Law No. 14,611/2023 establishes new measures on equal pay and remuneration criteria for women and men

On July 04, 2023, Law No. 14,611 (of July 03, 2023) was published in the Federal Official Gazette of Brazil, and introduced new measures aimed at establishing equal pay and remuneration criteria between women and men. Such measures must be adopted by private companies and the Brazilian Federal Government, including transparency reports and increased monitoring as regards this topic.

Law No. 14,611 (of July 03, 2023) was published in the Federal Official Gazette of Brazil on July 04, 2023, introducing new measures aimed at fostering equal pay and remuneration criteria for women and men. Such measures must be adopted by private companies and the Brazilian Federal Government, including transparency reports and increased monitoring as regards this topic.

Although there has been no change in the regulations provided for in the Brazilian Consolidated Labor Laws (“CLT”) characterizing the right to equal pay – which were already applicable to cases of wage disparity between men and women –, the new law introduced important news, including:

• New penalties for violation of equal pay (Art. 461 of the CLT):

1. The payment for wage discrepancies arising from claims of equal pay does not prevent the claim for indemnity for pain and suffering damages in the event of discrimination; and
   
2. The administrative penalty for non-compliance with equal pay on a discriminatory basis increased ten-fold as compared to the new wage due to the discriminated employee, which will be applied twice in the event of recurrence.

• Measures to ensure equal pay for men and women: 

1. The new law also establishes provisions considered as ways of ensuring equal pay and remuneration criteria between men and women, such as:
2. establishing wage transparency mechanisms and remuneration criteria;
3. increasing the monitoring against wage discrimination and remuneration criteria between women and men;
4. providing specific channels for wage discrimination complaints;
5. fostering and implementing diversity and inclusion programs in the work environment encompassing the training of managers, leaders and employees on the theme of equality between men and women in the labor market, with benchmarking results; and
6. fomenting women training programs for joining, continuing and growing in the labor market, on equal terms with men.

•  Half-yearly wage transparency reports:

The most prominent innovation addressed by the new law, in our view, was the creation of the obligation, for companies with 100 or more employees, to publish half-yearly reports on wage transparency and remuneration criteria, observing the regulations provided by the Brazilian General Data Protection Law (“LGPD”).

These reports will not only provide anonymized data that allow for the objective comparison between wages and remuneration of men and women, but also the proportion of administration, management and leading job positions occupied by women and men. In addition, these reports must provide information on statistical data regarding other possible inequalities arising from race, ethnicity, nationality and age, in compliance with the LGPD and the specific regulation.

Failure to disclose the report under discussion can make the company liable to pay an administrative fine equivalent to 3% of the payroll, limited to 100 minimum wages.

In addition, in cases where there is inequality in wage or remuneration criteria, regardless of non-compliance with the provisions of article 461 of the CLT, the company must submit and implement an action plan to mitigate inequality, including targets and deadlines, also ensuring the participation of union and employee representatives in the workplace.

The law under discussion also provides that the Brazilian Federal Government will make available reports and other prominent statistical information, in an integrated way and on public digital platform.

It is not yet clear how companies will publish these reports, nor the criteria used to characterize a situation of “inequality” for developing an action plan as an obligation. However, we can already notice a trend, by the Brazilian Federal Government, to charge effective measures to foster gender equality, not only from the wage point of view, but also from occupancy and distribution of job positions.

Therefore, in the field of labor relations, the new law is aimed at establishing matters that were already under discussion, such as the case of open companies, since the Brazilian Securities and Exchange Commission (“CVM”) already requests information on gender equality through the “Reference Form” (according to the “Practice or Explain” model, or the ongoing discussions at B3). Thus, the importance of evaluating practices in the field of Environmental, Social and Governance (“ESG”) within companies is reinforced.

For more information about our ESG performance, access the link.

Demarest’s ESG Labor and Employment Team is available to clarify any doubts on the topic and to provide assistance with any necessary measures.