The terms bonus, premium and profit sharing (PLR) are used to describe variable portions that may compose the compensation of employees in Brazil. However, each of these portions has its specifications and important legal aspects to be observed.
In a simplified way we can describe that:
- the bonus is an additional payment offered in recognition of good performance, but the payment of this portion cannot be recurring and must be granted to all employees who meet the criteria for receiving the bonus, without distinction;
- the award, present in article 457, paragraph 4 of the CLT, is an additional portion that is justified by the achievement of expressive results and can be granted individually or collectively, depending on the criteria adopted by the company. Compared to the bonus, the premium also differs by the fact that it is not considered for labor and social security effects, as long as the legal requirements are observed;
- PLR, regulated by Law No. 10.101/2000, presupposes the sharing of the company’s positive results with employees. For its formatting, the PLR requires prior negotiation with the workers’ union, to define metrics and criteria for its concession. In addition, PLR has a differentiated taxation, which can become attractive for companies and employees.
The mentioned forms of variable remuneration can be adopted cumulatively, or even separately. The important thing is that its adoption is preceded by internal planning to structure the criteria, requirements, value metrics and payment conditions, ensuring greater legal certainty in the granting of these portions. As for PLR, it is essential that, in addition to internal structuring, negotiation with the unions be carried out to format the benefit.
Another important aspect for structuring the payment of variable compensation concerns labor, social security and tax consequences, which must be analyzed in order to reduce the costs involved in granting this type of benefit, allowing the company to choose the option that is most beneficial according to its planning.
If you have questions about this, contact our experts.
Written by Daniel Rangel and Júlia Soares.