Brazil’s new equal pay law: a big step towards gender parity

Thursday 21 September 2023

Rodrigo Seizo Takano
Machado Meyer, São Paulo

Marcela Ortega Tavares
Machado Meyer, São Paulo

Murilo Caldeira Germiniani
Machado Meyer, São Paulo

In July 2023 the Brazilian government approved Law 14,611/23, establishing that private legal entities with 100 or more employees are required to guarantee equal salary and compensation criteria for women and men exercising the same position and undertaking work of equal value.

The Brazilian Labour Law (Consolidação das Leis do Trabalho or CLT) established that companies cannot pay different salaries for women and men in the same employment role as far back as 1943. While Law 14,611/23 has not altered the existing rules on equal pay for equal work, it is nevertheless a big step towards gender parity in Brazil, as it introduces several obligations for private entities to uphold this commitment.

Measures established by Law 14,611/23 to guarantee equal pay and compensation criteria between women and men include:

  • publication of a report on salary transparency and compensation criteria (a ‘Salary Transparency Report’) every six months;
  • salary transparency mechanisms and remuneration criteria;
  • increased monitoring of wage and pay criteria for women and men;
  • specific channels for complaints concerning pay discrimination;
  • implementation and promotion of diversity and inclusion programmes, including training for managers, leaders and employees on gender equity in the labour market, with measurement of the resulting impact; and
  • training for women on entering, remaining in, and rising in the labour market on equal terms with men.

In a proven case of wage discrimination due to sex, race, ethnicity, origin or age, in addition to the payment of salary differences, Law 14,611/23 establishes that payment of a fine equal to ten times the new monthly salary must be paid to the individual discriminated against (this is doubled in the case of recurrence). This is a significant increase; prior to Law 14,611/23, the fine was equivalent to one regional minimum wage (doubled in case of recurrence).

The salary transparency report

Among these measures, the obligation to publish a bi-annual salary transparency report is the most important, as it gives greater visibility to possible inequalities in the Brazilian labour market. In fact, since Law 14,611/23 was approved, it has generated great speculation among companies about what the real impacts resulting from the new law will be and how companies should prepare for the salary transparency report.

The Brazilian government did not issue specific regulations in this regard, though Law 14,611/23 provides guidance for companies on the necessary information to include. (It is expected that the government will eventually clarify certain aspects related to the salary transparency report through regulation, but this would be unlikely to deviate much from what Law 14,611/23 already requires.) Law 14,611/23 outlines that the salary transparency report must contain anonymised data that allows for an objective comparison between salaries, compensation and the proportion of management positions filled by women and men. The Report must also contain statistical data on other protected characteristics, including race, ethnicity, nationality and age.

It is important to note that this salary analysis must go beyond the role title or organisational level. It is legitimate for companies to have officers in different positions earning different salaries, regardless of their gender; for example, a commercial analyst, HR analyst and IT analyst may all be on different salaries. A violation of equality would arise when the requirements for equal pay set forth in Article 461 of the CLT are not met, which include:

  • identity of position;
  • work of equal value, with equal productivity and equal technical perfection, provided to the same employer and in the same business establishment;
  • difference in length of service for the same employer not exceeding four years; and
  • difference in time in the position not exceeding two years.

Non-compliance exposes companies not only to an investigation by the Public Labour Prosecutor’s Office, but also to administrative fines of up to three per cent of the employer's monthly payroll, limited to 100 minimum wages.

Next steps for private entities

Companies have been notified by the Public Labour Prosecutor’s Office to present their first salary transparency report in January 2024, and consulting and auditing companies are already including the report in their lists of documents for auditing.

This analysis should therefore be conducted by companies’ human resources and legal departments as soon as possible, as it involves complex data collection, analysis and organisation. In addition, following the publication of the report, companies are required to implement an action plan to correct any discrepancies identified. The action plan must guarantee the participation of the relevant labour union and employee representatives in related discussions.

The clock is ticking. Companies should not wait for the government to issue a regulation before beginning work on their first salary transparency report, as this could prevent them from meeting the January 2024 deadline.