eSocial * definitively comes into force in 2020, but for some companies, the deadline for compliance reporting ends this year
*Digital Bookkeeping System for Tax, Social Security, and Labor Obligations
Created to unify legally required reporting documents from companies to the Federal Revenue Service into a single system, eSocial emerged in 2014, and its mandatory implementation took place gradually. Integrating the databases of the former Ministry of Labor (now the Ministry of the Economy) with those of the Federal Revenue Service and Caixa Econômica was the original concept.
Simplifying the collection system for the Severance Indemnity Fund (FGTS), DIRF (Withholding Income Tax Return), RAIS (Annual Social Information Report), and CAGED (General Register of Employed and Unemployed Persons), eSocial established deadlines and milestones for business compliance.
Therefore, what is being called the new eSocial is actually the continuation of the companies' adaptation process, which has its final deadline set for 2020. The deadline for companies with annual revenues exceeding R$ 78 million to comply, for example, ends in 2019.
Reducing bureaucracy and making the government system more dynamic to better channel tax and social security information with greater transparency and access to employee and employer data has been the core rationale for advancing improvement proposals for the program since its inception.
Information integration will occur as follows
- The GFIP (FGTS Payment and Social Security Information Guide), which covers social security information, will be replaced by the DCTFWeb (Declaration of Federal Tax Debts and Credits).
- The integration between the EFD-Reinf, eSocial, and DCTFWeb records will be automated once the submission of their respective closings is completed.
- Deadlines will vary for each category of company subject to mandatory eSocial reporting.
New rules and program adjustments emerge over time with the goal of making compliance with regulations easier for business owners.
If deadlines are missed, rules are circumvented, or information is submitted incorrectly, the system provides for penalties and fines. Therefore, stay alert or hire a consultancy.
Schedule and Implementation – eSocial
More than 13,000 companies in Brazil are already adapted to eSocial. Given the difficulty other companies face in adapting to the program, the government divided businesses into subgroups or subcategories.
Now, the group of large enterprises (revenue > R$ 78 million), as previously mentioned, is in the final phase of definitively implementing the system and meeting the deadline that ends this year.
Micro, small, and medium-sized enterprises will have until January 2020 to finalize system implementation. Individual Microentrepreneurs (MEI) do not qualify for the program and continue reporting via Simples Nacional.
Individuals, non-profit institutions, and rural producers who are employers must pay attention to their profile to check whether they fall under eSocial or reporting via Simples Nacional. International organizations and public entities will have until 2021 for full compliance.
Pros & Cons
Using the platform makes processes easier for employers, optimizes time, and promotes transparency and efficiency. In addition, the modernization of having information systematized in an integrated, digital manner ensures better administrative management. It reduces bureaucracy and facilitates oversight.
However, it is important to emphasize: avoid leaving it to the last minute; the system may become overloaded, leading to network and connection issues.
Companies that still handle their processes in an analog manner will face greater difficulties and must hurry to adapt; otherwise, they will face penalties and fines.
Key Information and Data
The most relevant data regarding employment contracts and everything related to them will be covered on the digital platform. Companies must provide information such as hiring date, leaves of absence, and dismissals, including prior notice. The system compiles all data to release INSS, FGTS, Unemployment Insurance, and more. Therefore, all information regarding the worker must be included in the system.
- Salary changes.
- Working hours and schedule adjustments.
- Assessment of tax credits.
- Assessment of tax debts.
- Information regarding social security benefits.
- Occupational health certificates.
- Workplace environmental conditions (reporting insalubrity, hazardous conditions, and more).
- DIRF – Withholding Income Tax Return.
- Workplace accident reporting.
- Pay stubs / Payroll.
There is other information as well. To see all of it, visit the government portal. However, these are the most relevant.
Biggest Challenges
Payroll
As the final step of the stage, it was considered the most challenging to adapt. For companies already using an ERP – Enterprise Resource Planning system, making the transition will be relatively smooth. Those who decide to implement one during the process can benefit from its advantages, such as having smart tools backed by professional consulting to support HR and accounting during the data transition period.
Hiring
In the adaptation process for documenting onboarding information, items such as ASOs (Occupational Health Certificates) must now be submitted one day before the hired employee begins their activities. The penalty for non-compliance, missing deadlines, or submitting incorrect information can result in fines of up to R$ 6,000 (in cases of repeated offenses). For microenterprises, the amount is up to R$ 800.
Workplace Accidents
The CAT (Workplace Accident Report) must be submitted via eSocial. The deadline is one business day following the incident. In the event of death, reporting must be immediate. The penalty for non-compliance with this rule is a fine. Its amount is tied to the contribution salary, which can vary between the minimum and maximum limits. In cases of repeat offenses, the fine amount doubles.
Stay informed about government requirements. New rules may arise and existing ones may undergo adjustments. Be sure to also follow our insights on the impacts of the labor reform and hiring models.
