A R$120,000 CLT salary costs a Brazilian employer about R$171,760 a year once the encargos and 13th salary are in, which is 43.1% on top of base pay. Holiday pay and its constitutional one-third bonus come on top of that again.
The structural point that matters for planning is what Brazil does not have: an employer ceiling. The employee's own INSS contribution stops at the teto of R$8,475.55 a month, but nothing stops the employer's. The loading stays at 43.1% at R$60,000 and at R$240,000 alike, so in Brazil a salary decision and an encargos decision are the same decision.
Total add-on, any salary
43.1%
encargos plus 13th salary
Statutory encargos alone
34.8%
INSS, FGTS, RAT, Sistema S
Employer ceiling
None
unlike the employee's INSS teto
Price a CLT hire with your own RAT rate.
Open the Brazil employer-cost calculatorThe encargos, line by line
| Charge | Rate | What it funds | At R$120k |
|---|---|---|---|
| INSS patronal | 20% | Social security, no employer ceiling | R$24,000 |
| FGTS | 8% | Employee severance fund account | R$9,600 |
| RAT | 1% office | Work accident cover, 1% to 3% by CNAE | R$1,200 |
| Sistema S and terceiros | 5.8% | SESI, SENAI, SEBRAE, salário-educação | R$6,960 |
| 13th salary | One twelfth | Statutory, paid in two instalments | R$10,000 |
PayMetric's own modelled figures from the Brazil employer-cost engine at 2026 rates, for a company outside Simples Nacional with an office RAT rate of 1%.
Nothing caps, so the loading never moves
This is the opposite of markets like Japan or Vietnam, where contribution ceilings mean senior hires cost proportionally less. In Brazil the percentage is identical at every level, which makes budgeting simple and expensive at the same time.
| Salary | Encargos | 13th salary | Total cost | On top |
|---|---|---|---|---|
| R$60,000 | R$20,880 | R$5,000 | R$85,880 | 43.1% |
| R$120,000 | R$41,760 | R$10,000 | R$171,760 | 43.1% |
| R$240,000 | R$83,520 | R$20,000 | R$343,520 | 43.1% |
FGTS is also a liability you have not paid yet
The monthly 8% deposit is straightforward. The part that is missing from most cost models is the exit: dismissing an employee without just cause triggers a penalty of 40% of their entire accumulated FGTS balance, payable by the employer on top of every deposit already made.
The longer someone stays, the larger that number grows, and it lands in a single month whenever you restructure. If you are modelling a Brazilian team, carry it as a provision rather than discovering it at termination. A mutual-agreement termination halves the penalty to 20%.
Model a CLT hire properly
Set your own RAT rate, decide whether to include the 13th salary, and add equipment and recruitment separately. Then check the rescisão calculator for what an exit would cost.
Open the Brazil Employer Cost CalculatorMonthly briefing
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Frequently asked questions
What does a R$120,000 CLT salary really cost an employer?
About R$171,760 a year, which is 43.1% on top of salary. The statutory encargos are R$41,760 of that: R$24,000 INSS patronal at 20%, R$9,600 FGTS at 8%, R$1,200 RAT at an office rate of 1% and R$6,960 of Sistema S contributions at 5.8%. Thirteenth-month salary adds a further R$10,000. Holiday pay and its one-third bonus sit on top of that again.
Does the employer cost percentage fall for senior hires, as it does in Japan?
No, and this is the single most important structural point about Brazil. There is no employer-side ceiling on INSS patronal, FGTS, RAT or Sistema S. The employee's own INSS contribution caps at the teto of R$8,475.55 a month, but the employer's does not. The loading stays at 43.1% whether you pay R$60,000 or R$240,000, so doubling a salary doubles the encargos exactly.
What is Sistema S and why am I paying 5.8%?
It is a bundle of third-party levies (contribuições a terceiros) that fund bodies such as SESI, SENAI, SESC, SENAC, SEBRAE, INCRA and salário-educação. For most companies on the lucro real or lucro presumido regimes it totals about 5.8% of payroll. Companies inside the Simples Nacional regime are treated differently and generally do not pay the same bundle, which is one reason small-company payroll quotes can look implausibly cheap next to a larger employer's.
How is the RAT rate set?
RAT (riscos ambientais do trabalho) funds work-accident cover and is risk-rated from 1% to 3% by the company's main CNAE activity code, then adjusted by the FAP multiplier, which reflects that specific company's accident history and can roughly halve or double the rate. Software and office activities sit at the 1% end, which is the figure used here. If you are budgeting for a different sector, change it.
Is FGTS really a cost if the money belongs to the employee?
Yes. You deposit 8% of salary each month into the employee's FGTS account, and it is gone from the company either way. The part that catches employers out is what happens at the end: dismissal without just cause triggers a penalty of 40% of the entire accumulated FGTS balance, paid by the employer on top of everything already deposited. On a long-tenured employee that is a substantial contingent liability that never appears in a monthly cost model.
What about holiday pay and the one-third bonus?
Brazilian employees get 30 days of paid annual leave plus a constitutional bonus of one third of a month's pay (o terço constitucional). In cash terms that is roughly another 11.1% of monthly salary a year on top of the figures here, which cover the encargos and 13th salary only. It is covered separately in the férias article linked below.
Does this make PJ contracting cheaper?
On the invoice alone, usually yes, which is why the PJ model is so widespread in Brazilian technology. But the comparison is not like for like: a PJ contractor carries no FGTS, no 13th salary, no paid holiday and no termination penalty, and the arrangement risks reclassification if the working relationship looks like employment in practice. Compare the total cost of a CLT hire against a PJ rate that genuinely compensates for those missing entitlements, not against a bare invoice.
How does Brazil compare with other markets?
It is the most expensive market PayMetric models on statutory employer contributions: about 34.8% before 13th salary, against roughly 31.4% in Sweden, 24.8% in Mexico, 23.5% in Vietnam, 15.7% in Japan and 6.2% in the Philippines. Because nothing caps, Brazil's position gets relatively worse at senior salary levels while Japan's and Vietnam's improve.
General information only. Rates are the 2026 figures used by PayMetric's Brazil employer-cost engine, last checked against the INSS schedule and current payroll guidance. Simples Nacional companies are taxed on a different basis. Check current official guidance and take professional advice before a decision affecting your payroll, tax or employment position.