Doing buziness in Brazil

(Doing buziness in Brazil, 2001 - Britcham Brasil - pgs. 105 a 129)

EMPLOYED LAW 

(Tozzini, Freire, Teixeira & Silva Advogados, Shinckar e Advogados Associados)

The CLT of 1943 contain the basic employment law principles. Since then, however, a myriad of statutes have been passed covering salary increases, social security and pension funds, strikes, health and safety standards and protection of certain specific classes of workers. The Federal Constitution also provided urban rural workers certain rights, which superseded some of those in the CLT.

Definition of Employee

Under the CLT, an employee is a person who renders services on a permanent basis to an employer, under its direction and in exchange for a salary. Subordination is essential in a employment relationship; hence, company directors and officesrs are generally nor employees.

Employee Hiring Procedures

Companies incorporated in Brazil do not need prior authority to contract Brazilian nationals as employees. Before being admitted however, the employee must have an employee work and social security booklet (CTPS). Upon admission, the employee must complete a medical examination and present the CTPS to the prospective employer.

The content of the employment contract must be recorded in the CTPS. Tohse contents must include:

• The company’s name tax registration number, address and activities;
• The number of the employment registration card or page of the employment registration book where the employee was registered;
• The employee’s position, date of admission and from of payment of salary, and
• The signature of the company representative.

The company must also register each individual’s employment in its employment registry.

The employer update the registration of the employment relationship throughout its term, recording (amongst others) details on holidays taken, work accidents and illnesses, as well as the termination of employment.

The company's first employment registration book or batch of employment registration cards must be authenticated by the Regional Labour Department, upon inspection by the Ministry Labour.

Hiring practices that discriminate against potential employees on grounds of sex, ethnic origin, race, colour, marital status, family situation or age, are prohibited. Discrimination against those this criminal records is not expressly prohibited, and there are laws preventing criminal checks on potential employees. However, any information obtained must be treated confidentially.

Employment Contracts

Individual employment contracts may be in writing or implied from the relationship between the individual and the company to which he/she renders services. Foreign employees domiciled abroad and transferred to Brazil must sign an employment contract and submit in to the Ministry of Labour before entering the country.

Employers and employees may negotiate contracts provided that they observe the law, the decisions of the competent authorities and the terms and conditions of the relevant collective bargaining agreements (if any).

Collective bargaining agreements are those that establish general and normative rules governing the relationship of a particular category of employer and employee. They are executed between the employers’ association and employees’ union, or between the employees’ union and a specific company.

Collective bargaining agreements are note compulsory but once they are entered into, their terms and conditions prevail over individual contracts.

Term of Individual Employment Contracts

The employment contract may be entered into for an indefinite or fixed term (the latter is permitted only in specific circumstances). The term will be held as definite when:

• The contract expressly states that the term is indefinite;
• The contract does not stipulate a term;
• A fixed term contract is implicitly or expressly renewed more than once, and
• An existing fixed term contract is terminated, but within 6 months another contract for a fixed term is entered into, involving the same parties. (This does not apply where the termination was connected with the rendering of specialised services or the occurrence of certain events.)

The principal advantages of fixed-term contracts over indefinite term contracts include enhanced flexibility, and lower benefit contributions and severance payments.

• A contract will be for a fixed term when its validity is pre-set or for specific services or terminates upon the occurrence of a reasonably foreseeable event. Fixed term contracts are permitted:
• For an initial 90-day, trial employment period, the continuation of which will trigger its transformation into a contract for an indefinite term;
• For a maximum two-year term where:
  1 - The nature of the object services, including the transitional nature, justifies a pre-set term, or
  2 - The object services are related to business activities of a transitional nature, or
  3 - Upon collective negotiation in the other cases.

Compensation and the Minimum salary

Compensation comprises not only the employee’s fixed salary, but also commissions, bonuses (Christmas or otherwise), fringe benefits (such as personal or family benefits), and living expenses. Compensation may not be reduced, except by collective bargaining agreement.

