Portugal Equal Pay Law 2018

Overview

Law no. 60/2018, of August 21, 2018, represents a significant legislative advancement in Portugal, specifically designed to promote equal remuneration between women and men for equal work or work of equal value. This law, which officially entered into force on February 21, 2019, six months after its publication in the Diário da República, aims to combat persistent gender pay gaps by introducing a comprehensive set of measures focused on transparency, monitoring, and enforcement. Its enactment reflects a growing national and international commitment to gender equality in the workplace, aligning Portugal with broader European Union objectives and international labor standards.

The historical context for this law is rooted in the recognition of enduring wage disparities between genders across all sectors of the Portuguese economy, despite existing legal frameworks promoting equality. Prior to Law 60/2018, while the principle of equal pay was enshrined in the Portuguese Labor Code (Article 24) and the Treaty on the Functioning of the European Union (Article 157), practical mechanisms for its effective implementation and enforcement were often insufficient. The law emerged from a proposal by the Portuguese Government, developed by the governmental areas of Citizenship and Equality and Employment, underscoring a concerted effort to move from de jure equality to de facto equality in remuneration.

Key innovations introduced by Law 60/2018 include the mandatory adoption of transparent remuneration policies by employers, the annual collection and disclosure of statistical information on pay differences, and the establishment of a formal process for assessing and correcting unjustified pay gaps. It also significantly enhances the powers of key enforcement bodies, such as the Authority for Working Conditions (ACT) and the Commission for Equality in Labour and Employment (CITE), enabling them to actively intervene, issue binding opinions, and impose penalties for non-compliance. Furthermore, the law explicitly establishes a presumption of discrimination for unjustified pay differences, shifting the burden of proof to employers in certain circumstances, thereby strengthening employee protections and facilitating the pursuit of justice.

Definitions

Law no. 60/2018 provides specific definitions to clarify its scope and application, ensuring a consistent understanding of key concepts related to pay equity. One fundamental term defined is "Sexo" (sex), which refers to the biological characteristics distinguishing a human person as a woman or a man, used as a sociodemographic variable. This definition underpins the entire framework of the law, emphasizing that any remuneration differences must not be based on these biological characteristics. The law's focus is on eliminating discrimination that arises directly or indirectly from an individual's sex, ensuring that pay decisions are based solely on objective, non-discriminatory criteria.

Another crucial definition is "Remuneração" (remuneration). For the purposes of this law, remuneration is broadly defined to include not only the base salary (retribuição base) but also other regular and periodic benefits, whether provided directly or indirectly, in money or in kind. This comprehensive definition ensures that all components of an employee's compensation are considered when assessing pay equity, preventing employers from circumventing the law by shifting discriminatory practices to variable or in-kind benefits. It also explicitly references the provisions of paragraphs a) to d) of no. 1 of Article 260 of the Labor Code, further integrating the law with existing labor legislation and ensuring a holistic approach to compensation analysis.

While not explicitly defined as a single term within the law's definitional article, the concepts of "trabalho igual ou de igual valor" (equal work or work of equal value) are central to its application. The law mandates that remuneration policies must be based on the evaluation of job components using objective criteria, common to both men and women, to ensure that individuals performing work that is objectively assessed as equal or of equal value receive equal pay. This principle is further elaborated by requiring employers to demonstrate that any pay differences are justified by factors other than sex, such as merit, productivity, seniority, or other objective criteria, as outlined in Article 31 of the Labor Code.

Covered Employers

Law no. 60/2018 applies broadly to employers across Portugal, encompassing both the private and public sectors, with a general obligation to ensure equal pay for equal work or work of equal value. While the initial text of Law 60/2018 did not specify explicit size thresholds for all obligations, subsequent interpretations and enforcement actions by the Authority for Working Conditions (ACT) have clarified the practical scope, particularly concerning reporting and audit requirements. For instance, the ACT has initiated inspection actions targeting thousands of employers, indicating a wide reach of the law's provisions.

The law's requirements, such as establishing a transparent remuneration policy and being subject to potential notification for a pay gap assessment plan, generally apply to all employers. However, the intensity and specific triggers for enforcement actions, particularly those involving detailed reporting and audit plans, often correlate with company size. For example, the statistical information on pay differences, including the "balance of pay differences by company," is developed based on information provided by employers, such as the annual "Relatório Único" (Unique Report), which is mandatory for most employers. This suggests that companies required to submit the Relatório Único are implicitly covered by the data collection mechanisms that inform the ACT's enforcement activities.

