Equal pay law sees companies racing to provide data amid legal challenges

In the middle of a legal dispute, criticism of the government and fears of reputational damage, companies with more than 100 employees are racing against time to complete and publish pay transparency reports, with data on their employees’ payments. They are required to communicate the data by Sunday 31st, pursuant to n provided for by law 14.611 of July 2023known as Equal Pay Actwhich provides that women and men who perform the same function receive the same pay.

The obligation to submit the report was suspended from Friday 22nd, when the Federation of Industries of the State of Minas Gerais (Fiemg) obtained an injunction at the 4th Panel of the Federal Regional Court of the 6th Region (TRF-6), in Belo Horizonte. On Tuesday 26th, however, the injunction was cancelled, leading to a rush to finalize the declarations. Fiemg has announced that he will appeal the decision.

Companies that do not provide the information, on their websites or social networks, by the deadline, will have to pay a fine equal to 3% of the value of the paycheck, limited to a ceiling of 100 minimum wages, i.e., R$ 141 ,2 thousand.

During the Easter holidays and weekends the Court operates in shifts. Once the injunction that would have guaranteed, at least, the postponement of the publication of the information fell, some companies took legal action. Among these are the São Paulo and Pacheco pharmacy chains.

Furthermore, the Ministry of Labor and Employment (MTE), responsible for receiving the data, released a new version of the report only on the evening of Wednesday 27th. According to the undersecretary for statistics and labor studies, Paula Montagner, in a note, the inclusion of the information in the new version came from a suggestion from the companies themselves. In some reports, companies have found discrepancies between the institute’s CNPJ and the number reported by the government.

Although the changes were considered by Fiemg as “an evolution that reduces risks for employees and the company”, the organization specifies that the report “still exposes companies and people to unnecessary risks, which could lead to disclosure of their data”. Information on policies aimed at increasing diversity and information on the proactiveness criterion have been added.

The report contacted the ministries of Labour, Employment and Women, but received no response.

“Whoever posted the old version will need to update, because the new report only appeared on the last day before the holidays, and companies that pre-released the release may have their teams already off work and unaware of the changes,” says l lawyer Domingos Fortunato, partner of the work area at the office of Mattos Filho.

Companies are also awaiting the ruling Federal Supreme Court (STF) of a direct appeal of unconstitutionality of the law, promoted by the art National Confederation of Industry (CNI). However, the case before Minister Alexandre de Moraes, who did not grant the request for an injunction, is expected to be assessed only in mid-April, in plenary, after the deadline has expired.

“Companies are dividing themselves into four different races. They are choosing between publishing as required by the government, publishing alongside an explanatory note to resolve any discrepancies between the report and their most up-to-date data, taking the matter to court, or simply not publishing anything and waiting the STF’s decision,” says Fortunato.

For larger companies, the fine of up to R$141,200 has no major financial consequences and would justify avoiding image risks if you have information about a large wage gap between men and women and between whites and blacks. be exposed.

Complaints from companies

Fiemg said he will appeal the decision of TRF-6 chairwoman Federal Judge Monica Jacqueline Sifuentes, who stayed the injunction. “We defend the company, to prevent its data from being exposed and used for undue purposes. We do not understand the reason for publishing specific data on incomes, for both men and women”, said the president of Fiemg in a note, Flavio Roscoe.

“We stand for meritocracy, yes, for both sexes, and we stand for equality for all, regardless of sex, regardless of race, regardless of age. We are confident that we will succeed at the end of all these legal demands.”

One of the first questions raised by the obligation to publish salary data is whether it could violate the principle of the right to secrecy in matters of remuneration, the General Data Protection Law or whether it could pose a competitive risk, since the structure of A company’s costs could be exposed to competitors.

However, according to experts, these concerns were alleviated after learning the contents of the report, which does not contain information on reais values, but rather on salary differences in percentages.

Other complaints concern the quality of the data released. Part of the information is taken from data already provided by companies for e-Social 2022, with last year’s data already available and others updated.

“The information that arrives with the 2022 data ends up creating a huge distortion for companies, because it is not updated” says the lawyer Cristian Divan Baldani, partner in the work area of ​​Veirano Advogados.

“Also, they do not take into account the criteria for paying different wages and are classified in very broad groups of the Brazilian Classification of Occupations (CBO). It is a bit complicated because it does not address the peculiarities of each company. There was a lot of uncertainty, a lot insecurity, because publishing information can cause reputational damage to companies.”

The data provided is divided into five CBO categories: administrators and managers, higher-level professions and occupations, mid-level technicians, administrative services workers and operations workers. Companies complain that, in this way, the salaries of the different departments are not separated, which can have large salary differences or the criteria of seniority and meritocracy are not taken into consideration.

“There is discussion about how the methodology adopted grouped the information. These are very large CBO groupings and the 2022 information does not reflect today’s reality,” says lawyer Mauricio Guidi, partner in the practice area of ​​Pinheiro Neto Advogados.

“We have told clients that, before asking for an injunction, it is best to check whether there is an error in the information or in the CNPJ. Arguing the merits of the law is difficult. It is a legitimate question, and it is stated in the Constitution it is stated that equality must be sought. This provision of information should be the first in a series of important policy measures.”

Under the new law, companies will have to update information every six months. Equality was already foreseen by the Constitution, but compliance with the rules was not monitored. From now on the MTE will produce what it calls a “pay transparency and remuneration criteria report” based on e-Social data, which is regularly reported by companies.

They include, in anonymous form, the value of each employee’s salary, contractual salary, 13th salary, bonuses, commissions, overtime, night pay and even tips.

During an event held on Monday 25th, the Ministries of Labor and Employment and Women presented the 1st National Report on salary transparency and remuneration criteria. It was prepared based on data from e-Social, the 2022 Annual Social Information List (RAIS) and preliminary information from reports, submitted by 49,587 companies that responded to the MTE by March 8.

These first data show that in Brazil women earn 19.4% less than men, with a difference that varies depending on the professional group. In the positions of directors and managers the difference reaches 25.2%.