Note: This post is opinionated. Do not make career choices based on someone else’s opinion. What I describe here is my worldview at this point in time, and it can change at any moment without anyone’s prior approval.
When I entered the IT field, one of the most interesting options I saw was working as a PJ. The immediate benefit is lower costs than CLT for both the worker and the employer, with those costs transferred to the service provider as compensation.
As a market average, a PJ should earn at least 40% more than a CLT employee for it to be worthwhile. Even with that extra 40%, though, I kept wondering which option was better if I just wanted to break even.
This article has no sources; it is simply my attempt to answer my own questions and doubts.
Retirement is something we all look forward to, ideally at the highest possible benefit and as soon as possible. The problem is that, as of 2022, Brazil’s INSS public pension system is pay-as-you-go and unsustainable in the long term. So it is likely to be adjusted in the future. The question I see here is: Should I risk paying a high amount into a public pension?
Brazil’s population pyramid is shrinking because people are having fewer children, and the country does not have a strong immigration policy. The workforce should get smaller, and contributions to the pension system should shrink too. That is the risk: will the government be able to pay pensions? Will the rules have to change, with the minimum retirement age moving to 70? 80? Will the benefit cap go down?
To me, the answer to all these questions is probably yes. A point for PJ, then? Maybe. Contractors also run the risk of accidents; depending on the severity, you could become permanently disabled. If you are in a good INSS contribution bracket, you may be able to retire with more security than someone paying the minimum as a PJ.
Of course, it also depends on the financial reserves you have built up as a PJ. Again, it is worth weighing the risks you are willing to take.
In this case, I still take the risk of paying the full INSS contribution. I believe the complete collapse of the public pension system would lead to many social uprisings, and reforms are very likely. Even so, I think it is riskier to be outside the INSS than inside it.
In my view, this is a factor worth considering when comparing CLT and PJ, and almost nobody talks about it.
First, individual health insurance plans are getting harder to find and more expensive. As a PJ, you may get some discount, but nothing like the discount on a plan offered by the company hiring you, if it is a medium-sized or large company. For a micro or small business, perhaps PJ really is a good option here.
The other option as a PJ is relying on SUS, Brazil’s public health system, which may work well for you depending on where you are in your career.
Another CLT advantage is the possibility of keeping your health plan if you have been at the company for more than 10 years before retiring. That can mean substantial savings over the long term.
Again, I see an advantage for CLT here, since the cost of the plan is shared across the company’s employees and you may keep it after 10 years with the company. As a PJ, though, you can choose whichever plan you want. If you want to include your parents or grandparents, you can choose a plan that covers them; as a CLT employee, that may not be possible, depending on the company.
The first cost you will have as a PJ is an accountant. The second is the opportunity cost: time spent dealing with accounting instead of doing other things.
As a PJ, you can probably reduce the tax bite by operating as a company. On this point, that is a clear advantage.
As a CLT employee, you have to accept it. There is not much you can do about it, haha.
To me, FGTS is worthwhile only for people who do not have much control over their finances. In that case, CLT is definitely for you. Otherwise, FGTS is just protection in case you are dismissed without cause. It may also be an advantage if you really want to buy your own home.
Another point in favor of PJ.
This is where CLT shines again: 30 days of vacation and public holidays. As a PJ, you can easily include this in an agreement. You probably will not be paid for days away, but with good planning you can enjoy your time off without a problem.
You also have the advantage of taking only the days you need for a trip, rather than having to fit your vacation into the fixed CLT schedule.
This is a tie, though the public holidays give CLT a slight edge.
Other points that do not matter much to me:
Whether you are CLT or PJ, it does not matter much; just make sure the amount is included in your offer.
Even with the financial disadvantages of CLT, its benefits should also be taken into account. As a PJ, you can sometimes feel isolated, not like part of the team, or less connected to the company, which can limit your growth there. Still, it can be a great way to give your finances a boost.
Of course, before deciding between PJ and CLT, remember the three pillars:
If the company does well on all three pillars, it will probably only hire CLT employees. But in the end, the decision is yours. Good luck.