Compensation, except for commissions, must be paid at least monthly. Employees are entitled to receive one Christmas bonus per year equal to one monthly salary. Half of the Christmas bonus must be paid by 30 November and the other half by 20 December.

Compensation is to be paid in Brazilian currency. A portion, however, may be paid in kind: e.g. when the employer is responsible for providing employees with housing, food and clothing (provided that these benefits are nor necessary for the performance of the employees' job itself, in which case they are instruments of work and not salary).

Employees are also entitled to benefit from the company’s profits and/or result sharing pans. The law states:

"Each company is to establish with its employees, through a commission formed by their elected representatives and a union representative or by direct collective negotiation, the form of the participation in either the company’s profits or results. The guidelines for and conditions of the participation are to be established freely, and clearly defined in a separate document that must be filed with the union with the power to represent the company’s employees. Among other factors, the company’s productivity, type, profitability and its previously agreed programmes for achieving its goals, results and deadlines, as previously agree, are to be taken into consideration. Amounts paid in connection with the employee’s participation cannot replace or supplement the employee’s compensation and are not to be deemed to constitute a tax base for purposes of any employment or social security charges". (16)

Workers nation-wide are guaranteed a legal minimum salary of R$180.

Collective bargaining agreements may set a so-called "professional salary", which is the minimum wage for a specific class of workers. Professional salaries are always higher than the minimum wage.

Employees with monthly salaries of over R$900 must pay income tax at between 15% and 27,5% (depending on how much they are paid). The income tax base is the salary less certain deductible expenses, such as children’s educational costs up to a certain limit). Health expenses etc. income tax is deducted and paid directly by the employer to the tax authorities. Commissions, bonuses and fringe benefits are taxable income.

Salary Increases

Monthly base salary adjustments are not mandatory, but increases may be negotiated either individually or though annual negotiations of collective bargaining agreements.

Child Labour

The Federal Constitution prohibits children under 16 from working other than apprentices. Employees under 18 are prohibited from working overtime, at night, and under hazardous conditions. Student employees under 18 have the right to co-ordinate their holidays from work with those from school.

Working Hours

The regular working period may not exceed 8 hour per day and 44 hours per week. Employees are also entitled to a weekly rest of 24 hours, which is generally taken on Sundays. Overtime must be paid at least 50% more than for normal hours.

Holidays and Leaves of Absence

After each 12 months of employment, the employee is entitled to 30 day's holiday (which must be taken within the next 12 months). In addition, the employee is entitled to receive a holiday bonus of one-third of his or her salary.

Maternity leave is 120 days, during which the employee’s job and salary are secured. During the maternity leave the employee’s salaries are paid by the INSS. The Federal Constitution also provides for five days paternity leave.

Termination of Individual Employment Contracts

Contracts of employment may be terminated by:

• The employer (with or without just cause);
• resignation;
• expiry of the term, and
• constructive dismissal (where the employee terminates the contract due to the employer providing "just cause").

Prior notice and redundancy payments are defined depending on the type of termination.

Employer’s Initiative

Termination Without Just Case

There id no distinction between termination of employment without just a case and termination due to redundancy; they are considered to be the same. The law does not oblige the employer to declare reasons for terminating the employment contract. If the contract is terminated, the employee is entitled to: (i) the balance of his/her monthly remuneration; (ii) unused holidays and "pro rata" holiday pay (which is proportionate to how many months were worked in the previous 12 months, plus one third); (iii) "pro rata" Christmas bonus equivalent to the number of months worked during the calendar year, and (iv) a 40% increment on the amount deposited as FGTS. The employer must give the employee at least 30 days notice or dismiss immediately and pay salary in lieu of notice.

Termination With Just Cause

The law defines just cause for terminating the employment contract. In these cases the employee is only entitled to:

• the balance of the monthly salary, and
• unused holiday pay (after 12 months of work) plus one third. The employee is not entitled to the 40% fine of the amount deposited as FGTS nor can he/she withdraw the balance of FGTS deposits.

