ESocial

DEFINITION

Digital bookkeeping of labour, social security, tax, and fiscal information, amongst others, in respect of the hiring and use of workforce with or without the existence of an employment relationship.

IMPLEMENTATION

Group 1

The implementation of eSocial for employers of Group 1, which include “Corporate Entities” (defined in Attachment V of RFB Normative Instruction No. 1,634 / 2016), taxed under the actual profit regime and having recorded annual turnover (gross income) above BRL78,000,000.00 (seventy-eight million reais) in 2016, will be mandatory in January 2018.

The above-mentioned implementation will be gradual as provided by the timeline attached hereto.

Group 2

In July 2018, the implementation of eSocial will become mandatory for entities of Group 2, which include the other employers and taxpayers, including: (i) “Corporate Entities” taxed under the actual profit regime and having recorded annual turnover (gross income) below or equal to BRL78,000,000.00 (seventy-eight million reais) in 2016; (ii) non-profit entities; (iii) individuals and (iv) international organizations and other extraterritorial institutions, all of them listed in such Attachment V to RFB Normative Instruction No. 1,634/2016.

The above-mentioned implementation will be gradual as provided by the timeline attached hereto.

Group 3

For Group 3, which includes Public Bodies, listed in Attachment V to RFB Normative Instruction No. 1,634/2016 which include members of the “Public Administration”, the implementation of eSocial will become mandatory only in January 2019.

The above-mentioned implementation will be gradual as provided by the timeline attached hereto.

Employee health and safety events

Employee health and safety events will become mandatory for Groups 1 and 2 in January 2019 and for Group 3 only in July 2019.

EVENTS

Events comprise information individualized by their nature, which must be inserted into eSocial. Events are divided into three types, namely: a) initial and checklist events; b) periodic events and c) non-periodic events.

a) initial and checklist events: the first event to be inserted into the system, such as: employer information, list of HR entries, tax, list of positions and functions, working hours, workplaces, judicial and administrative proceedings, initial hiring information, and union affiliation, etc.

b) periodic events: have previously defined periodicity and are recurrent. They comprise events that pertain to payroll. The deadline to insert such events into system is the 7th day of the month subsequent to that in which work was done.

c) non-periodic events: those events that do not have a defined periodicity, are not recurrent, in other words, must only be inserted when a specific event occurs, such as: hiring, termination, amendments to employment agreements, employee health issues, leaves, reinstatement, etc.

WHAT HAS CHANGED?

The way how all information will be sent by employers and received by authorities involved, namely changed: the Ministry of Labour and Employment, the Social Security Institute, the Federal Revenue Service and Caixa Econômica Federal, since the furnishing of the information become unified.

WHAT INFORMATION MUST BE INSERTED INTO THE SYSTEM?

All information regarding services rendered by individuals, i.e., employees and compulsory non-employee workers, such as non-employee directors and interns, must be inserted into eSocial.

There are also optional non-employee workers for whom information does not necessarily have to be inserted into the system. The recommendation is not to insert information on such type of workers into the system, to avoid the same being used against the company.

LABOUR CLAIMS

Labour claims must be inserted into eSocial only when an employee-plaintiff is reinstated, under the “Reinstatement” event.

ISSUES REQUIRING ATTENTION

All information inserted into eSocial can be changed, corrected or deleted. However, all changes and corrections will be recorded in the eSocial tracker. The company may, as a result thereof, be held liable for any information incorrectly inserted into the system, pursuant to applicable legislation.

In order to delete an event, the original registration number pertaining to the original insertion must be provided.

Each event has a deadline to be observed and many of them are interconnected. Therefore, to insert a specific event, on certain occasions, another event must first be inserted, for example, the hiring of an employee precedes his/her leave or vacation.

It is essential that the initial and checklist events be ready before the implementation of eSocial, since it will only be possible to change information on an employee if his/her initial registration is in order on eSocial.

Managers must be trained on the importance to inform to the company’s HR department beforehand any changes to employment agreements, such as to the employee’s position and working hours, so that such changes can be inserted into eSocial correctly and in timely manner.

The validation of information by the system is minimal, therefore, there are no warnings if information inserted is incorrect or untrue.

IMMEDIATE ACTIONS

All companies must put together the initial and checklist events, mainly those regarding payroll, given they are the first ones to be implemented into eSocial.

It is advisable to request all current and future employees to verify the correctness of their personal information, such as, complete name, CPF, NIS and date of birth, on the eSocial website:
www.esocial.gov.br/qualificacaocadastral.aspx

It is essential to review internal procedures, put together reports on the company’s situation, particularly concerning payroll, position and roles, working hours and rectification of information before providing the same to eSocial.

QUERIES

Montgomery & Associados remain at our clients’ disposal to clarify any queries pertaining to eSocial. To access additional information and the comparative table click on the following link: https://montgomery.adv.br/en/esocial-4/. Queries may be forwarded to: esocial@montgomery.adv.br

ANEXO A/ ATTACHEMENT A

Cronograma de Implementação do eSocial/

Timeline of eSocial Implementation

*Empresas com faturamento (receita bruta) anual em 2016 superior a R$78.000.000,00 / Companies with turnover (gross income) in 2016 above BRL78,000.000.00.