Furthermore, the upcoming EU Pay Transparency Directive (Directive 2023/970), which Portugal, as an EU member state, will implement, introduces more explicit size-based reporting requirements. While Law 60/2018 already has many elements aligned with the EU Directive, the Directive specifies that companies with 250 or more employees will need to report annually starting June 7, 2027, and companies with 150 to 249 employees will report every three years starting June 7, 2030. By 2031, all employers with 100 or more employees will be required to comply with these reporting obligations. This indicates a phased-in approach for more detailed reporting based on company size, which will complement and potentially expand upon the existing requirements under Law 60/2018, ensuring that larger entities face more stringent and frequent scrutiny regarding their pay equity practices.

Employee Rights

Law no. 60/2018 significantly strengthens employee rights concerning pay equity, providing clear mechanisms for workers to address suspected discrimination. A core right established by the law is the ability for a worker or their trade union representative to request an opinion from the Commission for Equality in Labour and Employment (CITE) regarding the existence of pay discrimination based on sex for equal work or work of equal value. This request must be submitted in writing and must substantiate the allegation of discrimination, including identifying the worker or workers of the opposite sex against whom the applicant believes they are being discriminated.

Upon receiving such a request, CITE is mandated to issue a binding opinion on the matter. This opinion is a crucial tool for employees, as it provides an official assessment of whether discriminatory pay practices are present. If CITE's opinion confirms the existence of discrimination, it is communicated to the Authority for Working Conditions (ACT), which can then initiate proceedings for gender-based discrimination and apply appropriate fines. This process empowers employees by providing an administrative avenue for redress, reducing the immediate burden of legal action and leveraging the expertise of a specialized equality body.

Furthermore, the law introduces protections against retaliation. Any dismissal or other sanction applied to an employee, allegedly for a labor infraction, is presumed abusive if it occurs within one year after the employee or their representative has requested an opinion from CITE. Similarly, any retaliatory act that harms a worker as a consequence of their rejection or refusal to submit to pay discrimination is considered invalid under Article 25 of the Labor Code. These provisions are designed to safeguard employees who exercise their rights under the law, fostering an environment where workers feel secure in challenging discriminatory pay practices without fear of adverse employment consequences. The law also establishes a presumption of discrimination for any pay differences that an employer cannot objectively justify, further strengthening the employee's position in challenging unequal pay.

Pay Transparency Requirements

Law no. 60/2018 introduces several key pay transparency requirements aimed at shedding light on remuneration structures and identifying potential gender-based disparities. A central obligation for employers is to ensure the existence of a transparent remuneration policy. This policy must be based on the evaluation of job components using objective criteria that are common to both men and women, such as merit, productivity, attendance, or seniority. The intent is to ensure that all pay decisions are justifiable and free from any possibility of discrimination based on sex, moving away from opaque systems that can perpetuate inequalities. Employers are expected to demonstrate the objectivity of their salary-setting criteria to workers, the ACT, CITE, and, if necessary, the courts.

While Law 60/2018 mandates transparency in pay policies, it does not explicitly require employers to disclose specific salary ranges in job postings or to individual employees upon request, beyond the general obligation to have a transparent policy. However, the law does require the Ministry responsible for the labor area (specifically, the Cabinet of Strategy and Planning - GEP) to annually develop and make available statistical information on pay differences. This includes a general and sectoral barometer of pay differences between women and men, as well as a balance of pay differences by company, profession, and qualification levels. This aggregated data, derived from existing administrative sources like the 'Relatório Único' (Unique Report), is made publicly available on the Ministry's website, providing a macro-level view of pay disparities and serving as a basis for enforcement actions.

