Although much is said about the high unemployment rate in Brazil, little is discussed about booming sectors that need professionals, such as technology. The talent competition in a highly competitive market means that companies must look for various mechanisms to attract qualified candidates.
In a market in which high salaries, long-term incentives and flexible work are the minimum expected, the hiring bonus presents itself as a differential: after all, why would the professional give up on certain rights for something uncertain?
The hiring bonus aims, precisely, to compensate the professional for the loss of potential rights due to the request to resign to accept the new job, such as the loss of shares subject to vesting periods or short-term incentives.
The lack of legal provision on the subject, however, may generate questions regarding labor/employment and social security charges on this type of payment and should be a point of attention for companies that wish to implement it.
Our Tax Department has already analyzed the theme from a social security point of view in this article. But, and from a labor/employment point of view – is the hiring bonus subject to labor/employment charges and repercussions?
The case law of the Brazilian Labor Courts understands that the amounts paid as hiring bonus should serve as base for labor/employment charges (in this case, for the Severance Guarantee Fund - FGTS) due to its remunerative nature, given that the amount is paid as a result of the provision of agreed services and represents an asset increase for the employee.
On the other hand, according to recent decisions of the Brazilian Labor Courts, including decisions of the Brazilian Superior Labor Court, as the hiring bonus is paid only once, the amounts paid as hiring bonus should be limited to serve as base for the collection of FGTS, and not for the payment of labor repercussions (13th salary, vacation payment plus vacation bonus etc.).
Companies, however, should beware when contractually structuring the payment of the hiring bonus so that its legal nature is not characterized as a retention bonus, both for labor/employment and social security purposes. This situation can happen, for example, by conditioning the payment (or maintenance of the amounts) to a minimum period for the employee to stay employed by the company or to another requirement other than the employee's hiring.
Therefore, companies must pay attention, because, depending on how the hiring bonus is contractually structured by the company, it may be subject to different labor/employment and social security charges and repercussions.
