The new cycle of the Salary Transparency and Remuneration Criteria Report, established by the Pay Equality Act (Law no. 14,611/2023), began on August 1.

According to the Regulation of the Pay Equality Act, companies with 100 or more employees must complete, by August 30, 2024, the Salary Equality Declaration, made available by the Ministry of Labor and Employment (“MTE”) on the Emprega Brasil Portal.

The Regulation requires employers to provide information regarding (i) the existence of an organizational career path or a job and salary plan, (ii) remuneration criteria for access, promotion, or advancement of employees, (iii) incentives for hiring women, (iv) initiatives or programs by the employer that support the sharing of family obligations, and (v) criteria adopted by the employer for promotion to leadership, management, and executive positions.

According to information from the Ministry of Labor and Employment, the report will continue to be prepared by the Ministry and will be made available to the obligated companies on September 16, 2024, for publication by September 30.

History

Law no. 14,611/2023, also known as the Pay Equality Act, established the obligation for private legal entities with 100 or more employees to publish a biannual report on salary transparency and remuneration criteria.

According to the law, the report must contain information that allows for an objective comparison between salaries and remuneration, as well as the proportion of leadership, management, and executive positions occupied by women and men. Additionally, the report shall also present information on other potential inequalities related to race, ethnicity, nationality, and age.

The law also states that companies that fail to comply with the publication requirements will be subject to a fine of up to 3% of their payroll, capped at 100 minimum wages, without prejudice to sanctions applicable in cases of wage and remuneration discrimination between women and men.

To regulate the obligations set forth by the Pay Equality Act, Decree no. 11,795 and MTE Ordinance no. 3,714, both of 2023, were published, which together form he Regulation of the Pay Equality Act.

Among the main definitions, the Decree established the months of report publication as March and September, as well as defined the elements that comprise worker remuneration for the purposes of analysis and report preparation.

The Ordinance, in turn, defined the information to be used for report preparation and established the procedure for collecting additional data, setting February and August as the months for companies to provide the necessary additional information.

The report must be published on companies’ websites or social media, ensuring, as required by law, broad publicity and access for both the company’s employees and the general public.

Keep in mind

If the Salary Transparency Report indicates the existence of salary inequalities, companies will be obligated to present and implement an Action Plan to mitigate existing disparities.

The law stipulates that the Action Plan must contain goals and deadlines for implementing the proposed measures, and that companies must ensure the participation of union representatives and employee representatives in the process of drafting and implementing the Plan.

According to the Regulation, the Plan must be prepared and presented to the Ministry of Labor and Employment within 90 days from the company’s notification by the Ministry.

Failure to prepare or implement the Plan may also subject companies to administrative penalties.

What to do next?

Despite ongoing discussions on the topic, the Pay Equality Act and its Regulation remain in effect, requiring companies to comply with their provisions. This includes both completing the Salary Equality Declaration and publishing the report prepared by the Ministry of Labor and Employment by September 30.

Some companies have obtained judicial orders suspending the obligation to complete the Declaration and publish the Report, but the rulings are not final. Therefore, companies not covered by these court decisions have three alternatives:

1. Publish the report prepared by the MTE;
2. Publish the report prepared by the MTE along with an explanatory note, alerting the public to potential inconsistencies arising from the methodology adopted by the ministry; or
3. File their own lawsuit to eliminate the obligations of completing the Salary Equality Declaration and publishing the report prepared by the MTE.

Finally, considering the dynamic reality of the labor market and the possibility of inconsistencies in a companies’ salary structure, it is advisable for employers to conduct an internal evaluation to identify and preemptively resolve any salary inequalities.