Employee's Resignation

The employee may resign on giving at least 30 days' notice to the employer (unless the employer releases the employee from the obligation). The employee is entitled to: (i) the balance of the monthly salary; (ii) unused holiday pay plus one third (after one year in employment), and (iii) proportionate Christmas bonus equivalent to the number of months worked during the calendar year.

Expiry of Employment Terms

Employment contracts may be terminated upon expiry. The employee is entitled to:

• the balance of the monthly salary;
• proportionate holiday pay proportionate to the number of months worked in the previous 12 months, plus one third, and
• proportionate Christmas bonus equivalent to the number of months worked during the calendar year.

If fixed-term Contract is terminated without just cause, the terminating party must pay additional damages of 50% of the compensation established for the remaining term of the contract. Furthermore, the 40% fine of the balance deposits is payable if the employer terminated the contract.

Constructive Dismissal

Domestic employment gives grounds on which the employee may terminate employment for just cause. It is called indirect/constructive dismissal because the employee is entitled to the same termination amounts payable as if the termination were unjust.

Job Security

An employee may obtain protective stability rights in several situations:

• a pregnant employee is protected up to 5 months after delivery;
• a union leader is secured for 1 year after completion of his/her respective mandate;
• members of the Internal Commission for Accident Prevention (CIPA) are granted 1 year of protection after completion of their respective mandates;
• employees injured while carrying out their professional activities are respectively granted stability of 1 year after their return to work; any others provided for in the collective bargaining agreements (including pre-retirement periods).

The employer may not dismiss employees who have work stability except for just cause. If the employer dismisses the employee for gross misconduct (i.e. just cause), and the employee files a lawsuit, the employer must then prove the grounds for the dismissal. If the employer fails to do so, it may be obliged to treat the dismissal as having been without just cause. This would mean the employer having to pay all past employment obligations (if any).

Travelling Costs

Employees are entitled to public transport vouchers for commuting between home and the workplace. Fares are not compensation for legal purposes so long as the employer respects certain legal requirements. The amount disbursed by the employer is deductible against income tax.

Unions and Strikes

State authorization for a trade union to be founded is unnecessary, but it must be registered with the competent agency. The Government is prohibited from interfering or intervening in trade union organisation.

Each territorial base may have only one trade union representing a particular professional or economic category. This territorial base is to be defined by the interested employees or employers and must at least cover a municipality.

The right to strike is constitutionally guaranteed. It is incumbent upon the workers to decide on the advisability of striking as well as the interests they wish to protect by doing so. Strikes are not permitted in essential sectors (water treatment and supply; electric power, fuel and gas production and distribution, and public transport, among others). Strikes are abusive if:

• the legal notice period is not observed;
• they jeopardize the free exercise of the right to work of non-strikers by violence or gross intimidation;
• they use violence or gross intimidation against others or damage any property;
• they disobey an authority's legitimate order;
• they attract persons unconnected to the striking professional category, and they occupy premises or obstruct its operation, or jeopardize the employer's or non-strikers' access.

Social Security and Pension Funds

Employers and employees must make compulsory, monthly contribuons to the INSS, (the agency responsible for providing employees with sideband retirement benefits.)

The employees contributions range from 7.72% to 11% of his/her salary up to 10 times the legal contribution salary. The percentage varies according to the employee's salary (the higher the salary, the higher the percentage). The value of the contribution salary is slightly lower than one minimum salary.

Employer contributions average 27% of the employees overall salary. Contributions may be higher if the employee works in hazardous conditions (when an additional 2% to 4% is payable). Furthermore, all companies must withhold social security contributions of 20% of the total compensation paid to corporate directors and independent contractors.

Employee Dismissal Fund (FGTS)

Employers must, on the employee's behalf, deposit every month 8% f each employee's salary into a fund administered by a federal financial institution.

