Finocchio & Ustra Sociedade de Advogados | View firm profile
The expatriation of employees is a common practice for companies looking to expand their operations abroad or meet international demands, becoming increasingly prevalent due to globalization. However, this process requires special attention to the legal obligations imposed by Law No. 7,064/82, which regulates the transfer of employees abroad. Understanding the specifics of this legislation is essential to ensure that workers’ rights are respected and to avoid legal issues.
One of the main considerations when planning expatriation is determining whether the transfer will be temporary or permanent. This decision directly impacts the rights and obligations of both the company and the employee, the maintenance of the employment relationship in Brazil, and the application of labor and social security regulations.
This is because Law No. 7,064/82 establishes that the international transfer of Brazilian workers must comply with the most favorable regulation to the employee, whether from Brazilian law or the destination country’s law. This means that during expatriation with a temporary intent, the company must ensure the rights provided for in Brazilian law, such as FGTS (Unemployment Compensation Fund), INSS (Brazilian Social Security Institute), 13th salary, vacation with an additional one-third, and the transfer allowance, which can be 25% or another amount agreed upon in the contract.
The payroll may undergo some adjustments depending on the company’s policy and the destination country’s laws. Salaries and benefits may be adjusted according to the cost of living in the country to which the employee is being transferred.
Managing payroll for expatriates is a multifaceted task that requires attention to detail and a deep understanding of international laws and regulations, ensuring a successful and satisfying expatriation experience for the employee.
Taxation can vary depending on the country of origin and the destination country, especially considering that Brazil has social security agreements with several countries. There may also be a need for adjustments in withholding tax according to fiscal and international laws.
On the other hand, if the transfer is permanent, the company may proceed with the employee’s contract termination in Brazil, followed by hiring abroad. In this case, all severance payments will be due, and there will no longer be an employment relationship with the local subsidiary.
Another crucial point that often raises questions in expatriation is the management of benefits during expatriation. Generally, these benefits are agreed upon in the offer letter and may include airfare, life insurance, moving costs, and other aspects negotiated with the employee. Additionally, after two years abroad, in the case of temporary transfers, the employee is entitled to a vacation in Brazil with all expenses covered by the company, as provided by law.
As observed, the expatriation of employees requires detailed planning and strict compliance with the regulations established by Law No. 7,064/82. The company must ensure that all employee rights are respected, from the payment of benefits to the guarantee of return to Brazil, if necessary, depending on the temporary or permanent nature of the expatriation. Compliance with these obligations not only avoids legal issues but also ensures a smoother and safer expatriation process for all parties involved.
Authors
Veridiana Police, Labor and Social Security Advisory Partner;
Victor Campana, Labor and Social Security Advisory Lawyer;
Fernanda Florêncio, Labor and Social Security Advisory Consultant.