Unions and Collective Agreements in Brazil: What Foreign Employers Need to Know

Foreign employers often discover Brazil’s union system on the day they hire their first employee: the employment contract has to follow a collective agreement they did not negotiate, signed by a union they have never met. In Brazil, every employee belongs to a professional category represented by a union, whether or not they join it, and the collective agreement for that category sets minimum salaries, annual raises and benefits that the employer must apply. This guide explains how the system works and what a foreign-owned subsidiary needs to manage.

One union per category and territory

The Brazilian Constitution establishes union unicity: there can be only one union representing the same professional or economic category in the same territorial base, which cannot be smaller than a municipality (article 8). In practice:

• the employees’ union is determined by the employer’s main activity and the place of work, not by the employee’s choice;
• the company is represented by the employers’ union of its economic category;
• some professions form a differentiated category with their own union and agreement, regardless of the employer’s activity (drivers and certain regulated professions are common examples).

Nobody is obliged to join a union, but union participation in collective bargaining is mandatory, and elected union officials have job protection from candidacy until one year after their term.

Convenção or acordo: two types of collective agreement

Both last for a maximum of two years, and their terms do not continue after expiry (CLT, article 614). They must be filed electronically with the Ministry of Labor through the Mediador system. Most categories renegotiate every year on a fixed date, known as the data-base, when the annual salary adjustment is set.

A typical convention covers the minimum salary for the category (often above the national minimum wage), the annual raise, overtime premiums above the legal minimum, meal or food allowances, sometimes health plans or life insurance, rules on working hours and time banks, and conditions for profit sharing. Its content varies by category and region, so the first step for any new subsidiary is to identify the applicable convention and read it (see hiring your first employee in Brazil and mandatory employee benefits).

What can be negotiated: agreements can prevail over the law

Since the 2017 labor reform, collective agreements prevail over the law on a list of topics (CLT, article 611-A), including working hours within constitutional limits, annual time banks, a shorter lunch break of at least 30 minutes for shifts over six hours, remote work, on-call and intermittent work, the method of recording working hours, the exchange of public holidays, productivity pay, incentive bonuses and profit sharing.

Other rights cannot be removed or reduced (article 611-B): among them the minimum wage, FGTS deposits, the 13th salary, the 50% minimum overtime premium, the number of vacation days and the one-third vacation bonus, 120-day maternity leave, health and safety standards and the right to strike.

The Supreme Court confirmed this model in 2022 (Theme 1046): collective agreements that limit or exclude labor rights are valid, even without explicit compensating advantages, as long as absolutely unavailable rights are respected.

Company-level agreements

Because a company agreement prevails over the sector convention, a subsidiary can negotiate specific rules with the union, for example on time banks, remote work or shift patterns. For technology and services companies with flexible work arrangements, this can be worth exploring once the team reaches a certain size.

Union contributions

The mandatory union tax ended with the 2017 reform: the union contribution now depends on the employee’s prior and express authorization. Collective agreements may, however, create an assistance contribution charged to all employees of the category, including non-members, provided they have the right to object (Supreme Court, Theme 935, 2023). In November 2025, the Court added that the contribution cannot be charged retroactively, its amount must be reasonable, and third parties, including employers, must not interfere with the employee’s decision to object.

For the employer, this means deducting the contribution only as the agreement provides, respecting objections, and staying neutral: the company should neither encourage nor discourage objections.

Profit sharing (PLR)

Profit and results sharing under Law 10,101/2000 is negotiated with employees either through a joint committee that includes a union representative or through a collective agreement. The rules must be clear and objective and agreed before any advance payment and at least 90 days before the final payment, and the document is filed with the union. Payments are limited to two per calendar year, at least one quarter apart. When these rules are followed, PLR is not subject to social security contributions or other labor charges, and income tax is withheld separately under a specific table. A well-designed PLR plan is one of the most tax-efficient ways to pay variable compensation in Brazil.

Strikes

Strikes require at least 48 hours’ notice to the employer, or 72 hours in essential services, where minimum services must be maintained. During a lawful strike, employment contracts are suspended and the employer cannot dismiss strikers or hire replacements, except in specific cases (Law 7,783/1989).

What headquarters should do

1. Identify the employers’ and employees’ unions and the applicable convention for each location and category before the first hire.
2. Build the convention’s minimum salary, annual raise and benefits into the budget, and track the data-base each year.
3. Check whether any employees belong to a differentiated category with its own agreement.
4. Consider a company agreement for working-hours flexibility and a PLR plan for variable pay.
5. Handle union contributions strictly according to the agreement and the employees’ choices.

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. Our payroll team identifies the applicable unions and agreements, applies salary floors, annual adjustments and union contributions correctly, and supports the design and documentation of PLR plans. See our payroll service or talk to our consultants.