Diego Castro and Carol Paranhos
Lawyers in charge · direct contact with who signs the work
Brazilian lawyer for companies hiring contractors in Brazil: PJ agreements, misclassification risk under the CLT, IP assignment, confidentiality and LGPD terms.
Contractor agreements that describe a real business relationship, not an employment contract in disguise.
Risk review of how your team actually works: schedules, tools, exclusivity and reporting lines.
IP assignment and confidentiality that hold up under the Software Act and the Copyright Act.
Clear options when the role looks like employment: Brazilian entity, EOR or restructuring.
Online meetings in English · Attorney client confidentiality · Brasília time business hours
Foreign companies can hire professionals in Brazil as independent contractors through their own company (a PJ contract), which is lawful under CLT article 442-B. The risk is reclassification: if the work involves subordination, fixed hours, personal service and continuity, a labor court may recognize employment and order up to 5 years of employment rights. A Brazilian lawyer aligns the contract and the day to day reality and secures IP assignment and confidentiality.
Full time developer on a US style contractor agreement
Risk ·Employment recognized with back pay for up to 5 years.
Action ·Rewrite around deliverables and adjust how the work is managed.
Candidate asked to open a company to be hired
Risk ·Strong evidence that the PJ model is a disguise.
Action ·Assess the role and consider EOR or a Brazilian entity.
Code delivered without a written assignment
Risk ·Disputes over ownership of works outside the Software Act.
Action ·IP assignment covering past and future deliverables.
Contractor with access to customer data
Risk ·LGPD incident with no contractual security duties.
Action ·Confidentiality, security and processing terms in the agreement.
Yes. PJ arrangements are lawful when the relationship is genuinely between businesses. The risk comes from treating the contractor like an employee.
Only partly. Labor courts look at how the work happens. A contract helps when it matches reality and can hurt when it contradicts it.
An EOR makes sense for roles that are really employment and when you do not want a Brazilian entity yet. We help you compare it with the other options.
The Software Act favors the contracting party for software developed under the contract, but a written assignment clause is still the safe route.
Not in a genuine business relationship. You owe what the contract says, such as notice and pending invoices. Severance only becomes an issue if a court recognizes employment.
Yes. Since June 2026 first instance and regional labor courts are judging these cases again, while the STF's binding thesis in Theme 1,389 is still pending.
If your company is already dealing with any of these situations, the next step is a short call about the facts.
Online meetings in English · Attorney client confidentiality
Hiring through a Brazilian company (PJ) is lawful and common, especially for developers. The risk is not the contract itself but the gap between what it says and how the person actually works.
Service agreement between your company and the contractor's Brazilian company, written around deliverables, autonomy and business terms.
We compare the contract with day to day reality and rate the risk that a labor court would recognize an employment relationship.
Ownership of code, designs and content created by the contractor, with the formalities Brazilian law requires.
Confidentiality, security and LGPD processing terms for contractors who access your systems and personal data.
When the role is really an employee role, we compare the options: Brazilian subsidiary, employer of record or a restructured contractor model.
Support when a contractor relationship ends badly or a former contractor threatens a labor claim.
Documents for the contractors and practical guidance for the managers who work with them, because the risk lives in the day to day.
Scope and fees are set in an individual written proposal, as required by the Brazilian Bar (OAB).
Each Brazilian role rated by misclassification risk, with the facts that drive the rating.
What Brazilian law says, what courts look at and what to change first.
Bilingual service agreement with scope, fees, IP, confidentiality and LGPD terms.
Covers code and content already delivered, for contractors who signed without it.
One page on how to request work, set deadlines and give feedback without creating subordination.
When needed, contractor, EOR and Brazilian entity compared for the roles at risk.
Brazilian labor courts look at reality, not at the title of the contract. The same agreement can be safe or risky depending on how the relationship works every day.
Fixed working hours, timesheets and approval for days off.
Reports to a manager like any employee, inside the org chart.
Exclusive, full time, for years, with a monthly fee that never changes.
Asked to open a company only to be hired.
Receives company benefits, email signature and job title.
Works on deliverables and organizes their own schedule.
Coordinates with a client contact, not a line manager.
Can serve other clients and sets their own methods.
Runs an actual business with invoices and its own tools.
Paid for services under a business to business agreement.
Tick what is true for your Brazilian contractors today. Each unchecked item is a point where reality and the contract may not match.
Brazil has strong employee protection and active labor courts. Foreign companies that build remote teams in Brazil should understand the test courts apply before the first contract is signed.
Article 3 of the CLT defines an employee as an individual who provides services personally, on a non occasional basis, under subordination and for pay. When those elements are present, courts may recognize an employment relationship regardless of the contract's title. Subordination, meaning the company directs how, when and where the work is done, is usually the decisive factor.
Hiring a professional through their own company, known in Brazil as a PJ (pessoa jurídica) arrangement, is a lawful business to business relationship. Article 442-B of the CLT, added in 2017, states that hiring an autonomous worker with all legal formalities does not create employee status, whether continuous or not, exclusive or not. The Supreme Court (STF) has also upheld outsourcing and alternative contracting models in several decisions.