The employee can only withdraw the fund upon: 

• dismissal without just cause;
• termination of fixed term contract;
• some cases of illness;
• retirement, or
• to buy real estate.

Where the employee dies, the fund will form part of the employee's estate.

For dismissals without just cause, the employer must pay the employee a fine equivalent to 40% of the amount deposited in the FGTS. The amounts deposited are monetarily adjusted every month by the dame value as that applied to savings accounts. It will also earn interest at between 3% to 6% per year, depending on the duration of the employment with the same employer.

Social Integration Programme (PIS)

PIS is a system for employee participation in the employer's activities, is participation is not established between the employer and employee of each company, but rather the whole country. Employers throughout the country make compulsory contributions towards an unemployment insurance programme and bonus scheme for dismissed employees (who receive monthly payments up to 2 minimum salaries). Contributions by employers are paid from their own resources and are 0.65% of the company's gross income.

Health and Work Safety Matters

Several obligatory programmes on health and safety standards include:

Occupational Health and Medical Control Programme (PCMSO) /Medical Records

This programme includes the obligatory submission of employees to a medical examination prior to admission, periodically during employment, and upon dismissal. The medical examination before admission is to discover if the individual suffers from any health problems which might prevent him/her from performing his/her duties. The periodical examinations determine if the employee's health has deteriorated or if there is sign of any work-related disease. The medical examination upon dismissal is intended to see if the employee is suffering from a health problem or is pregnant; both of which would prevent the employer from dismissing them.

Environmental Risk Prevention Programme (PPRA)

This programme is designed to protect the employee's health and integrity by anticipating, recognizing, evaluating and controlling environmental risks in the workplace at all times, whilst also respecting both the environment and resources.

Internal Commission for Accident Prevention (CIPA)

Brazilian companies must have an internal commission for accident prevention (CIPA). It is composed of employees and company representatives who remain in office for 1 year. The number of CIPA members varies depending on how many employees the company has and how dangerous its activities are.

Those elected by the employees to the company's CIPA (either as current or substitute members), cannot be removed from their positions from the date of their registration as candidates until 1 year after term-in-office.

Health Hazard Allowance

Employees working under hazardous health conditions receive an additional monthly 10%, 20% or 40% of the current minimum salary. The amounts vary according to the degree of danger (which it appraised by experts) Companies arc required to provide employees with adequate Individual Protective Equipment (EPI). They are not required to pay this allowance if the equipment is sufficient to neutralize or eliminate the agents causing the health hazard.

One-the-job Risk Allowance

Employees working in dangerous conditions (that is, those in contact with explosives, inflammable materials or electricity) are entitled to an additional 30% of their base pay.

Trade Union Law

Members of a particular profession or a group of employers may form trade and professional associations. Theses associations aim to defend their members' common economic or employment interests and to ensure their representation and defence in administrative and legal proceedings. Either employees or employers may form such associations. Under the law, trade and professional associations must consist of members who share a common:

• Economic category and solidarity of economic interest; or
• Professional category or similarity of lifestyle stemming from common work where employment is in the same or related fields of economic activity.

Employees in different professions or job functions may form a union when authorised by statute.

The Federal Constitution guarantees the free creation of trade and professional associations. The Federal Constitution also prohibits the government from requiring authorisation to form a trade or professional association and from interfering in the organisation of the association. Trade and professional associations have the right:

• To  represent their members;
• To execute collective bargaining agreements;
• To collaborate on technical matters with the State;
• To elect their own representatives; and
• To levy membership fees.

Trade and professional associations are recognised as private sector organisations. Only one union may represent members in a given category in each municipality. Workers are not obligated to join the union for their category.  Non-military civil servants have the right to join trade unions. Military personnel are prohibited both from joining unions and from striking. Union representation of an entire professional category is authorised; it is required for unions in collective negotiations. Workers in all professional categories are obligated to pay union dues regardless of their membership. Union representatives have tenure. Labour courts have jurisdiction over collective employment agreements and contracts.