Looking ahead, the forthcoming EU Pay Transparency Directive (Directive 2023/970) will introduce more explicit and granular pay transparency requirements that will complement and expand upon Portugal's existing law. This Directive will mandate employers to provide salary range information to job candidates, prohibit asking about salary history, and require more detailed annual pay gap reporting, especially for larger companies. For instance, companies with 250 or more employees will need to report annually on gender pay gaps starting June 7, 2027, and those with 150-249 employees every three years from June 7, 2030. These new requirements will necessitate Portuguese employers to update their HR policies and practices to ensure compliance with the enhanced transparency obligations, moving beyond the current framework to include proactive disclosure of salary information.

Reporting & Audit Obligations

Law no. 60/2018 establishes a robust framework for reporting and auditing pay differences, primarily driven by the Authority for Working Conditions (ACT) and the Ministry responsible for the labor area. Annually, the service competent for statistical analysis within the Ministry of Labour, Solidarity, and Social Security (specifically, the Cabinet of Strategy and Planning - GEP) is tasked with developing and making available comprehensive statistical information. This includes a general and sectoral barometer of pay differences between women and men, as well as a detailed balance of pay differences by company, profession, and qualification levels. This information is derived from existing legal and administrative sources, notably the 'Informação sobre a Atividade Social da Empresa' (Information on the Company's Social Activity), commonly known as the 'Relatório Único' (Unique Report), which employers are already obligated to submit.

Based on the analysis of this statistical data, particularly the company-specific balance of pay differences, the ACT plays a critical role in identifying potential disparities. If significant pay differences are detected, the ACT is empowered to notify the employer. Within 60 days of receiving the balance of pay differences, the ACT notifies the employer, who then has a further 120 days to present a 'Plano de Avaliação das Diferenças Remuneratórias' (Pay Gap Assessment Plan). This plan is not merely a report but a commitment to action. It must detail how the employer will assess the identified pay gaps, verify the assessment, outline corrective measures, and demonstrate that any existing gaps are not due to discriminatory practices.

The Pay Gap Assessment Plan is designed to be implemented over a 12-month period. During this time, the employer must conduct a thorough evaluation of job components based on objective criteria, common to both men and women, to systematically exclude any possibility of sex-based discrimination. Upon completion of the 12-month implementation period, the employer is required to communicate the results of the plan to the ACT, demonstrating the justification for any remaining pay differences and the correction of any unjustified disparities. Failure to submit or implement this plan, or to communicate its results, constitutes a serious administrative offense, underscoring the mandatory nature of these audit obligations. The ACT has actively pursued these obligations, notifying thousands of companies to submit such plans, demonstrating a proactive enforcement approach.

Governance & Enforcement Bodies

The enforcement and governance of Law no. 60/2018 are primarily vested in two key public authorities in Portugal: the Autoridade para as Condições do Trabalho (ACT) and the Comissão para a Igualdade no Trabalho e no Emprego (CITE). The ACT, or Authority for Working Conditions, is the national labor inspection authority responsible for monitoring compliance with labor legislation, including provisions related to equal pay. Its role is crucial in identifying potential pay disparities through the analysis of statistical data, such as the 'Relatório Único' (Unique Report), and subsequently notifying employers to develop and implement Pay Gap Assessment Plans. The ACT ensures that employers adhere to the legal requirements for transparent remuneration policies and take corrective actions when unjustified pay differences are found. It also has the power to impose fines and other penalties for non-compliance.

The Comissão para a Igualdade no Trabalho e no Emprego (CITE), or Commission for Equality in Labour and Employment, is the specialized entity competent in the area of equal opportunities between men and women in the workplace. CITE's responsibilities were expanded by Law 60/2018, granting it the specific competence to issue binding opinions on the existence of pay discrimination based on sex for equal work or work of equal value, upon request from a worker or a trade union representative. These opinions are critical for employees seeking to challenge discriminatory practices, as they provide an authoritative assessment. CITE also plays a vital role in monitoring the application of the law, promoting studies on remuneration, and attributing distinctions like the "Selo da Igualdade Salarial" (Equal Pay Seal) to companies demonstrating good practices in pay equity.

The interaction between ACT and CITE is central to the enforcement mechanism. When CITE issues a binding opinion confirming pay discrimination, this opinion is communicated to the ACT, which then proceeds with the necessary inspection and enforcement actions, including the potential application of fines. This collaborative approach ensures that both the specialized expertise in equality matters (CITE) and the enforcement power of labor inspection (ACT) are brought to bear on cases of pay discrimination. Furthermore, the law mandates that courts communicate final judgments of conviction for pay discrimination to CITE, ensuring that a comprehensive record of enforcement outcomes is maintained and informs future policy and monitoring efforts.

