Brazil: Startup of New Digital System for Employee Data Delayed Again

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By Ed Taylor

Sept. 16—The implementation of a new digital system for reporting employee information to the government has been delayed for the third time.

The E-Social system, under which employee information must be entered online as soon as it becomes available to the employer, was supposed to be operational in 2014 but was delayed to 2015, then to September 2016. The government has now extended the implementation date to 2018 because employers need the additional time “to prepare their systems” for E-Social.

Under the E-Social system, a new employee must be immediately entered into the system and any subsequent changes in status immediately reported. At present, employers have seven days to report new hires. Employers will also be required to maintain up-to-date information on their total payroll, tax and social security payments. Individual payments for payroll, social security, severance pay, union fees and income taxes must be entered into the system by the seventh day of the following month.

With this wealth of real-time data, tax department auditors will be able to cross check company tax information with data on salaries and benefits paid to employees. In addition, the labor ministry will have immediate access to information on dismissals, vacations, sick leaves and overtime pay.

‘Not That Long'

According to the newly announced timetable, employers with annual sales of over $24 million will have until Jan. 1, 2018, to transition to the new system for all labor, social security and tax information. Smaller companies will have until July 1, 2018.

According to Valquiria Cruz, in charge of E-Social for the Brazil unit of human resources management firm ADP, employers still face serious difficulties in collecting and verifying all the information demanded by the new system.

“On the average, 20 percent of the information provided by employees contains some inconsistencies that have to be resolved,” Cruz said. “The extension of the deadline is not that long given all of the verification work that must be done.”

The delay will also help companies invest in the software they will need for the new system, said attorney Caiio Taniguchi of the Sao Paulo-based law firm ASBZ Advogados, adding that because Brazil is in the second year of a severe recession, many companies have yet to make these investments.

To contact the reporter on this story: Ed Taylor in Rio de Janeiro at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

For more information on Brazilian HR law and regulation, see the Brazil primer.

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