Introduction
In Brazil, Labour Law is protective of employees. Some basic principles implicitly or expressly provided by Law will govern any employment relationship in Brazil. The most relevant principles are: (a) prevalence of facts: in the determination of labour consequences, the relevant facts surrounding an employment relationship will prevail over formal documents; (b) prohibition of detrimental changes: employers are prevented from making changes to employment terms and conditions that are detrimental to employees, whether or not the employee has previously consented with the change; and (c) joint liability (group of companies): companies belonging to a group of legal entities under the same control, direction or management are jointly liable for the obligations of any company belonging to such group with respect to employment relationships.
Legal framework
In Brazil, labour relations are a matter of Federal law, so the States and Municipalities have no power to legislate over labour matters. Therefore, labour rights are nationally standardised and the same labour costs and consequences will apply regardless of an employer’s place of business or place of incorporation.
The basic principles concerning labour relations in Brazil are contained in the Labour Code, the so-called “Consolidação das Leis do Trabalho – CLT”, enacted on 1 May 1943. On 11 November 2017, the Labour Reform became effective. It changed more than 100 articles of the Brazilian Labour Code. The changes intended to: (i) update the Brazilian Labour Code, (ii) improve labour relations, (iii) value collective negotiations between workers and employers, (iv) reduce the number of labour claims filed every year, (v) reduce the workforce informality, and (vi) simplify labour procedures.
New Developments
On July 3rd, 2023, law 14.611/2023 was published and added provisions to the Labour Code related to “equal pay for equal work”[1]. Although the new regulation did not change the existing equal pay for equal work rules, it has created additional measures that must be observed by companies to ensure wage equality.
The most relevant innovation of the law is the obligation for private companies with 100 or more employees to publish a biannual transparency report (on March and September of every year) on wage and remuneration criteria that also observes the limits of the General Data Protection Law (LGPD). Failure to present the transparency report may lead to an administrative fine of up to 3% of the company’s payroll, capped at 100 Brazilian minimum monthly wages.
Additionally, it has established more severe legal and monetary consequences in the event of wage discrimination. Thus, in the event of wage discrimination, companies are subject to the following sanctions and fines:
- payment of salary differences to the employees discriminated against;
- employees may seek compensation for moral damage; and
- administrative fines of ten times the new salary owed to the employee that was subject to discrimination – the amount doubles for repeat offences.
The transparency report is prepared and published by the Ministry of Labour based on the information in the e-Social system and complementary information provided by the companies.
In case the Ministry of Labour finds that there are unequal salaries and remuneration criteria between women and men (after the analysis of the transparency report), the companies with 100 or more employees must draft and implement, within 90 days, an Action Plan to Mitigate Unequal Salaries and Remuneration Criteria between Women and Men, in specific conditions.
According to the law, the first batch of reports were issued and published in March 2024. The next report will be issued in September 2024.
Nevertheless, the methodology adopted by the Ministry of Labour to prepare the transparency report has been questioned by both companies and unions, resulting in favourable decisions that exempt companies from the requirement to publish the report.