In April 2025 the STF took up the legality of contracting through a PJ, the jurisdiction of labor courts and the burden of proof in these cases (Theme 1,389, ARE 1,532,603) and suspended related cases nationwide. In June 2026 the suspension was lifted for first instance courts and regional labor courts, which are judging cases again, while the binding thesis is still pending. Check the current status before relying on any specific outcome. A contract that reflects a genuine business relationship is the best protection under any outcome.
If a court recognizes employment, the company may owe the rights of an employee for the period worked, within the limitation rule of the Constitution: claims cover the last 5 years and must be filed within 2 years after the relationship ends. That can include 13th salary, paid vacation plus one third, FGTS deposits of 8% per month, notice and social security contributions, as well as interest and legal fees.
Under article 4 of the Software Act, software developed during a service contract aimed at development belongs, unless agreed otherwise, to the contracting party. Designs, texts and other works fall under the Copyright Act, which requires a written assignment. A good contractor agreement states both, covers moral rights limits and deals with open source and prior work.
Developers, support agents and analysts often access customer data. Under the LGPD, the contract should state confidentiality, security measures, processing instructions and what happens to data when the relationship ends.
Contractors in Brazil work fixed hours and report to a manager like employees.
You asked candidates to open a company in Brazil so you could hire them.
Contractors have worked full time and exclusively for you for more than a year.
Your agreements were copied from a US template and never checked against Brazilian law.
There is no written IP assignment for code or content already delivered.
A former contractor sent a demand letter or mentioned a labor claim.
We talk about the roles, how the work is organized and the contracts you use today.
Scope, deadline and fees in an individual proposal before any work starts.
A risk rating per role, a memo in English and new or revised agreements in English and Portuguese.
Practical guidance for managers on how to work with contractors so the reality matches the contract.
These criteria help decide whether your contractor setup needs attention.
Answers for foreign companies building teams in Brazil.
PJ stands for pessoa jurídica, a legal entity. In a PJ contract, the professional provides services through their own Brazilian company and invoices the client, instead of being hired as an employee under the CLT. It is a lawful business to business arrangement when the relationship is genuinely autonomous.
A CLT employee has a formal employment contract with rights such as 13th salary, paid vacation plus one third, FGTS deposits, notice and social security paid by the employer. A PJ contractor is a business that sells services, sets its own methods and receives a service fee, without those employment rights.
Yes. A foreign company can sign a service agreement with a Brazilian contractor's company and pay it from abroad. Hiring CLT employees directly is different and usually requires a Brazilian entity or an employer of record.
The labor court may recognize an employment relationship and order payment of employment rights for up to the last 5 years, plus interest, fees and social security contributions. Claims must be filed within 2 years after the relationship ends. Tax and social security authorities may also assess contributions.
Subordination is the main factor: fixed hours, a manager who directs the work, approval for time off, integration into the org chart and exclusivity. Personal service, continuity and regular pay complete the CLT test in article 3.
There is no specific statute for contractors, and courts tend to accept non compete clauses only when they are limited in time, territory and scope and, in many cases, compensated. Non solicitation and confidentiality clauses are easier to enforce.
Cross border service fees are usually set and paid in foreign currency and converted through the Brazilian exchange system. Exchange, invoicing and tax treatment on the contractor's side should be checked with an accountant in Brazil.
Brazilian Bar rules require individual fee agreements, so there is no generic price list. After a short call about your team and the roles involved, we send a written proposal with scope, deadline and fees.
An employer of record lets you employ people in Brazil under the CLT without opening a company, which suits a small team or a market test. A Brazilian entity costs more to set up and maintain but gives control over payroll, benefits and local contracts as the team grows.
The STF has upheld outsourcing and alternative contracting models in several decisions and is deciding Theme 1,389 on PJ contracts. Since June 2026 lower labor courts are judging these cases again, but the binding thesis is pending, so outcomes still depend on the facts of each relationship.
// about the firm
Diego Castro Advogado is a Brazilian law firm focused on data protection (LGPD), contracts and technology law for digital businesses. The lawyer in charge is Diego Castro, admitted to the Brazilian Bar under OAB/PI 15.613, with a postgraduate degree in Digital Law and author of the book "Termos de Uso sem mistério" on terms of use. The firm has an office at Av. Brigadeiro Faria Lima, 1181, São Paulo, and a base in Teresina, Piauí, and works with foreign companies by video call in English. It advises on Brazilian law only and coordinates with the client's home counsel when the matter also involves foreign law.
By Diego Castro, OAB/PI 15.613 · Published · Updated · 14 min read
// legal sources
Reviewed against the CLT (arts. 2, 3 and 442-B), the Civil Code, the Software Act, the Copyright Act and the LGPD. Information only. Labor risk depends on how each relationship works in practice; get advice from a Brazilian lawyer before hiring or terminating.
Tell us what you sell, who your users in Brazil are and which document or decision is on the table. We reply in English with the next step and, when it makes sense, a written proposal before any work starts.
Online meetings in English · Video calls across time zones
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