Brazil’s Ministry of Labor and Employment releases pay parity guidelines

On September 18, 2024, Brazil’s Ministry of Labor and Employment (MTE) published Instruction No. 6, with clarifications on how Brazil’s Gender Pay Parity Law (Law No. 14,611/2023) is to be implemented. This law establishes guidelines on equal pay and compensation criteria between women and men, as previously regulated by Federal Decree No. 11,795/2023 and MTE Ordinance No. 3,714/2023.

The instruction offers guidance on the methodology, content, and disclosure of the Salary Transparency and Remuneration Criteria Report (Transparency Report), the action plan for mitigating wage inequality, and inspections by the Ministry of Labor and Employment.

Key points:

Validation of explanatory notes for transparency reports

The instruction endorses the practice of including explanatory notes in a separate document from the Transparency Report. This allows companies to justify any wage differences based on equal pay rules. These notes enable companies to contextualize data in the reports, relating it to the specific industry segment and reflecting the company’s practices and values.

MTE inspections

Although the report serves to support MTE inspections, labor auditors must consider the equal pay criteria in Article 461 of Brazil’s Labor and Employment Code (CLT) before drawing conclusions on any unjustified salary differences. This analysis will include comparing identical roles and positions within the company using the Brazilian Classification of Work Positions (CBO) as a reference, rather than the company’s internal job titles. Auditors will also verify the existence of salary and career plans and other data provided in the Equal Pay Statement (Declaração de Igualdade Salarial) that companies submit twice a year, such as incentives for hiring women or sharing family responsibilities.

Labor auditors may request proof of the report’s publication, making it essential for companies to be able to prove the document has been publicly disclosed.

Action plans

Upon finding unjustified wage differences, the company will be asked to submit a specific action plan, which must include:

• Measures to be adopted, including a scale of priority;
• Goals, deadlines, and mechanisms for measuring results;
• An execution schedule;
• An evaluation of measures at least once every six months;
• Training programs for executives, officers, leaders, and employees on gender equity;
• Measures to promote diversity and inclusion in the workplace;
• Training and education for women to enter, remain, and progress in the labor market.

Companies with multiple establishments may develop a centralized action plan, provided that it considers the specific needs of each establishment.

Union and employee representative participation

Labor unions and employee representatives must participate in the development and implementation of the action plan to ensure the information is transparent. However, the instruction does not specify which unions and employee representatives must participate in the action plan when multiple unions represent the company’s employees. It also does not clarify whether unions or employee representatives from different establishments, if they exist, need to be involved.

MTE action plan evaluations

Labor auditors will be responsible for evaluating action plans at all stages. They may request adjustments or even an entirely new action plan if they find the current one inadequate for its intended purpose.

Methodological notes

The instruction outlines parameters for preparing the reports. For the purpose of the reports, only wages between 0.3 and 150 times the monthly minimum wage were considered when calculating the average and/or median contractual wage. The instruction also clarifies that only situations involving at least three men and three women were considered for the purpose of the reports in order to protect employees’ personal data.

It is worth noting that the instruction is not a law, and any aspects that may conflict with the governing legislation (i.e., the Gender Pay Parity Law) could be challenged by companies, including through legal action.

Regardless, the instruction establishes important guidelines for companies on what to expect from labor inspections. It also validates the possibility of including explanatory notes in the transparency reports, allows for the creation of centralized action plans, and reinforces the active role of unions and labor auditors in developing and monitoring them.

With the publication of MTE Instruction No. 6, labor inspections are expected to begin soon.

For more information on the subject, please contact Mattos Filho’s Labor & Employment practice area.