Overview of the Brazilian Labor Law provisions on DEI matters

Throughout recent years, discussions regarding the promotion of diversity, equity and inclusion (“DEI”) in workplace have increased as a result of both changing social and corporate norms. Similarly, new legal provisions on the topic have been developed, which need to be monitored to comply with labor laws, as well as to mitigate the eventual risks associated with labor inspections and discrimination claims filed before labor courts by employees, unions or labor authorities.

Equal Pay

The principle of equality is an essential principle of the Brazilian legal system. It is explicitly guaranteed in Brazilian Constitution, which states that men and women have equal rights and obligations under the law. Specifically attributing this principle within the context of employment law, the Brazilian Constitution prohibits any kind of income disparity related to gender, age, ethnicity and marital status. Article 461 of the Brazilian Labor Code (Consolidação das Leis do Trabalho, "CLT") guarantees that—when the employee's job is identical, all work of equal value performed for the same employer, in the same business establishment—shall correspond to equal pay, without regard to gender, ethnicity, nationality or age. The principle of equal pay is a legal guarantee given to workers against wage discrimination when their work is of the same value as another. Thus, unlawful or unequal pay may result in labor lawsuits filed by employees claiming salary differences and other grievances, as well as fines by labor authorities.

The Brazilian Equal Pay Act

As of July 2023, with the enactment of Brazilian Law No. 14,611, of 2023, also known as the Brazilian Equal Pay Act, new legal parameters were established for the promotion of diversity in workplace. These parameters give special consideration to gender equality, as well as strengthening possible enforcement actions against violators. Under the provisions of the Brazilian Equal Pay Act, companies that operate in Brazil with 100 or more employees must semi-annually publish salary transparency and remuneration criteria reports. The salary transparency and remuneration criteria reports must adhere to the following guidelines: (i) anonymized data; (ii) information must enable an objective comparison between salaries, remuneration, and the representation of women and men in executive, managerial, and leadership positions; and (iii) statistical data on other possible inequalities arising from race, ethnicity, nationality and age. The published reports must also comply with the Brazilian General Data Protection Law provisions regarding personal data and confidentiality. The Brazilian Equal Pay Act is already in effect, even if specific reporting templates and public administration platforms are yet to be determined. In this perspective, labor authorities can request that companies provide information and clarifications on the matter. Additionally, where pay inequality is identified, companies must devise an action plan to mitigate inequality with clear targets and deadlines, and involve representatives of employees’ unions and employees’ representatives.

Consequences of Non-compliance with the New Equal Pay Act

Non-compliance and failure to publish salary transparency and remuneration criteria reports may lead to fines of up to 3% of employer’s payroll, limited to the amount of 100 minimum wages. The penalties stipulated by the Brazilian Equal Pay Act do not preclude other potential sanctions in wage discriminations cases, including compensation for wage disparities resulting from recognizing wage equalization or providing restitution for moral damages. Furthermore, if authorities deem the , companies may incur fines of up to ten times the amount of the new salary owed to the discriminated employee, and such penalties would double in case of recurrence. Government bodies such as the Ministry of Labor and Employment, the Public Labor Prosecution Office, and the Labor Court will conduct inspections and impose penalties. The Brazilian federal government will establish a specific enforcement protocol against wage discrimination and gender-based remuneration criteria.

Legal Quota for Disabled Employees

Article 93 of Law No. 8.213, of 1991, stipulates that companies with more than 100 employees must have between 2% and 5% of their workforce made up of disabled employees, at the following rates: I – up to 200 employees: 2%; II – between 201 and 500 employees: 3%; III – between 501 and 1,000 employees: 4%; and IV – more than 1,001 employees: 5%. In cases of non-compliance, the company may be subject to fines based on criteria such as the size of the company and repeat offenses. It is important that companies make a clear and unequivocal effort to hire employees with disabilities. If they are unable to do so due to external factors, all these efforts need to be kept on record to mitigate risks arising from inspections by the Ministry of Labor and Employment or the Public Labor Prosecution Office. Additionally, the dismissal of an employee with a disability without just cause will only be possible upon the hiring of another employee in the same condition, in order to guarantee compliance with the legal quota. Finally, it is notable that disabled employees are entitled to an accessible and inclusive environment, with equal opportunities with other employees, which shall be guaranteed by the employer. Restrictions on the work of employees with disabilities, and any discrimination on the grounds of their condition, are prohibited, including during recruitment, selection, hiring, admission, admission and periodic exams, permanence in employment, professional advancement and professional rehabilitation, as well as the requirement of full aptitude.

