Brazilian Labor Code amended to include wage equality mechanisms between men and women

On July 3, 2023, Brazil’s President sanctioned Law No. 14,611/2023, introducing changes to the Brazilian Labor Code (CLT) concerning remuneration criteria and wage equality between men and women.

The new law determines that companies with 100 or more employees must publish salary transparency and remuneration criteria reports on a semi-annual basis. These reports must include anonymized data that allows salaries, remuneration, and the proportion of women and men in executive, managerial, and supervisory positions to all be objectively compared. They must also be accompanied by statistical data on other potential forms of inequality regarding race, ethnicity, nationality, and age.

In the event inequality regarding salaries or remuneration criteria based on these factors is identified, companies must present and implement an action plan to mitigate it. The action plan must include goals and deadlines, as well as guarantee the participation of labor union and workplace employee representatives.

Companies that fail to publish the semi-annual report will be subject to administrative fines of up to 3% of the company payroll, capped at the value of 100 Brazilian minimum monthly wages (equivalent to BRL 132,000 in 2023). Moreover, this penalty does not void the possibility of further legal penalties in cases of wage discrimination and discriminatory remuneration criteria between women and men, nor the right for affected employees to pursue legal action and seek compensation for moral damages.

The Brazilian government will provide a model for the semi-annual reports via a publicly accessible online platform. The platform is also set to include a series of indicators concerning gender equality in the labor market, gender-based income inequality, violence against women, job vacancies in public daycare centers, and access to technical and higher education and health services. Other data impacting women’s access to employment and income that can guide public policy development will also be made available.

Measures for guaranteeing equal pay

In addition to establishing mechanisms for transparency, the new law promotes women’s skills and training as a guarantee of equal pay and remuneration criteria, supporting the progression of their careers on equal terms with men. It also promotes the implementation of workplace diversity and inclusion programs that encompass the training and assessment of managers, leaders, and employees on the topic of gender equality in the labor market.

Furthermore, Brazil’s Executive Branch must also establish protocols to monitor remuneration criteria and wage discrimination between men and women.

Employer fines

The new law also amends the CLT to increase the maximum fines for employers that violate obligations to pay the same salary for equal work of equal value in the same job position, carried out in the same business establishment – whenever the distinction is found to be based on gender, race, ethnicity, nationality, or age. According to the new law, fines can be set at up to ten times the value of discriminated employees’ new salaries, and doubled in the event of recurring violations.

A need for companies to adapt to the new rules

Article 4 of Law No. 14,611/2023 is somewhat vague in defining whether companies or the Executive Branch will be responsible for implementing the measures it provides for. Nonetheless, companies should expect increased government monitoring of the issue. In considering how companies should adapt to the new legislation, it is important to reflect on current employer practices – including those regarding the implementation of mandatory annual training programs on topics related to workplace violence, harassment, diversity and equality – and consider gender equity-related issues, as provided for in the new law.

Furthermore, the new law should lead companies to reflect on the proportion of women and men in management positions, and if there is a need to reassess reporting and compliance channels designed to reduce workplace gender inequality. For publicly-held companies, the new law essentially reinforces changes that the Brazilian Securities and Exchange Commission’s (CVM) Resolution No. 59/2021 made to the CVM Reference Form. The changes mandated transparency regarding the gender of employees and managers at all levels of these companies’ hierarchies.

For further information on this topic, please contact Mattos Filho’s Labor & Employment and ESG practice areas.