Profit sharing (PLR) in Brazil: how it works, who is entitled and how it is taxed

*Profit or Results Sharing (Participação nos Lucros ou Resultados, PLR) is a payment linked to profits or targets, negotiated between the employer and employees through a committee with a union representative or through a collective agreement (Law 10,101/2000). It is not salary: it does not generate FGTS, INSS, vacation or 13th salary, and has its own income tax table.*

Quick summary

• Mandatory? Not by law, unless provided in a collective rule or company program.
• Rules: must be clear and objective — indicators, targets, deadlines and how results are measured.
• Payments: at most 2 per year, at least one quarter apart (art. 3, §2).
• Nature: not salary — no FGTS (the Severance Indemnity Fund), INSS (social security) or knock-on effects.
• Income tax: withheld separately at source, with its own table and exemption band.
• Those who left before payment: entitled to the proportional amount for months worked, if they met the conditions (TST Precedent 451 — the TST is the Superior Labor Court).

How PLR is defined

1. A joint committee (employer and employees, with a union representative) or the collective agreement sets the rules.
2. The document must include targets, indicators, the measurement period and amounts.
3. The agreement is filed with the union.
4. At the end of the period, results are measured and PLR is paid.

Controversial points

• PLR as disguised salary: monthly payments or payments without real targets may be considered salary, with effects on FGTS, vacation and 13th salary — see Off-the-books pay.
• Unattainable targets or targets changed mid-period can be challenged.
• Those who resigned or were dismissed before payment are usually entitled to the proportional amount; a clause excluding it is invalid under TST Precedent 451.

Frequently asked questions

I was dismissed in September. Do I receive PLR?

As a rule, yes, proportional to the months worked in the measurement period, if the targets are met.

Is INSS deducted from PLR?

No. Only income tax is withheld, under PLR's separate table.

Can the employer pay PLR every month?

No. The law limits it to 2 payments a year.

Read more in this series

• How to read your payslip
• Off-the-books pay: risks and how to prove it
• Commissioned salespeople: rights and commissions
• Severance pay: what you receive for each dismissal
• Index: complete guide to labor rights