Monitoring & Evaluation

The monitoring and evaluation of Law no. 60/2018 are integral to its effectiveness, involving a multi-faceted approach by various governmental bodies. The Authority for Working Conditions (ACT) is at the forefront of monitoring compliance through its inspection procedures. The ACT utilizes statistical information, particularly the 'balance of pay differences by company' derived from the annual 'Relatório Único' (Unique Report), to identify employers with potential pay disparities. This data-driven approach allows the ACT to proactively target companies for inspection. When notified of significant differences, employers are required to submit a Pay Gap Assessment Plan within 120 days, which is then implemented over a 12-month period. The ACT monitors the implementation of these plans and requires employers to communicate the results, demonstrating justified differences and the correction of unjustified ones.

Complaint investigations are primarily handled through a process involving the Commission for Equality in Labour and Employment (CITE). Workers or their trade union representatives can file a written request with CITE, alleging pay discrimination. CITE is then responsible for investigating these allegations and issuing a binding opinion on the existence of discrimination. This opinion is a crucial step in the investigative process, providing an expert assessment. If discrimination is confirmed, CITE communicates its findings to the ACT, which then takes over the enforcement aspect, including initiating administrative offense proceedings. This division of labor ensures that complaints are thoroughly investigated by a specialized equality body before enforcement actions are pursued.

Beyond individual complaints and targeted inspections, the law itself mandates a periodic evaluation of its application. Article 10 stipulates that the application of Law 60/2018 is subject to evaluation by CITE every four years. The first such evaluation was scheduled to occur two years after the law's entry into force, meaning in 2021, given its February 2019 effective date. For these evaluations, social partners are consulted, ensuring a comprehensive review that incorporates the perspectives of both employers and workers. This regular, systemic evaluation, coupled with ongoing monitoring by ACT and CITE, aims to assess the law's impact, identify areas for improvement, and ensure its continued effectiveness in reducing the gender pay gap in Portugal. The Ministry responsible for the labor area also maintains and updates statistical information on its website, contributing to public transparency and ongoing monitoring.

Enforcement & Penalties

Law no. 60/2018 establishes a clear regime of sanctions and penalties for non-compliance, underscoring the seriousness with which Portugal treats pay discrimination. The violation of specific provisions, particularly those related to the transparent remuneration policy and the submission and implementation of the Pay Gap Assessment Plan (Articles 5(1), 5(2), and 5(3)), constitutes a serious administrative offense (contraordenação grave). This classification means that such infractions carry significant legal consequences, independent of any other provisions in the Labor Code. The Authority for Working Conditions (ACT) is the primary body responsible for investigating these administrative offenses and applying the corresponding penalties.

The penalties for serious administrative offenses under Portuguese labor law can include substantial fines. While Law 60/2018 itself does not specify exact fine amounts, it refers to the general regime of administrative offenses in the Labor Code. For gender-based discrimination, which is considered a very serious offense, fines can range from €2,040 to €61,200, depending on the severity of the infraction and the size of the employer. These financial penalties are designed to act as a deterrent and to ensure that employers take their obligations seriously. Furthermore, in addition to monetary fines, a serious administrative offense can also lead to an ancillary sanction: the deprivation of the right to participate in public auctions or tenders for a period of up to two years, as per Article 562 of the Labor Code. This additional penalty can have significant commercial implications for businesses, particularly those reliant on public contracts.

The enforcement process is also bolstered by the presumption of discrimination. Any pay differences that an employer fails to justify according to the objective criteria outlined in the law are presumed to be discriminatory. This shifts the burden of proof to the employer, making it more challenging for them to defend unjustified pay gaps. Moreover, the law provides for judicial oversight and communication: courts are required to immediately inform the Commission for Equality in Labour and Employment (CITE) of any final judgments convicting an employer for pay discrimination based on sex. This ensures that CITE maintains a comprehensive record of legal outcomes and can use this information to inform its monitoring and policy development efforts. The law also protects employees from retaliatory actions, deeming dismissals or other sanctions abusive if they occur within one year of a request for CITE's opinion, or invalid if they are a direct consequence of rejecting or refusing to submit to pay discrimination.

