Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
After months of uncertainty, on June 23, 2017, the eSocial Steering Committee in Brazil finally issued a new resolution launching a restricted platform for companies to begin testing the program. The program will be available first for IT companies from June 26, 2017 to July 31, 2017 and for all types of companies from August 1, 2017 to December 31, 2017.1 The eSocial website has also created a complaint channel for companies to report errors they encounter during the trial period.2
Using the system will become mandatory for companies with a 2016 revenue of R$78,000,000 (approximately $24,000,000 as of today) on January 1, 2018 and for other companies on July 1, 2018. (Reports relating to health and safety will be mandatory six months after the company starts using the system.)
The System of Digital Bookkeeping of Fiscal/Tax, Social Security and Labor Obligations (“eSocial”) is a Brazilian federal government project to unify the transmission of employment and work-related data to the following federal government institutions: Caixa Economica Federal, the Brazil government bank that manages the Employee Savings Fund (“FGTS”) system; Social Security Institute (“INSS”); Social Security Ministry (“MPS”); Labor and Employment Ministry (“MTE”); and Internal Revenue Services (“RFB”).
The eSocial will reach all individuals and entities that engage workers, regardless of their size, including rural producers, professionals, employers of domestic workers, and service receivers, which will have to use the eSocial system to record events, payments and contributions relating to each work/employment relationship. Generally, employers will record in the eSocial system data referring to hiring, leaves, working hours, prior notice, termination, payroll information, such as compensation and other payments, payroll taxes and payments of taxes and contributions, and health and safety information.
Employers are already required to inform most of that data, although through several separate systems, and in much less detail. The eSocial platform has 43 forms, with 2,392 fields. If a company has 1,000 employees, it will have to send at least 2,000 forms per month, with up to 130 fields each, just relating to payroll.
According to the authorities, the eSocial will simplify and expedite the information process, by eliminating duplicated information and forms, such as the GFIP, RAIS, CAGED, among others. However, it will also allow the authorities (labor, social security, FGTS and internal revenue) to monitor and audit employers, so employers must improve the quality and accuracy of the information they provide in order to avoid penalties.
Companies that do not outsource payroll should make sure that they have in place all required tools and software to collect, process, and upload/transfer the information to the eSocial and start testing the program.
Companies that outsource payroll and occupational health and safety programs should make sure that they are capable and ready to provide the service providers with the required information and that those service providers are ready to process and transfer the companies’ information to the eSocial.
In any case, companies of all sizes should, as a first step, update their employees’ records, in particular by checking their employees’ full names, dates of birth, taxpayer numbers (“CPF”) and the National Registry of Social Information (“CNIS”). In the event that there are any discrepancies in any of this data, companies should take action to correct any errors. Companies can verify information online through the eSocial website: http://portal.esocial.gov.br/institucional/consulta-qualificacao-cadastral.