By: HUB’s EB Global Benefits Team

Companies with 100 or more employees in Brazil will be subject to the country’s new pay transparency law that came into effect July 2023. This law mandates that companies submit comprehensive documentation on pay transparency and compensation criteria to Brazil's Ministry of Labor and Employment every 6 months. The deadline for the first submission of data via the Ministry's digital tool is February 29, 2024.

The goal of this reporting is to shed light on potential gender-based disparities in compensation. The reports must include data on the representation of women in leadership roles, alongside statistics on potential inequalities based on race, ethnicity, nationality, and age.

The law focuses on ensuring equal pay for equal work, defined by factors like identical positions, comparable skill sets, and similar experience within the same company.

Companies must disclose base salaries, benefits, bonuses, and other forms of remuneration received by employees.

Reports should be submitted via a computerized tool provided by the Ministry of Labor and Employment and anonymized in accordance with Brazil’s data privacy regulations.

Penalties for Non-Compliance

Non-compliance carries substantial consequences, including hefty fines, potential reputational damage, and possible investigation by the Public Labor Prosecutor’s Office.

Employees experiencing discrimination based on protected characteristics can claim significant financial compensation. In addition to the payment of salary differences, payment of a fine equal to ten times the new monthly salary must be paid to the individual discriminated against.

The law makes provision for employees to voice concerns via dedicated reporting channels, for increased government monitoring of companies, the promotion of workplace inclusion programs, and the promotion of education and training for women in the workplace.

How this impacts you

  • Employers must navigate the intricacies of reporting requirements, ensuring accuracy and compliance.
  • Employers’ compensation strategy and philosophy will be subject to scrutiny by the Ministry of Labor authorities, employees and the public.
  • Companies must anticipate an increased focus on internal discussions about pay and potential concerns raised by employees.

Next steps

  • Conduct an audit of the company’s pay structure and job architecture.
  • Establish objective metrics for base pay levels and annual adjustments.
  • Variable pay should be based on clear performance expectations, metrics and processes for each job level, promoting fairness and equal access to growth.
  • Review the methodology driving compensation decisions to ensure unbiased approaches to setting pay.
  • Ensure your pay strategy and core philosophy is clearly defined and communicated to employees.
  • Develop enhanced communication surrounding employees’ Total Compensation

If you have any questions, please contact your HUB Advisor. View more updates in our Global Benefits Directory.