Relationship to Other Laws

Law no. 60/2018 on Equal Pay does not operate in isolation but is deeply integrated with and builds upon existing Portuguese labor legislation and broader legal principles. It explicitly amends three other key legislative diplomas: Law no. 10/2001, of May 21, which established an annual report on equal opportunities between men and women; Law no. 105/2009, of September 14, which regulates and amends the Labor Code; and Decree-Law no. 76/2012, of March 26, which approved the organic structure of the Commission for Equality in Labour and Employment (CITE). These amendments ensure that the new equal pay measures are seamlessly incorporated into the existing legal framework, enhancing and strengthening the overall commitment to gender equality in employment.

The law's provisions are intrinsically linked to the Portuguese Labor Code (Código do Trabalho). Article 24 of the Labor Code already guarantees the right to equal opportunities and equal treatment for all employees and job candidates, explicitly prohibiting discrimination based on gender, particularly concerning pay. Law 60/2018 operationalizes and reinforces this fundamental principle by introducing concrete mechanisms for pay transparency, reporting, and enforcement. For instance, the definition of "remuneration" in Law 60/2018 references Article 260(1)(a) to (d) of the Labor Code, ensuring a consistent understanding of what constitutes compensation. Furthermore, the requirement for employers to maintain a transparent remuneration policy based on objective criteria aligns with Article 31 of the Labor Code, which outlines principles for determining remuneration.

In cases of alleged pay discrimination, Law 60/2018 interacts directly with Article 25(5) of the Labor Code, establishing a presumption of discrimination for unjustified pay differences and placing the burden of proof on the employer to demonstrate objective justification. The enforcement and penalty regime also draws from the Labor Code, with violations constituting serious administrative offenses punishable by fines and other sanctions as stipulated in the Code, such as the deprivation of the right to participate in public tenders (Article 562 of the Labor Code). This interconnectedness ensures that Law 60/2018 acts as a specialized and complementary layer of protection within the broader framework of Portuguese labor law, providing specific tools to address the unique challenges of gender pay inequality while leveraging existing legal structures and enforcement mechanisms.

International Context

Law no. 60/2018 on Equal Pay in Portugal is deeply embedded within a broader international and European legal framework, reflecting Portugal's commitments to global and regional standards on gender equality and non-discrimination. At the European level, the law aligns with the principles enshrined in Article 157 of the Treaty on the Functioning of the European Union (TFEU), which consecrates the principle of equal pay for male and female employees performing equal work. This foundational EU principle has driven legislative efforts across member states, including Portugal, to address the gender pay gap. The Portuguese law anticipates and complements the forthcoming EU Pay Transparency Directive (Directive 2023/970), which will introduce more stringent and harmonized requirements across the Union, such as mandatory salary range disclosure and enhanced reporting obligations. While Law 60/2018 already incorporates many elements of pay transparency and reporting, the EU Directive will necessitate further adjustments, particularly for larger employers, to ensure full compliance with the evolving European standards.

Globally, Portugal's Law 60/2018 is consistent with the core principles of the International Labour Organization (ILO) Conventions, particularly the Equal Remuneration Convention, 1951 (No. 100), and the Discrimination (Employment and Occupation) Convention, 1958 (No. 111), both of which Portugal has ratified. Convention No. 100 specifically calls for equal remuneration for men and women workers for work of equal value, a principle directly addressed and operationalized by the Portuguese law. Convention No. 111 aims to promote equality of opportunity and treatment in employment and occupation, prohibiting discrimination on various grounds, including sex. Portugal's membership in the Equal Pay International Coalition (EPIC) since 2019, an initiative launched by the ILO, UN Women, and OECD, further demonstrates its commitment to accelerating progress towards equal pay. This international engagement provides a platform for peer-to-peer exchanges, identification of good practices, and improved data collection, all of which can inform and strengthen the implementation of national legislation like Law 60/2018. The law's emphasis on objective job evaluation criteria and transparent remuneration policies directly reflects the spirit and requirements of these international instruments, aiming to eliminate systemic biases that contribute to the gender pay gap.

Implementation Timeline

Compliance Checklist

Sources and References