January 12, 2015:
What is the challenge?
A large influx of refugees to Brazil, and to Sao Paulo in particular, has created a significant delay in assignees’ and transferees’ ability to book registration appointments with the Federal Policia. As a final step in the Brazilian immigration process global assignees require this appointment to obtain their RNE (RegistroNacional de Estrangeiros), a crucial document required for actions like opening a local bank account and going on local payroll.
In the past international transferees or assignees going into Sao Paulo would simply go on-line and book an appointment. Booking an appointment was easy and delays were short.
At this time, however, this is not the case: at the time of writing, they are already booking appointments into April.
Why does it matter #1?
Payroll problem: Those being sent to Sao Paulo that are to be localized (either permanent transfers or global assignments on local payroll), cannot go onto local payroll until after their RNE appointments. Companies must plan to either delay sending employees or keep transferees/assignees on local payroll. Obviously this will not be a solution for brand new recruits. Furthermore, tax and compensation plans may have to be adjusted if the expectation was immediate transfer to local payroll.
Why does it matter #2?
Even if you can leave your assignee on home country payroll, foreigners must register with the Federal Policia within 30 days of their arrival. Transferees/assignees that do not register within the 30 day period risk being fined. As appointments are now being scheduled over 90 days into the future, this is not possible in Sao Paulo. Therefore, Human Resource departments need to be prepared for their employees to receive these fines. It is not known at this time whether the Federal Policia will be lenient due to the obvious delays or continue with their standard penalty fine process.
Why does it matter #3?
Restricted Travel: Employees that have not registered are not able to travel outside of Brazil without the threat of having their work permit revoked. Travel outside of Brazil is not recommended until they have obtained their RNE. As stated earlier, expectations will need to be managed with the assignee and within the company that no travel outside of Brazil will be possible for approximately 90 – 120 days after arrival.
Why does it matter #4?
An RNE is required to open a local bank account. If a foreign national does not have a local bank account, then they cannot pay for security deposits on rental homes. They will also have challenges conducting day-to-day activities. Younger employees without credit history will have a challenge if they do not have substantial credit.
Furthermore, companies must ask themselves if the local entity is willing to be a guarantor for the employee vis a vis his/her landlord? If not (and in the case of localized employees, most companies do not wish to be guarantors) then the foreign national will have to buy an insurance bond equal to approximately 1.5 to 2 months’ rent. They will not be able to do this without a local bank account, which again, is not possible without the foreign national first getting their RNE protocol.
What can you do?
Manage Expectations: If you have international relocations to Sao Paulo, you should begin managing expectations with stakeholders immediately.
Start discussions with origin bank: Transferees/assignees should start speaking with their origin country bank accounts and credit cards about how they may be used in Sao Paulo and communicate to HR any problems they may have with regards to paying for day-to-day essentials until they can get their bank account established locally.
Move quickly: The most important thing is to move quickly on any global assignments or global relocations to Sao Paulo so the challenges of RNE delays are minimized.
This relo-lert is only a cursory look at a significant challenge in Sao Paulo. There are other nuances that go beyond this relo-lert. If you have any questions, please call and someone will be happy to discuss with you.