Signed on July 3rd by President Luis Inácio Lula da Silva, Law 14,611/23 establishes that the equality of wage and compensation criteria between women and men will be mandatory in cases of work of equal value or in the exercise of the same position.

Over the last few weeks, since the bill was approved by the Senate and sent for presidential signature, the issue has generated great debate and speculation among companies about what the real impacts resulting from the new law will be.

According to an article published by Reset, Santander recently released a report on the gender pay gap at companies listed on the Ibovespa Index. There are also several other studies - including public ones - that deal with the subject, considering only the amount of wages paid to men and women who occupy the same organizational level (coordinators, officers, etc.).

From a strictly legal point of view, however, these studies are not sufficient to confirm any existing gender wage differences at companies. In order to legally identify this fact, the data compared must consider all the legal requirements set forth in article 461 of the Brazilian Labor Law (CLT):

  • identity of position;
  • work of equal value, with equal productivity and equal technical perfection, provided to the same employer and in the same business establishment;
  • difference in length of service for the same employer not exceeding four years; and
  • difference in time in the position not exceeding two years.

In other words, legal analysis cannot take into consideration only the name of the job or the organizational level to compare salaries between women and men.

It is even fully legitimate for officers in different positions to earn different salaries, regardless of gender: the chief legal officer may earn a different salary than the chief financial officer, who, in turn, may earn a different salary than the chief operating officer. In these cases, there is no problem or violation of the rules of the CLT and Law 14,611/23, regardless of whether the positions are held by men or women.

Law 14,611/23 did not change the existing equal pay rules. It has, however, exposed companies to more severe legal consequences in the event of violations of the above-mentioned requirements and, consequently, to greater financial risks.

Moreover, by establishing the obligation to publish a semi-annual report on salary transparency and compensation criteria, it gives more visibility to possible inequalities.

This obligation is, without a doubt, the most important new feature introduced by the new law. Because of this, companies must conduct legal analyses considering their specificities and the work characteristics of each of their employees, in order to ascertain whether or not there is wage inequality between men and women.

This study, which should be carried out with the active participation of the companies' legal departments, will be essential to identify any legal risks and correct preparation of the salary transparency report and compensation criteria.

We detail below the new items introduced by Law 14,611/23:

Obligation to publish salary transparency report

Private legal entities (companies, associations, and foundations, for example) with 100 or more employees must publish, every six months, a report on salary transparency and compensation criteria.

The reports should contain anonymized data and information that allow for an objective comparison between salaries, compensation, and the proportion of management positions filled by women and men, accompanied by information that can provide statistical data on other possible inequalities arising from race, ethnicity, nationality, and age.

If unequal pay or compensation criteria are identified, the private legal entity must present and implement an action plan to mitigate the inequality, with targets and deadlines. The participation of labor union representatives and employee representatives in the workplace must also be assured.

In the event of non-compliance, an administrative fine of up to 3% of the employer's monthly payroll will be applied, limited to 100 minimum wages.

Increased fine for companies in the event of wage discrimination

In the event of proven wage discrimination due to sex, race, ethnicity, origin, or age, in addition to payment of wage differences, the employer will be responsible for paying an administrative fine equivalent to ten times the value of the new monthly wage due to the person discriminated against (the fine will be doubled in the event of recurrence). Until then, the fine was one regional minimum wage, doubled in the event of recurrence.

Payment of the fine and salary differences due to the employee discriminated against does not rule out the right to an action for moral damages.

Measures to guarantee equal pay for women and men

Law 14,611/23 establishes the following measures to guarantee equal pay and compensation criteria between women and men:

  • establishment of salary transparency mechanisms and remuneration criteria;
  • increased monitoring against wage discrimination and pay criteria between women and men;
  • availability of specific channels for complaints about pay discrimination;
  • the promotion and implementation of diversity and inclusion programs in the workplace that include training of managers, leaders, and employees on the subject of equity between men and women in the labor market, with measurement of results; and
  • fostering of the training of women to enter, remain in, and rise in the labor market on equal terms with men.

The new law, however, does not define who will be responsible for implementing each of the above measures. Increased enforcement against pay discrimination is certainly an obligation of the Executive Branch. The other measures, on the other hand, could be implemented by both public and private entities.