1. Inês’s Case: An Everyday Situation
Imagine the following situation: Inês and Bernardo work for the same company, perform identical duties and have the same level of responsibility. However, Inês discovers, through an informal conversation, that Bernardo receives a higher basic salary than she does. At present, Inês feels her hands are tied and is afraid to ask her line manager or of facing consequences if she raises the issue.
The forthcoming Portuguese law, which amends Law No. 60/2018 to transpose the European Pay Transparency Directive — Directive (EU) 2023/970 —, is set to change this very situation. Let’s look at what Inês will now be able to do and what the company is obliged to comply with.
2. What Can Inês Do Under the New Law?
Inês now has the right to request written information from the company regarding her individual pay level and the average pay levels, broken down by gender, of employees performing work that is the same or of equal value to hers.
The company will have a maximum of two months to respond to the request. In addition, the employer must inform all employees annually about how to exercise this right.
Another important change concerns so-called ‘salary confidentiality’. If Inês’s contract includes a clause prohibiting her from discussing her salary, that clause will now be deemed null and void, meaning that contractual prohibitions on salary confidentiality imposed on employees are no longer valid.
3. What if the company tries to retaliate against or dismiss Inês?
This is one of the most significant aspects of the new draft bill. Should Inês lodge a complaint regarding pay discrimination and the company respond with a disciplinary measure or dismissal, the law provides for the period during which abusive retaliation is presumed to have taken place to be extended from one to three years.
In practice, if the company takes action against Inês within three years of the complaint, it may be presumed that such action constitutes unfair and discriminatory retaliation, and the burden of proof to the contrary will lie with the company, in accordance with the applicable regulations.
4. The Company’s Perspective: What Are the New Obligations?
For business owners and human resources managers, the new framework introduces rules that require proactive adjustments to internal practices.
Transparency in recruitment: prior to recruitment, candidates will have the right to know the salary amount or the expected salary range for the role. Furthermore, it will be prohibited to ask candidates how much they earned in previous jobs.
Publication of remuneration criteria: companies will have to publish, on their intranet or in visible locations, the objective criteria used to set salaries. Small and medium-sized enterprises with fewer than 50 employees will be exempt from the obligation regarding salary progression criteria, in accordance with the provisions of the new regime.
Mandatory reporting of pay gaps: the European Directive set out reporting obligations for companies with 100 or more employees, but Portugal has opted for a more stringent regime, covering companies with 50 or more employees.
Penalties for non-compliance: breaches may result in fines and additional penalties, including the loss of public subsidies or benefits, the revocation of tax incentives and a ban on participating in public tenders, in accordance with the applicable legal provisions.
5. Practical Summary: What Changes in Day-to-Day Practice?
With regard to job interviews, it is currently common practice to ask candidates how much they were paid in their previous jobs. Under the new law, this practice will be prohibited and the company must inform candidates of the salary or salary range envisaged for the role.
As for the possibility of finding out colleagues’ salaries, this matter is currently treated as confidential in some companies and may be subject to contractual clauses regarding salary confidentiality. Under the new regime, such clauses will be deemed null and void, allowing employees to request information on average pay levels, broken down by gender, for those performing work of equal value or of an equivalent nature.
With regard to requests for salary information, the company’s response will now be subject to a maximum deadline of two months. The employer will also be required to inform employees annually about the exercise of this right.
Finally, with regard to protection against dismissal or other retaliatory measures, the period during which abusive retaliation is presumed to have taken place will be extended from one to three years following the complaint, and it will be up to the company to demonstrate that the measure taken does not constitute abusive retaliation, in accordance with the law.
6. Frequently Asked Questions from the Public
Is the law already fully in force?
This is a draft bill that has been subject to public consultation. As the legislative process is still ongoing, the final text may be subject to changes until it is definitively approved. It is therefore important to check the current status of the legislation before making decisions based on these rules.
Does every company have to provide access to pay information?
Employees’ right to obtain information on pay levels applies generally, in accordance with the terms set out in the legislation. However, the formal obligations to report pay gaps depend on the size of the company and the requirements laid down in the applicable regulations. Under the proposed model, these obligations apply to companies with 50 or more employees.
This article is for information purposes only and does not replace personalised legal advice. Legislation may change, so you should confirm the current position with a lawyer.