Brazil’s eSocial—Is Your Company Ready for Compliance by September?

The Brazilian government has developed a groundbreaking unified electronic platform for mandatory reporting of employee data, payroll data, health and safety records, and tax information. The program, “eSocial,” will fundamentally change communications between employers (particularly human resources departments) and the government. Companies operating in Brazil will be required to begin reporting information via eSocial in September 2016 and January 2017, depending on the company’s revenue.

The goals of eSocial—a collaborative effort between the Brazilian Ministry of Labor and Employment, National Social Security Institute, workplace safety ministry , and the country’s federal revenue service and federal savings bank—are to simplify and streamline reporting of employment data to these institutions, reduce data and reporting errors, and provide the government with better data. Employment data, once entered, will be accessed by all five government agencies. This will have the effect of greater transparency. However, it may also create more government intervention in a company’s ability to manage its workforce, including its use of independent contractors. 

Why should US-based companies care about eSocial?

Noncompliance with eSocial’s implementation deadlines will result in the swift imposition of fines and penalties—potentially by all five government ministries. Compliance may expose companies to broader and more detailed audits—even without their knowledge—as well as the potential for greater liability related to employee terminations, worker safety, leaves of absence, and tax payments. 

Is your Brazilian operation ready to verify, register, be certified, and comply?