# Employer payroll taxes in Brazil, the encargos trabalhistas

Encargos trabalhistas (payroll taxes) are what a company pays on top of the salary for having an employee with carteira assinada (formal employment, registered in the work card). In a regular company, the taxes on the payroll add up to 27,8%, and the FGTS (Fundo de Garantia do Tempo de Serviço, a severance savings fund) adds another 8%.

Part of these charges goes back to the employee, such as the 13º (an extra month's pay each year), the 1/3 de férias (one-third vacation bonus) and the FGTS. Another part is tax and goes to the government, such as the employer INSS (Instituto Nacional do Seguro Social, Brazil's social security) and work accident insurance. Telling the two apart helps you read the [cost of an employee](https://simplesclt.com.br/en/clt-pj/custo-do-funcionario).

## Three groups that everyone calls encargos

The word encargo is used for very different things. One part is a right of the employee and ends up in their pocket. Another part is a company tax. And some of it comes out of the salary itself.

| Group | Examples | Who keeps the money |
|---|---|---|
| Employee rights | 13º, 1/3 de férias, FGTS and the FGTS fine | The employee |
| Company taxes | 20% INSS, RAT and third-party contributions | Government and Sistema S bodies |
| Salary deductions | Employee INSS and income tax | Government, on behalf of the employee |

Salary deductions do not raise the company cost, because they are already inside the gross salary.

People who say carteira assinada is expensive usually add up all three groups. People who say the employee keeps everything usually forget the second. An honest calculation separates them.

In the next sections, each charge comes with the law that creates it, who gets the money and how much it weighs on a salary of R$ 5.000,00.

## The rights that go back to the employee

These amounts are part of the employee's pay, but they arrive on another date or stay saved. For the company, they are a cost. For the employee, they are income.

- The 13º salário, one extra salary a year, under Law 4.090 of 1962.
- The extra 1/3 on férias (annual vacation), guaranteed by the Constitution.
- The FGTS, a deposit of 8% of what the employee earns, into a Caixa (federal savings bank) account in their name.
- The 40% fine on the FGTS, paid when the company dismisses without justa causa (serious misconduct).

> Na hipótese de despedida pelo empregador sem justa causa, depositará este, na conta vinculada do trabalhador no FGTS, importância igual a quarenta por cento do montante de todos os depósitos realizados na conta vinculada durante a vigência do contrato de trabalho, atualizados monetariamente e acrescidos dos respectivos juros.
>
> (Law 8.036/1990, art. 18, § 1º)

In English, if the company dismisses without justa causa, it deposits a 40% fine into the employee's FGTS. The fine is worked out on everything deposited during the contract, already adjusted.

Anyone comparing CLT (Consolidação das Leis do Trabalho, Brazil's labor code) with PJ (pessoa jurídica, working through your own company) must add these amounts to the salary. The [CLT and PJ comparison](https://simplesclt.com.br/en/clt-pj/comparar-clt-e-pj) shows how big that sum is in reais.

## Employer INSS, 20% on the payroll

This is the largest charge for a regular company. The payroll is the total the company pays its employees in the month.

> A contribuição a cargo da empresa, destinada à Seguridade Social, além do disposto no art. 23, é de: I - vinte por cento sobre o total das remunerações pagas, devidas ou creditadas a qualquer título, durante o mês, aos segurados empregados e trabalhadores avulsos que lhe prestem serviços, destinadas a retribuir o trabalho (...)
>
> (Law 8.212/1991, art. 22, main text and item I)

In English, the company pays the INSS 20% of everything it pays its employees for their work in the month. That money comes out of the company's cash, with no deduction from the salary.

The money goes to Seguridade Social, Brazil's social security, which pays pensions and benefits to everyone insured. It does not raise the benefit of any particular employee.

Each person's benefit comes from their own salário de contribuição (INSS contribution base), the amount on which they pay their own INSS. The [net salary page](https://simplesclt.com.br/en/salario/salario-liquido) shows how that INSS is worked out.

## RAT, the work accident insurance

RAT stands for riscos ambientais do trabalho, the risks of the work environment. It is the work accident insurance paid by the employer, and it funds benefits for people injured or made ill by their work.

