What is PJ contracting?
PJ (pessoa jurídica, 'legal entity') is the model in which a professional provides services through their own company — usually an MEI or ME — and issues invoices, instead of being hired as a registered employee. The relationship is governed by a services agreement, not by the CLT.
For the hiring company, the cost is lower: no FGTS, employer INSS, vacation or 13th salary. For the professional, the gross amount is usually higher, but without CLT rights — paid vacation, 13th salary, unemployment insurance and FGTS are on them, as are their own company's taxes.
The model's risk is the so-called 'pejotização': hiring as a PJ someone who works with subordination, personal service, habituality and compensation — the legal elements of an employment relationship. In those cases, Brazilian labor courts can recognize a CLT relationship and order the company to pay all rights retroactively.
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A CLT developer at R$ 6,000 costs the company about R$ 8,000+ with charges. As a PJ, they could negotiate R$ 8,000 gross — but pay their own company's taxes (for example, ~6% under Simples for services) and self-fund vacation, 13th salary and retirement savings.
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What is PJ in Brazilian employment?
PJ stands for pessoa jurídica, a legal entity: instead of being hired as an employee, the professional opens a company (MEI, ME or partnership) and invoices for services. There is no vacation, 13th salary, FGTS or notice pay, and taxes are the contractor's responsibility.
Can a PJ contractor be reclassified as CLT?
Yes. If the relationship shows subordination, fixed hours, personal performance and exclusivity, the labour courts can recognise an employment relationship and order the company to pay every CLT entitlement for the period, plus fines and charges.
How much should a PJ charge to match a CLT salary?
As a rule of thumb, a PJ needs to charge 1.5 to 1.8 times the CLT salary to make up for vacation, 13th salary, FGTS, employer INSS and the lack of job security, net of the taxes of their own company. The exact figure depends on the tax regime chosen.