Brazilian New Equal Pay Law (Law 14,611/2023) requires employers to implement salary transparency mechanisms, reports, but it was not clear how this would occur and what criteria would be used.
The Regulation 3,714/2023 issued last week clarifies that the Brazilian Ministry of Labor and Employment (MTE) itself will be responsible for issuing the reports, which will be prepared based on data provided by companies on eSocial and the Emprega Brasil Portal from the following perspective:
1. What Data Shall Be Included in the Report? Anonymized data relating to: gender, ethnicity, race, position and occupation (CBO), grant salary (monthly and annual), existence or non-existence of a career framework or job and salary administration plan, existence of incentives for hiring women, and identification of criteria adopted for promotion.
2. How the Total Compensation will be carried out for comparison purposes? The total amount of salary based earning of an employee will be consider as total compensation for comparison purposes, including fixed and variable payments (such as overtime, tips, bonuses, bonuses and commissions).
3. What will be the deadline for collecting and publishing the Reports? The MTE will collect the data registered by companies in the months of February and August and will publish the Report in the months of March and September of each year, on the Labor Statistics Dissemination Program platform. Companies that were notified to present the information in January 2024 can present it in March 2024.
4. How will the company publicize this data? After the reports are released by the MTE, it will be up to companies to publish them on their electronic channels, such as company’s social media and website, so the report are accessible to workers and the general public.
5. How will inspection be carried out? The MTE will create a reporting channel regarding salary discrimination and remuneration criteria, to be made available in the Digital Work Card application.
Although the Ordinance clarifies several aspects necessary for the application of the Brazilian New Equal Pay Law, the implementation of tools is still awaited in the employer area of the Emprega Brasil Portal, and in e-Social, so that companies can fully provide the necessary information for these reports. Something that should be announced in the coming months.
In any case, considering that companies will already have to disclose their data in February or March 2024, we highlight the importance of a prior analysis of the data, essentially in relation to compliance with the obligation to implement programs to encourage hiring and women and those that concern the criteria adopted for promotion.
It is also worth detailing the analysis of the remuneration criteria, essentially in relation to variable payments, which, normally, have greater subjectivity, and/or are linked to individual performance. At this point, it is recommended that the entire performance and results analysis process be documented by companies, with the purpose of providing support in case of future questions.
Note that the Ordinance already makes it clear that if a situation of inequality is identified, the company must, within 90 days, prepare an Action Plan to Mitigate Inequality in Salary and Remuneration Criteria between Women and Men.
Therefore, the maxim “is better safe than sorry” must prevail in this case, and it is highly recommended that companies take advantage of the year-end recess period to review their data, and potential cases of inequality, to anticipate potential plans of action and/or improvements that can be implemented to comply with the Brazilian New Equal Pay Law.