Unions have five primary obligations:

• To represent members in contract negotiation;
• To assist members and offer services that help them achieve their full human potential, including education, health care, job placement, leisure activities, cooperative institutions and legal services;
• To support themselves through the collection of dues, though members may be given an offset for services performed for the union;
• To collaborate with the State in the study and solution of relevant problems; and
• To represent collective and individual interests before administrative and legal authorities.

In fulfilling this last obligation the union may either substitute itself for a member and act in its own name or simply represent a member in a given legal dispute.

International Labour Organisation

In addition to constitutional guarantees, Brazil has obligated itself by treaty to respect the principal of trade and professional union freedom as a fundamental human right. This treaty obligation is self-regulating because it refers to human rights. The treaty provides that both workers and employers shall have the right, without prior authorisation, to:

• Organise as they choose;
• Establish by-laws and regulations;
• Freely elect representatives; and
• Organise their management and activities.

The International Labour Organisation (ILO) asserts several principles as essential to union freedom. The most basic of these is the right to organise trade unions. This basic principle is defended vigorously and applied to all workers and employers. It includes not only the right to create an organisation but also to join or leave one. This principle of union freedom applies collectively and individually on all levels and in all sectors without distinction of sex, colour, race, credo or nationality. This principle is in conflict with Brazil's requirement that only one union represent a category of workers within a particular territory. Brazil's approach is referred to as exclusivity. The ILO prefers the principle of unity, which allows, but does not require, all workers in a particular category to be represented by the same union.

However, Brazil does fully comply with the other ILO principles, including:

• The right to organise without prior state authorisation;
• The right to self-governance, including freedom from dissolution by the state and protection for union representatives; and
• The right to assert collective needs in all spheres of economic activity and in the public sector.

IMMIGRATION AND EXPATRIATE RIGHTS (17)

Under the Federal Constitution, foreign citizens legally residing in Brazil have the same rights as Brazilians.

Whilst foreigners and Brazilians are considered equal before Brazilian law (including labour legislation), no foreigner will be granted a work authorisation if:

• he/she is not qualified and/or specialised in a particular field of activity; or
• is as qualified or specialised as the Brazilian workforce available domestically.

The Ministry of Labour has a dual role in relation to expatriate rights.

First it is represented in the National Immigration Council (CNIg), which formulates national immigration policy, and second it grants work authorizations to foreign employees ( through the Immigration General Co-ordiantion  - CGI )., essential for the granting of work visas.

Types of Visa

There are several types of visa. They are:

• transit visas;
• tourist visas;
• temporary visas;
• permanent visas;
• courtesy visas;
• official visas; and
• diplomatic visas.

Transit Visas

Foreigners obliged to transit through Brazilian territory to another country must, unless the journey is continuous, apply for a transit visa. Its maximum validity is 10 days, it cannot be extended, and it only allows its holder to enter the country once.

Tourist Visas

Tourist visas are required by foreigners visiting Brazil for recreation or tourism. Tourists cannot engage in paid activities. International treaties ensuring reciprocal rights have been ratified by the Government. Therefore, tourist visas are not required for foreigners coming from countries not requiring visa from Brazilians to enter their territories. Tourist visas are valid for up to 90 days.

Temporary Visas

Temporary Visas are required for those foreigners entering Brazilian territory:

• on a cultural trip or study mission (Type I);
• on a business trip (Type II);
• as an artist or a sportsperson (Type III);
• as a student (Type IV);
• as a scientist, professor, technician or any other professional, under a contract or employment agreement, or on Brazilian government  service (Type V);
• or as a correspondent of foreign newspapers, magazines, radios, televisions or news agencies (Type VI).

Permanent Visas

Foreign citizens planning to settle and reside in Brazil definitively must apply for a permanent visa.