> II - para o financiamento do benefício previsto nos arts. 57 e 58 da Lei nº 8.213, de 24 de julho de 1991, e daqueles concedidos em razão do grau de incidência de incapacidade laborativa decorrente dos riscos ambientais do trabalho, sobre o total das remunerações pagas ou creditadas, no decorrer do mês, aos segurados empregados e trabalhadores avulsos: a) 1% (um por cento) para as empresas em cuja atividade preponderante o risco de acidentes do trabalho seja considerado leve; b) 2% (dois por cento) para as empresas em cuja atividade preponderante esse risco seja considerado médio; c) 3% (três por cento) para as empresas em cuja atividade preponderante esse risco seja considerado grave.
>
> (Law 8.212/1991, art. 22, item II)

In English, the company pays another 1%, 2% or 3% of the payroll to cover work accidents and illnesses. The rate rises with the risk of the company's main activity.

An office pays the lowest rate when the risk of the activity is low. A building site usually pays the highest. The Constitution puts this insurance on the employer's bill.

> XXVIII - seguro contra acidentes de trabalho, a cargo do empregador, sem excluir a indenização a que este está obrigado, quando incorrer em dolo ou culpa;
>
> (Constitution, art. 7º, XXVIII)

In English, the accident insurance is paid by the company. If the company is at fault for the accident, it must still compensate the employee on its own.

## Third-party contributions and the Sistema S

Third parties are bodies outside social security that get part of the contribution on the payroll. That is where the name comes from, because the money does not stay with the INSS.

- Sesc and Senac, in retail, or Sesi and Senai, in industry, which offer leisure, health care and vocational courses.
- Sebrae, which supports micro and small businesses.
- Salário-educação, which funds public basic education.
- Incra, the land reform agency.

The total depends on the company's activity. The site uses the retail case, where the 20% INSS, the 2% RAT and the third parties add up to 27,8%.

A Simples Nacional (simplified tax regime for small businesses) company does not pay these contributions separately. The Simples law exempts it, and in Annexes I, II, III and V the payroll INSS goes inside the DAS (Documento de Arrecadação do Simples Nacional), the single tax slip.

## How much each charge weighs on a salary of R$ 5.000,00

The example below shows a normal month, without 13º and without férias, in a retail company outside the Simples.

**Charges in a normal month on a salary of R$ 5.000,00 in 2026**

| | |
|---|---:|
| Salary | R$ 5.000,00 |
| Employer INSS, 20% | R$ 1.000,00 |
| RAT, 2% | R$ 100,00 |
| Retail third parties, 5,8% | R$ 290,00 |
| FGTS, 8% | R$ 400,00 |
| **Company cost for the month** | **R$ 6.790,00** |

With the 13º, the 1/3 de férias and the reserve for the FGTS fine, spread over 12 months, the average cost rises to R$ 7.722,23 a month.

Of the extra R$ 1.790,00 that month, R$ 400,00 belongs to the employee, in the FGTS. The other R$ 1.390,00 is company tax on the payroll.

## The charges also apply to the 13º and the férias

The employer INSS, the RAT, the third parties and the FGTS are not limited to the monthly salary. They also apply to the 13º and to the férias pay with the extra 1/3.

So the base for the year is larger than 12 salaries. With a salary of R$ 5.000,00, the company pays R$ 60.000,00 in salaries over the year, R$ 5.000,00 of 13º and R$ 1.666,67 of 1/3 de férias. The total is R$ 66.666,67.

1. Payroll taxes of 27,8% on R$ 66.666,67 come to R$ 18.533,33 a year. Each month, the average base is R$ 5.555,56, which is R$ 66.666,67 divided by 12. The 27,8% of that base comes to R$ 1.544,45.
2. The FGTS, 8% on the same base, comes to R$ 5.333,33 a year, or R$ 444,44 a month.
3. The reserve for the 40% FGTS fine is R$ 177,78 a month.
4. With the salary, the 13º and the 1/3 de férias divided by 12, the average cost reaches R$ 7.722,23.

The reserve for the fine is a provision, money the company sets aside for a bill that may come. If the employee resigns, the fine is not paid, and the company keeps that reserve.

## What is not an employer charge

The INSS and income tax on the contracheque (pay slip) belong to the employee. The company only deducts them and passes them on. On a salary of R$ 5.000,00, the INSS deducted in 2026 is R$ 501,51.

