Ecuador: New employer requirements to strengthen gender equality at work

Employer Action Code: Act

New legislation, called the Violet Economy Law, is intended to promote the employment of women and the equal treatment of men and women in the workplace, including with regard to family-related leaves. Among other things, companies are required to develop employment equality plans (EEPs) to eliminate gender-based discrimination and to implement measures to prevent and handle sexual harassment at the workplace. The law was promulgated on January 20, 2023, but implementing regulations were not published until November 2023. The measures described below become effective one year after the enactment date, i.e., January 20, 2024, unless otherwise noted.

Key details

• Companies with 25 or more employees must develop action plans on the prevention of sexual harassment in the workplace as well as internal work rule procedures for reporting and handling any incidents. They must also conduct annual training on the topic.
• Employers with 50 or more employees must develop EEPs to assess and address barriers and disparities affecting gender equality in recruitment and hiring; pay and benefits; access to flexible work arrangements; training opportunities; promotions; and representation of women in every employee category, including management and executive roles, among other things. The assessment must also analyze HR policies on discrimination and sexual harassment.
• EEPs must specify clear objectives and active measures to eliminate gender-based inequalities and discrimination in employment. They also must cover resources for EEP implementation, time frames, assessment of results and performance indicators as well as mechanisms and designated people for following up and reviewing the EEP. EEPs must be registered with the Ministry of Labor (MoL) and will be valid for four years from the date of registration.
• Companies can apply to the MoL for recognition of superior implementation of EEPs, provided they meet other additional requirements. Companies recognized as such will receive “Sello Violeta” certificates (valid for one year, renewable) for marketing purposes. Certified companies will also be eligible for special tax breaks (yet to be determined).
• Effective January 20, 2023, up to 75% of the maternity leave entitlement can be shared with the father of the child. (Maternity leave is 12 weeks, with pay replacement benefits provided by social security and the employer at 75% and 25% of covered pay, respectively. New fathers are entitled to 10 days of paternity leave, paid on the same basis as maternity leave.)
• Companies creating new job opportunities for women may benefit from special tax deductions linked to the duration of employment for such jobs and the number of new openings for women compared with the current headcount.

Employer implications

Among companies surveyed, few (around 14%) conduct equal pay analysis/audits. The development of EEPs will require an in-depth analysis of workforce composition and HR policies and practices. Companies could face large fines and penalties for noncompliance with the new requirements, especially in regard to preventing sexual harassment and discrimination.