Yesterday we published an article in which we analyzed why, in our opinion, the methodology used by the Ministry of Labor (MTE) to prepare salary transparency reports does not allow the Salary Transparency and Compensation Criteria Law (Law 14,611/23) to achieve its main objective: to ensure equal pay and compensation criteria between women and men for work of equal value or in the same job.

On September 18th, the MTE published GM/MTE Normative Instruction (IN) 6 to regulate implementation of the Salary Transparency and Compensation Criteria Law, in addition to Decree 11,795/23and MTE Ordinance 3,714/23.

The normative instruction governs operational aspects of the salary transparency report, maintaining what had already been practiced by the MTE and companies, including aspects pertaining to preparation of the report by the MTE (and not by the companies), the provision of complementary information by means of a salary equality questionnaire, the format, content and methodology of the salary transparency report, and disclosure of the report by companies.

In addition, it regulated in greater detail the enforcement of the Salary Transparency and Compensation Criteria Law by tax auditors, as well as implementation of the Action Plan for Mitigating Wage Inequality with the participation of trade unions and employee representatives. These aspects are detailed at the end of this article.

The main point of the normative instruction is maintenance of the provisions of Decree 11,795/23 and Ordinance 3,714/23, by establishing that the report will continue to group employees into the major occupation groups of the Brazilian Classification of Occupations (CBO), which generates comparisons between non-comparable employees, insofar as:

• large groups of occupations bring together positions, jobs, roles, and activities that are completely different from each other;
• the CBO (and its major groups) has never been considered by the law, nor used by the Labor Courts, as a parameter for analyzing salary equalization between people (regardless of gender) or equal treatment;
• the CBO does not provide for different levels of seniority, which prevents objective comparison between comparables; and
• the CBO does not cover all the activities/roles that currently exist.

As we have made clear in the past, use of the CBO is excellent for statistical purposes, but not for achieving the objective of the Salary Transparency and Compensation Criteria Law.

In addition, the comparative calculation methodology defined by the IN establishes that composition of comparable compensation includes amounts that are independent of the company's actions and personal characteristics, such as amounts paid by way of commissions, overtime, night shift premium, health and danger bonuses and tips - which can distort the total compensation used for comparison purposes.

The IN does not divide fixed and variable payments, which also generates distortions not based on discrimination. Likewise, there is no comparative analysis rule for intermittent employees, hourly workers, or employees who work less than 220 hours (monthly comparative basis, not hourly), who may be paid more or less depending on the number of hours worked.

Given this context, we believe that the MTE has once again missed the opportunity to improve the methodology used to draw up the salary transparency reports and thus effectively deepen the search for equal pay for women and men.

Below we highlight the main aspects of the IN, in addition to those set out above:

• MTE audits and compliance with the requirements for salary equalization set out in article 461 of the Consolidated Labor Laws (CLT): until then, although the Salary Transparency and Compensation Criteria Law made express mention of article 461 of the CLT, Decree 11,795/23, Ordinance 3,714/23, and the reports made available by the MTE to companies in March/2024 did not make clear how the requirements for salary equalization set out in article 461 of the CLT would be considered by the MTE in the context of audits on the subject.
  
  With the IN, it is clear that if the companies can demonstrate that the differences in salary pointed out in the report can be explained by applying article 461 of the CLT, the MTE will not conclude that there is an unjustified difference in salary between women and men (article 19, sole paragraph, of the IN). This point brings great legal certainty to companies, as MTE auditors would not have to assess companies for violations of the Salary Transparency and Compensation Criteria Law.
• Anonymization of data and compliance with the LGPD: one of the main concerns of companies with the advent of the Salary Transparency and Compensation Criteria Law was publication of data/information that would allow for identification of employees and their compensation.
  
  Despite the lack of regulation, the March report had already correctly addressed this concern from a practical point of view. The IN now regulates the practice that had already been adopted by the MTE, bringing legal certainty to companies.
• Calculation/comparison methodology: until the publication of the first report - and even after it was made available by the MTE - the methodology and parameters used by the MTE to prepare the comparative analysis of compensation criteria were not regulated. The Annex to the IN now regulates the practice that had already been adopted by the MTE, bringing legal certainty to companies.
• Possibility of publishing explanatory notes: the IN expressly recognizes the possibility of companies publishing explanatory notes with additional information, so that they can clarify any differences.
  
  In this way, the MTE recognizes that the report alone is not enough to find existence or lack of gender discrimination and allows companies to provide this context and their individual reality, protecting themselves from misinterpretation.
• Action Plan to Mitigate Wage Inequality: during the audit, if the auditor finds that there is no justification for the wage differences based on article 461 of the CLT, the labor auditor will summon the company to present the Action Plan to Mitigate Wage Inequality within 90 days.
  
  The format of the Action Plan to Mitigate Wage Inequality will be at the companies' discretion, but the participation of labor union and employee representatives in the workplace must be guaranteed, as effective transparency and inclusion measures.
  
  However, if the company finds a pay gap between women and men internally, it must design, implement, and enforce measures to mitigate the pay gap, regardless of the work of the Labor Auditor.

Prior to the IN, an electronic summons was issued on September 3 to the Federal Government about the decision of the TRF for the 6th Circuit (TRF-6), which again suspended the obligation to publish the reports. The decision was handed down in the record of Interlocutory Appeal 6002221-05.2024.4.06.0000/MG. As a result, companies do not have to publish the report provided by the MTE while the staying decision remains in force.

The ruling applies to all companies in Brazil. However, as it has not yet become final, it could be appealed by the Federal Government. If this happens and any appeal is admitted and granted, the current scenario could change.