There is nothing to stop you working directly on the server, however a much better workflow would be for each developer to have their own environment and merge changes via git which would in turn be pushed out to the server

Take a look at homestead http://laravel.com/docs/4.2/homestead if you need an easy way to deploy development environments

What we do at the studio I work at (for Laravel work, at least) is use Homestead on our local machines, each with their own checkouts of a git repository. Each developer's code is then pushed to a central repository, and that central repository is then pushed to a central web server for client testing.