Income tax on that salary is zero in 2026, because of the cut of Law 15.270 of 2025. So the net salary for the month is R$ 4.498,49. The calculation is on the [net salary page](https://simplesclt.com.br/en/salario/salario-liquido).

Adding those deductions to the company cost is a common mistake. They are already inside the R$ 5.000,00 of gross salary, the salary before deductions.

The same goes for vale-transporte (commuting allowance). The company can deduct up to 6% of the employee's base salary to cover transport, and only the part above that is its cost.

## Why the charges matter in a PJ offer

When it hires a PJ, a person billing through their own company, the company stops paying all these charges. It pays only the invoice the PJ's company issues.

The payroll taxes disappear for the company. The employee rights, such as 13º, férias and FGTS, disappear for the worker. The invoice must cover that second part, or the PJ loses money.

The PJ still pays the taxes of their own company, the INSS on the pró-labore, which is the salary they take from the company, and the accountant. The [CLT and PJ comparison](https://simplesclt.com.br/en/clt-pj/comparar-clt-e-pj) does the whole calculation.

## Words of the law, in English

- **encargos trabalhistas** (payroll taxes). The costs the employer pays on top of your salary, such as the employer INSS, the FGTS, the férias and the 13º.
- **carteira assinada** (formal employment, registered in the work card). Formal employment, with the contract recorded in the carteira de trabalho, which is digital today. It gives you FGTS, férias, 13º, INSS and seguro-desemprego (unemployment insurance).
- **13º salário** (an extra month's pay each year). An extra month of salary each year, paid in two installments. The first comes by November 30 and the second by December 20. If you worked only part of the year, you get 1/12 for each month worked.
- **terço de férias** (one-third vacation bonus). The extra amount added to the férias pay, equal to one third of it. It is a right in the Constitution, so the employer cannot leave it out.
- **férias** (annual vacation). Thirty days of paid rest after every 12 months of work. The employer pays the salary for those days plus one third extra, up to 2 days before they start.
- **justa causa** (serious misconduct). Dismissal for serious misconduct by the worker, such as theft, abandoning the job or assault. Whoever leaves with justa causa loses the aviso prévio (notice period), the prorated férias and 13º, the FGTS fine and the seguro-desemprego.
- **salário de contribuição** (INSS contribution base). The amount your INSS contribution is calculated on, usually your gross salary, up to the INSS ceiling.
- **Simples Nacional** (simplified tax regime for small businesses). A simpler tax regime for small companies. It changes what the employer pays on your salary, but not your own deductions.
- **contracheque** (pay slip). The monthly pay slip. It shows the gross salary, each deduction, such as INSS and income tax, and the net amount paid into your account.
- **pró-labore** (owner's monthly pay). The monthly pay business owners give themselves for working in their own company. It pays INSS, like a salary.

## Who pays the FGTS, the employer or the employee?

The employer. The 8% deposit comes out of the company's cash and is not deducted from the salary. The money stays in a Caixa account in the employee's name.

The employee can follow the deposits in the FGTS app. If a month is missing, they can claim it through the union, the Superintendência Regional do Trabalho (regional labor inspection office) or the Justiça do Trabalho (labor courts).

## Does a Simples Nacional company pay fewer charges?

It pays less tax on the payroll. In Annexes I, II, III and V, the employer INSS goes inside the DAS, and third-party contributions are not charged.

The employee rights are the same. The 13º, férias with 1/3 and the 8% FGTS apply in any company, large or small.

## What percentage of the salary are payroll charges?

In a normal month, in a retail company outside the Simples, payroll taxes add up to 27,8% and the FGTS to 8%. Together they come to 35,8% of the salary.

Averaged over the year, with 13º, férias and the fine reserve, the cost is 54,4% above the salary. That is why a salary of R$ 5.000,00 costs R$ 7.722,23 a month, not double.

## Keep going

- [Work out the cost of an employee](https://simplesclt.com.br/en/clt-pj/custo-do-funcionario)
- [What a PJ invoice must be worth to break even](https://simplesclt.com.br/en/clt-pj/comparar-clt-e-pj)
- [How much of a salary reaches the employee's account](https://simplesclt.com.br/en/salario/salario-liquido)