Brazil’s Ministry of Labor issues ordinance regulating gender pay parity decree

On November 27, 2023, the Brazilian Ministry of Labor published Ordinance No. 3,717/2023. Together with Federal Decree No. 11,795/2023 (issued on November 24), the ordinance regulates Brazil’s Gender Pay Parity Law (Law No. 14,611/2023) – which provides for equal pay and remuneration criteria between women and men.

The ordinance provides further detail on the salary transparency and remuneration criteria report (content, disclosure method and who is responsible for preparing it), the action plan for mitigating wage inequality, and the Ministry of Labor’s role in monitoring how companies comply with the new measures.

Salary transparency and remuneration criteria report

One of the most important aspects of the new ordinance is that the Ministry of Labor itself is in charge of preparing the salary transparency and remuneration criteria report.

The report will be prepared based on information companies provide via the following systems:

• eSocial – companies’ registration data will be used to prepare the report, including the total number of employees per establishment, job positions or occupations contained in the Brazilian Occupation Classification System (CBO), and the total number of employees categorized by sex, race, and ethnicity together with their respective contractual salary and monthly remuneration data, which must contemplate:
  • Contractual (monthly) salary;
  • Thirteenth salary;
  • Gratifications;
  • Commissions;
  • Overtime;
  • Increased pay rates for night shifts and working in risky or hazardous conditions, among others;
  • Vacation premium;
  • Payments for work conducted after the employee gives notice;
  • Payments due during notice periods;
  • Tips; and
  • Any other payments to the employee stemming from current laws or collective bargaining agreements.

• Portal Emprega Brasil – a section on this online portal titled ‘salary equality and remuneration criteria’ will be created for companies to submit the following information:
  • Whether they have an established career path framework and salary policies;
  • Remuneration criteria regarding both the hiring of employees and their progress up the career ladder;
  • Whether they have established incentives for hiring women;
  • Whether they have adopted criteria for promoting employees to leadership and management positions; and
  • Whether they have established programs that encourage and support the sharing of family/domestic obligations (to reduce the traditional onus on women).

• Additional information: the Ministry of Labor will provide online methods for companies to submit any additional information in February and August each year.
• Report disclosures: Each year in March and September, the Ministry of Labor will publish the transparency report on its Labor Statistics Dissemination Platform. These reports must be disclosed on companies’ websites, social media profiles or other channels that ensure they are widely disseminated.

Action plan for mitigating wage inequality

Ordinance No. 3,717/2023 establishes that such action plans must encompass:

• Measures for ending wage inequality (using a priority scale); objectives, deadlines, and mechanisms for assessing the results (at least every six months); and yearly plans (with timelines) for executing the action plan.
• Training programs for employees on equity between women and men in the job market, diversity and inclusion in the workplace, and capacity building and training for women to enter, remain in, and rise in the job market on equal terms with men;

If notified of the need to submit an action plan by the Ministry of Labor, companies will have 90 days to prepare and submit it via the government’s Domicílio Electrônico Trabalhista system.

Companies must also share a copy of the action plan with the union representing their employees.

Supervision and complaint channels

The Ministry’s Labor Inspection Department will create inspection protocols to tackle wage discrimination and remuneration criteria inequality between women and men. A specific channel will be set up on the government’s Carteira de Trabalho Digital application for reporting complaints in this regard.

Potentially sensitive issues

Now that it has been established that companies will not be responsible for preparing their own salary transparency reports, there are concerns about how the Ministry may end up disclosing personal data protected by the Brazilian Data Protection Law (LGPD) – especially in situations where data makes it possible to identify specific employees. Moreover, disclosing salaries and companies’ remuneration policies can have potential business impacts, harming their ability to attract and retain professional talent.

A lack of clarity also remains about the information employers must provide in the salary equality and remuneration criteria section of the Portal Emprega Brasil.

Finally, companies may need to review the job codes within the Brazilian Occupation Classification System (CBO), as the Ministry of Labor and Employment will begin applying such codes when preparing the transparency report.

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