BRAZIL LAW AND PRACTICE Contributed by: Alan Campos Elias Thomaz, Juliana Sene Ikeda, Ricardo Barretto Ferreira da Silva and Camila Sabino Del Sasso, Campos Thomaz Advogados
erally formalised through written contracts and regis - tered with social security and tax authorities. Compli - ance with payroll obligations, severance fund deposits ( fundo de garantia do tempo de serviço FGTS) and social contributions is essential. In addition, Brazil - ian labour laws and case law are highly protective of employees. This often leads to a litigation-intensive environment, although recent reforms have sought to provide greater contractual flexibility and reduce judicial disputes. 10.2 Employee Compensation In Brazil, employee compensation typically includes a fixed cash salary, performance bonuses, profit- sharing ( participação nos lucros e resultados PLR) and statutory benefits such as paid annual leave, a 13th salary and FGTS contributions. Depending on the collective bargaining agreement, many employers also offer supplementary benefits like private health insurance, meal vouchers and private pension plans. Equity-based incentives, including stock options or restricted shares, are more common in multinational and high-growth companies/startups. In mergers, acquisitions or changes of control, employment contracts generally transfer automati - cally under successor liability principles, ensuring continuity of rights and benefits. However, variable or equity-based plans often require review, as change- of-control clauses may trigger accelerated vesting or bonus payments. Due diligence focuses on identify - ing potential labour liabilities and ensuring compliance In Brazil, employees’ rights are strongly protected under labour law and established case law. In an M&A transaction or a change of control, the treat - ment of employment relationships depends on the transaction’s structure. In cases of a merger or asset deal where the employer entity changes, it may be necessary to terminate existing employment agree - ments and pay the corresponding severance and notice, followed by re-hiring by the acquiring com - pany. Conversely, in share deals, where the employ - ing entity remains the same, employment contracts typically continue automatically, and employees are with compensation obligations. 10.3 Employment Protection
not entitled to severance solely because of a change of control. Employees are only entitled to statutory termination payments if dismissed without cause by the new employer. Collective bargaining agreements in force at the time of the transaction remain binding on the successor entity and must be observed after closing. While there are no mandatory works councils or col - lective approvals required to complete a transaction, due diligence normally includes a review of compli - ance with labour and union obligations to mitigate post-closing risks and liabilities. 11. Intellectual Property and Data Protection 11.1 Intellectual Property Considerations for Approval of FDI Intellectual property (IP) is not generally a central fac - tor in Brazil’s formal screening of FDI. There is no dedi - cated FDI review process focused on IP ownership or transfer. However, IP assets often form a key element of valuation and due diligence in cross-border trans - actions, particularly in technology, pharmaceuticals and agribusiness. When IP rights are transferred as part of an invest - ment, registration with the Brazilian National Institute of Industrial Property ( Instituto Nacional da Proprie- dade Industrial INPI) is required for patents, trade marks and technology transfer agreements to be effective against third parties. Recent changes to Bra - zil’s Foreign Exchange Legal Framework and BACEN Resolution No 277/2022, have simplified cross-border payments, allowing certain royalty remittances with - out prior registration of contracts with the INPI or BACEN, although registration remains advisable for legal certainty and, in certain cases, for tax purposes. Certain strategic sectors – such as defence, telecom - munications, and oil and gas – may be subject to addi - tional scrutiny due to national security or public inter - est concerns. In these cases, authorities may examine the ownership and use of sensitive technologies or trade secrets, even though there is no separate IP- specific approval mechanism.
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