Courtesy, Official, and Diplomatic Visas

These visas are granted case by case by the Ministry of Foreign Relations to personnel of foreign embassies, consulates, and international organisations within Brazilian territory.

General Conditions

Foreigners holding a student, transit or tourist visa are not allowed to engage in paid activities in Brazil. Correspondents of foreign newspapers, magazines, radios, televisions or news agencies are not allowed to be paid by a Brazilian source.

The visa (regardless of its nature) must be used within 90 days of the date it is granted. This period can be extended once by the consular authorities and for an equal period.

The Work Visa

Foreign citizens wanting to engage in paid activities in Brazil must request a work visa. The visa may be either temporary or permanent (based on the position the expatriate will hold in Brazil). The period the expatriate will be authorised to stay in Brazil will depend on the type of visa and on his/her activities.

Obtaining a Work Visa

Both temporary and permanent work visas are granted on an individual basis. The visa may be extended to include the person's legal dependants (defined as spouses and children under 21). However, this extension only allows them to live in Brazil; they are prohibited from taking paid activities. If they wish to work for remuneration in Brazil, they must apply for work authorisation.

The granting of a work visa depends on obtaining the Ministry of Labour's approval of die employment contract, and consequent work authorisation and visa. The employment contract must be approved.

The Ministry of Labour will take 2 factors into consideration when analysing the employment contract. They are the applicant's:

• curriculum vitae, level of education and qualifications justifying his/her being employed instead of a Brazilian employee;
• salary or remuneration. The Ministry of Labour will oblige the contracting company to sign a document stating the salary both in Brazil and abroad and that Brazilian income tax will be paid on both.

The documentation required in support of the visa request depends on the type of visa and activities the foreigner intends to perform. It includes personal documentation on the foreigner and his/her family (if applicable) and on the contracting Brazilian company. Filing the proper documentation does not, on its own, guarantee a work authorisation or visa. Indeed, they will only be granted where there is a connection between the activity to be performed by the foreign citizen, his/her professional experience and the contracting Brazilian company's corporate objectives.

The contracting Brazilian company must present evidence that employing or contracting of the foreigner will not: (a) increase the number of expatriate employees to more than one third of the total workforce, or (b) cause the total payroll to expatriate employees to exceed one third of the company's payroll.

Once the work authorisation and visa are approved, the Ministry of Labour will send an official note to the Ministry of Foreign Relations authorising the visa to be issued. Except in cases of force majeure, temporary and permanent visas will only be granted in the consular jurisdiction where the applicant resided during the past twelve months.

The expatriate is generally only allowed to work for the company which contracted or employed him/her (or offered him/her the job subject to the granting of a visa) at the moment in which the visa was requested. If the expatriate wishes to move from the original company to another within the same economic group, he/she must file a request with the Ministry of Justice. This Ministry will in turn request an opinion from the Ministry of Labour before deciding whether or not to accept the application.

For Income Tax purposes, expatriates are considered Brazilian residents from the date they arrived in Brazil. Therefore, the expatriates worldwide earnings will be subject to Brazilian income tax whilst he/she is resident in Brazil.

The decision of whether to apply for a permanent or temporary visa depends on several factors including the type of activity the expatriate proposes to undertake.

Temporary Work Visas

Temporary Work visas are granted to foreigners wanting to work in Brazil:

• as a scientist, professor, technician or other professional, under an employment or contractor agreement, or hired/contracted by the Brazilian Government;
• as an artist or sportsperson.

Temporary visas sought under the heading must be supported by evidence of the individual's qualifications and/or professional experience (which must be compatible with the activity he/she proposes to perform).

The maximum validity of a temporary visa is 2 years (which therefore is also the maximum duration for employment or contractor agreements). The visa can, however, be extended by an equal, additional period if either the employer or expatriate applies for the extension before the original visa expires. The application must be supported by a new employment or contractor agreement.

