partners.
- Will you be expanding your global PEO services and infrastructure? The best international PEO should be invested in sustainable and continued success. In other words, your chosen PEO should have the following:
- An in-house team that's caught up on Brazilian payroll solutions
- First-rate IP services and protection
- The ability to manage complex issues that require high-tech and legal standards, like data protection
- What assistance will you provide to help me create compliant employment contracts? Your PEO should have a dedicated team for creating and executing compliant employment contracts.
- What workflows are in place to ensure that my team is paid on time? Your PEO should have a standardized workflow for paying your hires on time, regardless of whether you pay them on time. They should also be able to have a 99.9% of higher payroll accuracy rate.
- Do you have Brazilian team members who can assist my hires in their time zone? Your PEO partner should also have Portuguese-speaking Brazilian teams who can help your hires with any concerns they may have.
- How do you follow data security and privacy regulations? The PEO must use secure email and encryption services to protect employees' data. They should also comply with relevant data compliance and security laws, including Brazil's General Data Protection Law (LGPD).
- How do you manage my hires? The PEO should have a standardized process for managing and communicating with each employee.
- How much do I have to pay for your services? International PEOs are typically direct about their pricing, but there may be hidden fees. These may include:
- Value-added tax (VAT) charges — ask them if VAT applies to your chosen services and at what rate
- A minimum term you would have to pay for even if an HR expert leaves
- Additional markup on foreign exchange, which may add several hundred dollars to monthly payrolls
- Do I have to pay every time I talk to your team? There should be no extra cost to talk to your PEO's team of experts.
Revelo: Sourcing and PEO Services Included
PEOs are a great way to pay and manage employees. However, finding employees is often the most difficult part, especially in competitive niches like programming and artificial intelligence (AI).
That's where Revelo comes in. As Latin America's premier tech talent platform, we offer sourcing and PEO services. All you have to do is tell us about your job requirements and we'll match you with a list of pre-vetted talent. We'll also handle payroll, compliance, benefits, and more.
Fill in this form to learn more.
