Brazil: New proposed legislation on equal pay for women and men

Employer Action Code: Monitor

While Brazil’s Constitution and Labor Code both have provisions establishing the principle of equal pay for equal work, employers aren’t currently mandated to demonstrate compliance. To address this, Bill 1085/2023 would amend the Labor Code to require companies with 20 or more employees to publish gender-based pay comparison information under certain circumstances, including identical roles, identical activities and no applied promotions (article 461 of Labor Code). Companies would face fines for noncompliance as well as increased penalties in cases of unjustified pay inequality. The bill is currently with the Chamber of Deputies for review. If enacted, its provisions would be effective immediately upon publication, if current wording remains.

Key details

• If unjustified pay inequality is proven on the basis of gender (as well as race or ethnicity) with respect to an employee, then the company would owe the employee back pay and be subject to a fine of 10 times the highest monthly salary paid by the employer (doubled if recurrence) plus potential “moral” damages claimed by the employee based on circumstances. This fine would be a substantial increase over the current one provided for in the Labor Code (i.e., 50% of the maximum social security annual pension).
• Companies with 20 or more employees would be required to publish transparency reports containing data and information enabling objective comparison of salary and remuneration between women and men. The bill contains no details on the content or frequency of the reports, but the Ministry of Labor and Employment would be expected to issue more detailed regulations.
• Where inequality is identified in the reports, companies would be required develop action plans with goals and deadlines to mitigate the inequality, in consultation with union representatives and representatives of the enterprise’s male and female workers.
• In the event of noncompliance with the reporting or action plan requirements, employers would be subject to a fine equal to five times the annual salary of their highest-paid employee , increased by 50% if noncompliance persists.

Employer implications

The Brazilian statistical agency IBGE (Instituto Brasileiro de Geografia e Estatística) and other institutions have found that women earn 20% to 30% less than men in Brazil, on average, when comparing workers with the same education and age profile in the same or similar role. If the bill is approved, companies would have greater incentive to review their policies and practices on pay to ensure compliance with the equal pay for equal work requirements.