Why such prohibition?
They are very pro-employee.
It's very difficult to sack somebody etc.
Perhaps someone from Brazil could enlighten us further?
Also there's a small fine to pay, relative to the time the employee worked in your company. It's not really expensive. For every year the guy worked there, you pay him for almost 2 weeks of work (our law says 40% of a month's salary, I'm just rounding it to "almost two weeks of work"). It's like the compensation that some US companies give when firing someone, but in here there's a law enforcing it (in a low value).
But the main thing is: working for a company outside Brazil he loses almost all of the protection of the law. Not because it's illegal, it's just that our standard employment laws are for Brazilian companies. When working for companies outside Brazil we usually start our own company and just sign a service contract.
See how that wouldn't necessarily align well with the Brazilian way of doing things?
The US is the outlier in allowing people to be fired for no reason.
In order for a US company to hire a Brazilian employee, it has to be through an established company that has a certain legal status inside of Brazil. If you do not have that status, you have to contract through a local company that has that status. Doing so is extremely expensive, and creates a complex set of legal obligations to the employer.
It is almost never worth doing for just 1 or 2 employees, and so US companies that want to establish a presence in South America often do so entirely inside of or entirely outside of Brazil.
The Brazilian employee, through his company, would invoice the US company which would then transfer the money, via wire transfer preferably, so the Brazilian employee can pay his taxes.
I know this because I work for 5 years for an US company as a remote sysadmin.