Expatriates working under an employment or contractor agreement or those working for the Brazilian Government may request their temporal registry with professional regulatory bodies. They may also leave Brazil and return without having to apply for a new visa so long as they return before the temporary visa expires.

Technicians

Foreign technicians can only be hired if:

• there is a specific and periodical operational need for them;
• such that need is alien to the daily running of the business;
• that need requires a highly specialised workforce unavailable in the Brazilian market.

Foreign technicians generally have the same rights as Brazilian employees. The foreign technician can extend his/her employment contract as many times as wanted. On the other hand, certain statutory employment benefits assured to Brazilian employees are denied (such as the Christmas bonus). The foreign technician must be paid in Brazil in Brazilian currency, even if a foreign currency is used as reference in his/her employment contract.

Furthermore, the technical assistance and/or technology transfer contract between the Brazilian and foreign company must be registered with the INPI.

Permanent Work Visas

Permanent work visas are granted to foreigners wishing to work in Brazil as high-level researchers or specialists, (with a contract over 2 years), administrators, managers, or as executives or officers of civil or commercial entities. The law, as a matter of policy, looks favourably on applications made by these professionals because they are seen to bring more specialised labour force into the domestic economy. It is national policy to encourage development - and especially to increase productivity, enhance technology and encourage investments in specific areas.

Permanent work visas arc obtained cither following an application to the authorities or by conversion from temporary visa status. The granting of permanent subject, for no longer than 5 years, to the performance of a specific professional activity, for which the work authorisation was granted by the Ministry of Labour, and i o the domicile in a determined area of Brazil.

The foreign citizen granted a permanent visa for a specific professional activity in a determined area cannot change domicile, professional activity or practice his/her activity outside that area during the permanent visa's life, or during the conversion from temporary to permanent visa. These conditions may exceptionally be modified by the Ministry of Justice). It will consider supporting evidence as well as the Immigration Secretariat (of the Ministry of Labour) opinion.

The expatriate may leave Brazil and return without a new visa, if the return is within 2 years of leaving the country.

Delegate-Manager/Officers

The most common employment position quoted in permanent visa applications is delegate-manager or officer. Theoretically, this person is not really a company employee because his/her role is to represent its managing quotaholder or shareholder; being appointed by it to administer, manage and command the company on its behalf. Through this delegation, the delegate-manager/officer assumes substantially all the rights and duties as if he/she were the quotaholder/shareholder (defined in the company's Articles of Association/By-Laws).

There are three situations in which the delegate-manager/officer has ties with the employer. He/she may be working for a Brazilian company despite:

• maintaining employment ties with the principal company;
• maintaining employment ties with the Brazilian company;
• having no employment ties either with the Brazilian or with the principal company.

 Members of the Board of Directors no longer need to be Brazilian residents. (18)

Maintaining Employment Ties with the Head Offices

The role of the delegate-manager/officer is usually set by the majority quotaholder or shareholder abroad; and restricted to performing his/her activities in a Brazilian affiliate or subsidiary. In this situation, the executive may render services in Brazil without the suspension or interruption of the employment agreement with the foreign company.

To import foreign workforce, the holders of the Brazilian company capital must pass a resolution in which they appoint the executive to be expatriated to Brazil as a delegate-manager/officer.

The foreign executive can participate in the company's capital. He/she would therefore become a nominee company quotaholder or shareholder, the foreign executive is not mentioned in the Articles of Association/By Laws/corporate books as a quotaholder/shareholder, then the owners mi set his/her remuneration by further resolution.

Employment Ties with the Brazilian Company

Expatriate employees with permanent visas have the same rights am duties as Brazilian employees. These may be extended by direct agreement between the employer and the employee or through the employees union. Therefore, the expatriate has the right to severance payments and other related employment benefits.

The employee's remuneration will be readjusted using the criteria defined in the annual, collective union negotiations.

