Contractor or EOR in Brazil: Hiring a Developer Legally

A US company hiring a developer in Brazil has to decide who legally engages that person. The choice sets the monthly cost, how much control you have over the work, and what can go wrong later. It is also the question founders most often get wrong, usually by signing a contractor agreement and then managing the person exactly like an employee.

This post compares the three options and explains where the legal line is. It is part of the complete guide to hiring a senior engineer in Brazil; for invoices and tax forms, see how to pay a software contractor in Brazil.

What are the options?

What does each option cost?

Take a senior engineer for a full year. The contractor option costs the agreed rate plus, if you use one, a contractor platform: Deel lists $49 per contractor per month (Deel).

An EOR employee costs the salary plus Brazilian employment charges plus the EOR’s fee. Under the CLT the employer pays 20% social security (INSS) and 8% into a severance fund (FGTS), a 13th monthly salary and 30 days of paid vacation (Athyna), with a one-third vacation bonus required by the Brazilian Constitution (art. 7, XVII). As a rough planning figure, the charges and common benefits add about half the salary again; then add the EOR fee, which Deel lists at $599 per employee per month.

Your own entity only makes sense at scale. Opening and running a Brazilian company means local directors or representatives, an accountant and monthly tax filings, whether you have one employee or fifty.

Where is the legal risk with contractors?

Brazilian labor law defines an employee by how the work happens, not by what the contract says. The Consolidation of Labor Laws considers an employee anyone who provides services personally, on a non-occasional basis, under the employer’s direction and for pay (CLT, art. 3). If a contractor relationship shows all of those, a labor court can treat it as employment and award the employee rights backwards: vacation, 13th salary, severance fund deposits and more.

The practice of hiring people as companies (known in Brazil as pejotização) is under review at the Supreme Court. In June 2026 the court let lower courts resume those cases while its final ruling is still pending (Felsberg). Until then, the safe reading is the old one: the substance of the relationship decides.

How do you keep a contractor relationship a real contract?

Contract for results and let the contractor run their own work. In practice:

• Define deliverables and a scope, not working hours. Agree on the shared hours you need for meetings, not a timesheet.
• No employee trappings. No company email signature that says “employee”, no vacation approvals, no performance reviews in the HR system, no inclusion in employee benefits.
• Let them choose tools and methods. Their own equipment, their own way of working inside your engineering standards.
• Pay invoices, not salaries. Monthly invoices from their company, as in any business-to-business contract.
• Allow other clients. Exclusivity is not what makes someone an employee, but it makes the relationship look like employment; if you need it, that is a reason to use an EOR.

None of this is unusual for a senior engineer. It is how independent professionals work everywhere.

When should you choose an EOR instead?

Choose an EOR when the role really is employment: you want to direct the person’s daily work, you need exclusivity, the person wants employee protections and benefits, or you plan to offer equity the way you would to a US employee. It costs more, but it moves the employment risk to a company whose business is carrying it. A contractor setup is the better fit for senior engineers who work autonomously, own outcomes and prefer running their own business.

I work with clients as a contractor, through my own Brazilian company, for exactly those reasons.