In our article on Law 14,611/23, which deals with equal pay and compensation criteria between women and men, we highlighted that the main innovation of the new law is the obligation to publish a biannual transparency report on pay and compensation criteria by legal entities governed by private law (companies, foundations, associations, etc.).
The report is the realization of one of the aspects of the social pillar of ESG practices. Due to the impacts in case of non-compliance, it is essential that companies take great care in preparation and publication of the report.
Not only is it necessary to carry out prior analysis to check for any inconsistencies before drafting the document, but it is also essential to exercise caution in how salary information is disclosed.
The information in the report should allow for an objective comparison between salaries, wages, and the proportions of directorship, management, and senior management positions filled by women and men. This information must also be disclosed in accordance with the General Data Protection Act (LGPD) and the competition law obligations applicable to companies.
In relation to the LGPD, the publication of data must be done after a balanced assessment of the purpose established in the disclosure of the reports[1] and identification of the data strictly necessary for this purpose.[2] Publishing unnecessary data may expose the company to the risk of violating the legal protection of personal data and lead to penalties.
Law 14,611/23 itself, in its article 5, defines what information is required by establishing, in its paragraph 1, that the reports will contain "anonymized data" and "information that can provide statistical data".
The purpose of the new standard, therefore, is not to know "who specifically receives how much", but to allow objective comparison and statistical measurement of the criteria adopted, in order to conclude whether or not there is a pay gap between women and men.
From a competition point of view, although Law 14,611/23 does not refer to competition obligations related to the disclosure of employee salaries, the Administrative Council for Economic Defense (Cade) has already expressed the understanding that the exchange of sensitive information between competing companies may constitute an infringement of the Competition Law, due to the possibility of leading to parallelism or coordination of action in the market, with effects similar to those of a cartel.
In general, specific information - current or future - on the performance of companies' activities, which may eliminate uncertainty in the decision-making process of those who receive it and is not available from public sources, is considered sensitive from a competition law perspective.
In this context, employee salaries are expressly treated as competitively sensitive information in the gun jumping guide published by Cade.
How, then, could companies publish pay transparency reports without violating the rules of the LGPD and competition law? One possible legal solution would be to draw up reports using mathematical ratios to compare wages paid to women and men.
This methodology is already used by companies in the United States and Europe to compare salaries paid according to organizational levels. There are also Brazilian companies that already use this methodology in their sustainability reports.
However, adjustments must be made: from a legal point of view, companies cannot apply mathematical ratios considering only the organizational level and the positions held by employees based on an average salary.
In Brazil, all the legal requirements set out in article 461 of the Brazilian Labor Law (CLT) must be considered by companies, which makes the analysis much more detailed. Mathematical ratios should be used to compare wages paid to women and men who are in legally comparable situations. This is because, if companies do not observe the legal criteria for wage differentiation, there will be a distortion in the pay equity ratio between women and men.
Companies should assess which people are in legally comparable positions and then apply mathematical ratios to allow comparison. If there are no people in comparable situations, the company should clarify this fact.
The report should therefore be adapted to the reality of each company.
This legal solution, however, considers the absence of a legal provision and rules regulating the procedures to be used for the preparation of the pay transparency report, in accordance with Law 14,611/23. If the federal government publishes specific regulations, companies must follow these guidelines.
[1] Principle of finality - Article 6, I, LGPD.
[2] Principle of necessity or ideal of data minimization - Article 6, III, LGPD.