Without Employment Ties

The hiring of a delegate-manager/officer without employment ties must be looked into carefully because if there appears to be an employment relationship* the law implies a contract and, therefore, an employment tie.

Delegate-managers/officers receive a fixed salary to manage and administer the company. In addition, he/she may also be granted quotas/shares in die company's capital. He/she will therefore become a company quotaholder or shareholder. However, his/her position differs to that of the quotahold-shareholder who controls the company because his/her position is pure-lie (and is used to comply with Brazilian law).

Procedures after the visa is granted

Once the visa has been granted allowing either permanent or temporary residence in Brazil, the foreigner has 30 days after his/her arrival in the country to register before the Ministry of Justice and other Brazilian authorities. Once registered, the foreigner will be issued a Identity Card for Foreigners (RNE).

Once the Ministry of Justice has issued the identity card, the Regional Employment Office (Delegacia Regional do Trabalho)will issue a Foreign Work Permit. This permit differs from others previously mentioned because its validity is tied to the validity of the RNE or work contract. If the RNE (and therefore, the work permit) have yet to be issued, the expatriate can nevertheless continue working by presenting the certificate proving his/her application for die identity card has already been submitted.

The conversion of a temporary to permanent visa

Having occupied the same position for 4 years, the holder of a temporary visa admitted in Brazil can request that the Ministry of Justice convert it into a permanent one. The Ministry of Justice will submit the request to the Ministry of Labour. If the request is approved, the holder will no longer be subject to the limitation of working solely for the entity which hired him/her whilst applying for the visa.

Once the visa is converted, the foreign citizen must register him/herself with the Federal Police within 90 days of the approvals publication in the Official Gazette.

1.Decree No. 619/92 which enacted the treaty ratified by Brazil and Argentina.

2.Federal Department of Trade Board Normative Ruling of 1998.

3.These are consolidated under Decree No. 3,000/99.

4.The Import Declaration ("DI") is prepared by the importer via computer, wing the SISCOMEX system. Once the DI is electronically transmitted it will be filed and analysed. If the DI is transmittedforfiling purposes, sequential automatic numbering of the DI will occur together with the initiation of the customs clearance procedure itself A summarised bill of the DI must be presented with specific documents to the competent customs author'ity. After the verification of the documents, the system will issue an Import Confirmation

so the goods can he delivered to the importer.

5.In accordance with the other methods, the III tax basis can be considered as (i) the "value of the transaction with identical merchandise" (Second Method); (it) the "value of the transaction with similar merchandise " (Third Method); (Hi) the "value of goods' resale" (Forth Method or Deductive Method); (iv) the "computed value of the merchandise" (Fifth Method) and (v) the "value of the last resort" (Sixth Method or Flexible Method).

6.The exporter has to prepare the Exporter Registration with the SISCOMEX system, using the information contained in the dispatch note. Later, the exporter has to issue the Bill of Sale, which will be required to perform the internal carriage until the place of the goods' shipment. Finally, in order to dispatch the merchandise, the exporter will have to present to customs authorities the BiUofSale, Export Registration, Bill of Lading dispatch note or packing list and other documents.

7.Supplementary Law No. 102/00.

8.Supplementary Law No. 70/91, amended by Law No. 9,718/98.

9.Supplementary Law No. 70/91 amended by Provisional Measure No. 1,212/95 and Laws Nos. 9,715/98 and9,718/98.

10.Law No. 8,212/91, amended by Law No. 9,032/95.

11.Law No. 7,689/88, amended by Provisional Measure 1,807/99.

12.Laws Nos. 4,886/65 and 8,420/92.

13.Law No. 6,729/79.

14.Law No. 6,099/74, and by BACEN resolution No. 1,969/92.

15.Law No. 7,565/86.

16.Law No. 10,101/00.

17.Immigration and Expatriation Rights are currently regulated by Law No. 6,815/80 (the "Foreign Citizen Statute").

18.Law No. 10,194/01, which amended Law No. 6,404/76.