22 january 2025
Framework
The gender pay gap between men and women, once constitutes a persistent reality, requires the implementation of concrete and effective measures.
Acknowledging this need and with the objective of ensuring equal pay for equal work or work of equal value, promoting a fairer and more balanced work environment, valuing professional merit, and reinforcing transparency as well as accountability and equity in labor relations, Law No. 60/2018, of August 21, was approved in 2018.
This legislation strengthens the role of entities such as the Authority for Working Conditions (ACT) and the Commission for Equality in Labor and Employment (CITE) in combating the gender pay gap, aiming to achieve a more equitable labor market with equal opportunities and professional appreciation.
Covered Companies
- Companies with 250 or more employees.
- Companies with 50 or more employees, starting from the third year of the diploma’s validity.
Enhancing Transparency in Pay Policies
One of the main innovations introduced by Law No. 60/2018 is the requirement for companies to adopt transparent pay policies based on an assessment of job components using objective criteria common to both genders (such as productivity or seniority), ensuring that all workers, regardless of gender, are evaluated fairly and impartially.
Under this law, whenever an employee claims wage discrimination, the employer bears the burden of demonstrating that it has a fair and objective pay policy. To this end, the employer must prove the absence of gender-based disparities, particularly concerning remuneration conditions, compared to other employees performing equivalent roles.
Statistical Data to Combat Inequalities
To ensure an effective diagnosis of pay disparities, the Strategy and Planning Office of the Ministry of Labor is tasked with preparing and annually providing detailed statistical information on gender pay disparities, both at the sectoral level (through sectoral barometers analyzing pay discrepancies by sector) and at the corporate level (through business reports assessing pay disparities within each company).
This information will allow the identification of wage inequalities and, subsequently, trigger the intervention of ACT, ensuring continuous and in-depth monitoring of existing disparities, with the aim of correcting them and promoting greater equity in the labor market.
The Role of ACT
ACT is responsible for improving working conditions by enforcing compliance with labor standards in private employment relationships and promoting policies aimed at preventing occupational risks. It is also tasked with overseeing compliance with occupational safety and health legislation across all sectors of activity, including services and public administration at the central, local, and indirect levels, as well as public institutes.
Under Law No. 60/2018, ACT plays a key role by conducting targeted inspections in companies where pay disparities have been identified, thereby contributing to reducing these disparities and promoting a culture of equity in the labor market.
The Contribution of CITE
This law also provides for the intervention of CITE, a tripartite collegiate body with administrative autonomy and legal personality. Its mission includes promoting equality and non-discrimination between men and women in employment, training, and work. It also collaborates in applying legal and conventional provisions related to these matters, including those concerning parental protection and work-life balance across the private, public, and cooperative sectors.
Among its responsibilities, CITE issues binding opinions on cases of gender-based pay discrimination at the request of employees or union representatives, reinforcing its role as an essential entity in defending equity and justice in labor relations.
It is worth noting that, under this legislation and in the specific context of requesting an opinion from CITE, dismissals or sanctions imposed on an employee within one year of such a request are presumed abusive. This ensures worker protection against retaliation and promotes greater security in exercising their rights
The Inspection Process
The inspection process begins with the analysis of the aforementioned statistical data, focusing on:
- The general and sectoral barometer of gender pay differences.
- The balance of pay differences by company, profession, and qualification levels.
Post-Receipt of the Pay Disparity Report:
- ACT must notify covered companies within 60 days to present a plan for assessing pay differences.
- After notification, companies must submit the assessment plan within 120 days.
- The referred plan is implemented over a 12-month period and is based on the evaluation of the components of the functions, using objective criteria, in order to exclude any possibility of discrimination based on gender.
- At the end of the period mentioned in the previous section, the employer communicates the results of the plan’s implementation, demonstrating the justified pay differences and the correction of unjustified pay differences.
- The services may, whenever deemed necessary, coordinate their actions with the competent entity in the area of gender equality and request information from the worker representation structures and employers.
- Pay differences that the employer does not justify are presumed to be discriminatory.
Non-Compliance
Failure to comply with legal obligations may result in:
- Fines ranging from €612 to €9,690, depending on the company’s turnover and the nature of the violation (negligent or intentional).
- Accessory sanctions, such as disqualification from participating in public tenders or auctions for up to two years.
Recent Developments
On January 7, 2025, ACT officially began a new investigation action to verify and ensure legal compliance with the requirements to provide equal pay for men and women.
According to information provided, ACT notified around 4,000 employers by email of potential disparities in the pay differences between men and women, resulting from the data provided by the entities in the Unique Report (Relatório Único), as announced on the authority’s website.
Thus, employers that have been notified will be obliged to submit a Pay Gap Assessment Plan to the ACT within 120 working days, which must assess the pay gaps identified, verify the assessment and corrective measures taken, and demonstrate that these gaps are not due to discriminatory practices.
Next Steps
We are at your disposal to provide full support, including personalized advice and detailed clarifications on transparent pay equality between women and men.
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The above information is not intended to provide an exhaustive analysis of all changes to the current legal framework but rather a selection of those we consider most relevant. It does not replace consultation with our company and/or the legal texts referenced herein.
For further information, please contact: Catarina Breia (+351 91 7575 832 or cbreia@pt-nexia.com) from our Tax Department.