Race and Ethnicity Records

As of April 2023, Law 14,553/2023 took effect, amending the Brazilian Statute of Racial Equality (Law 12,288/2010) to require employers to include a field for employees to indicate their self-identified racial or ethnic information, based on previously established groups, in administrative documents and records. This measure affects, but is not limited to, the following documents: (i) employee admission and dismissal forms; (ii) work accident forms; (iii) registration forms of the National Employment System (Sistema Nacional de Emprego, “SINE”); (iv) the employer’s Annual Social Information Report (Relação Anual de Informações Sociais, “RAIS”); (v) documents related to the employees’ registration in the Brazilian Social Security System (Regime Geral de Previdência Social); and (vi) the survey questionnaires from the Brazilian Institute of Geography and Statistics (Fundação Instituto Brasileiro de Geografia e Estatística, “IBGE”). The new legislation established that the categories should be based on the employees’ self-classification within previously established groups. Employers are encouraged to utilize the five categories used by IBGE for the purposes of classifying the Brazilian population in terms of race or color in their documents and records: (i) Afro-Brazilian; (ii) Multiracial; (iii) White; (iv) Indigenous; and (v) East Asian. It is important to note that the new rule applies to both the public and private sectors, and that the survey of the percentage of occupation by ethnic and racial segments in the public sector will serve to supplement the Brazilian National Policy for the Promotion of Racial Equality (Política Nacional de Promoção da Igualdade Racial, “PNPIR”), based on IBGE surveys which shall be conducted every five years.

Affirmative Action in the Private Sector: Opportunities and Legal Parameters

Affirmative actions, in the context of labor and employment relations in Brazil, are those based on internal and non-mandatory policies that can be adopted by employers in order to contribute to the promotion of equitable conditions for equal opportunities, inclusion and diversification of people or groups subject to discrimination, such as the afro-Brazilian community, women and LGBTQIA+ population. These policies are not considered discriminatory, and are in line with the employer's social responsibility. It should be noted that there is no legal obstacle for the adoption of affirmative actions aimed at minority groups, and that internal policies of this nature are in compliance with Brazilian constitutional and labor provisions as well, with the promotion of decent work, which is understood as work free from discrimination and capable of providing a dignified life. Affirmative action aimed at minority groups in the private sector can be adopted through selective processes aimed at minority groups, as well as setting internal goals for the number of employees that are part of minority groups hired or in leadership positions.

Collection and management of DEI data by employers

DEI data is classified as sensitive data in Brazil, as the Brazilian General Data Protection Law (“LGPD”) classifies personal sensitive as personal data on racial or ethnic origin, religious conviction, data concerning health or sex life, genetic or biometric data, when linked to an individual. Thus, the collection and management of this kind of data must comply with the applicable provisions of the LGPD. In the light of the above, even though the legislation allows data to be collected on a voluntary and anonymous basis during the course of employment and hiring processes, individual consent for DEI data collection must come from a specific, formal, individual agreement, which must contain certain highlighted information with respect to the specific purpose of the data collection and management. Considering the scope of this data, it is highly recommended that it be collected only for reasonable and justified DEI purposes, in connection to the adoption of initiatives aimed at the promotion of equity and inclusion in workplace. Specific internal DEI policies to regulate the initiatives are also recommended to mitigate risks related to any potential claims that DEI initiatives are discriminatory.

DEI Enforcement and Labor Authorities’ Inspections

DEI matters in Brazil involve optional policies based on employer’s social responsibility and mandatory requirements foreseen in labor legislation to be observed by employers, related to equality and non-discrimination in workplace. It is important to note that discriminatory conduct is prohibited by Brazilian law, especially in the context of employment relationships, as the Brazilian Federal Constitution provides for equality in access to job positions to all individuals without distinction, and they have the right to freely exercise any job or profession provided that professional qualifications are met. In this context, it is important to note that Law No. 9,029, of 1995, forbids the adoption of any discriminatory and restrictive practice for the purpose of access to, or maintenance of, employment relationships. Law 9,029, of 1995, also provides that the termination of an employment relationship due to a discriminatory act allows the employee to be compensated for moral damage and, additionally, to choose between reinstatement, with full compensation for the entire period of leave, or double pay for the period of leave. Moreover, offensive acts practiced against individuals of racial minorities and/or that are of the LGBTQIA + community, in the light of the decision rendered by the Brazilian Supreme Court, may be deemed as racism, as provided by Law No. 7,716, of 1989, which include: (i) denial of employment; (ii) restricted access to the workplace; (iii) failure to provide the necessary equipment to carry out the work on equal terms with other workers; (iv) prevent the employee from advancing or not being granted any other form of professional benefit; and (v) different treatment in the workplace, especially in terms of salary. Finally, compliance with labor legislation with respect to matters involving equality in workplace is subject to inspection by labor authorities, such as the Ministry of Labor and Employment and the Public Labor Prosecution Office, which may apply fines and/or require the adoption of measures under terms of adjustment of conduct. Additionally, non-compliance with legislation requirements and violence towards minority groups may lead to individual labor lawsuits filed before labor courts, with claims of indemnification for moral and other damages.

Final considerations

The regulation of DEI matters in workplace has increased, bringing with it new requirements set forth by legislation that complicate DEI matters. In this context, the development of DEI initiatives by employers has become not only a matter of acquiring and retaining talent and the construction of a diversified workplace without discrimination, but also a matter of legal compliance.

Authors:

Aline Fidelis afidelis@mayerbrown.com Thiago Garcia tgarcia@mayerbrown.com Isabela do Val Idoval@mayerbrown.com Isabella Fraia ifraia@mayerbrown.com

Labour and employment

Brazilian DEI Landscape: Changes to the Brazilian Labor Regulation on Diversity and Inclusion Matters

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