On 3 July 2023, Brazil implemented a new law aimed at enhancing existing regulations on salary equality. The law builds upon the foundation of the previous legal framework, which already included the principle of equal pay for equal work. The core principles of salary parity remain unchanged, where factors such as venue, productivity, technical proficiency, and seniority continue to determine employees’ entitlement to equal compensation.
However, the new legal framework introduces several key improvements:
- Addressing discrimination: The law specifically targets salary inequality resulting from discrimination based on ‘sex, race, ethnicity, origin, or age’.
- Transparent compensation policies: Employers are required to establish transparent compensation policies that foster diversity and inclusion. They should also provide training to leaders and employees on equal employment rights. Additionally, mechanisms must be in place to measure compliance with these policies, and hotlines should be available to receive complaints related to discrimination.
- Additional remedies: Alongside salary parity, which already existed, victims of discrimination are entitled to moral damages assessed by the judge based on the circumstances of the case. Further, a penalty equal to 10 times the salary determined by the court is imposed on the employer.
- Biannual reports: Employers with 100+ employees must generate biannual reports containing anonymised salary data and information regarding the representation of different demographics in management and leadership positions. Compliance with data protection laws is essential in preparing these reports.
- Remediation plans: If the reports indicate salary inequality, the employer is obliged to develop a remediation plan. The relevant workers’ union is empowered to participate in devising this plan.
- Penalties for non-compliance: Failure to produce the required reports carries a penalty of 3% of the payroll, up to a maximum of 100 minimum wages.
- Further regulations and new digital platform: The government will issue additional regulations on audits and inspections to ensure compliance with the law. Additionally, a digital platform for public consultation will be established, enabling stakeholders to contribute to the ongoing discussions and improvements in this area.
Employers are advised to carefully review their internal policies and make any necessary adjustments to ensure alignment with the new legal requirements.