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Portugal Passes Law Designed to Close Gender Pay Gap

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Portugal has passed legislation that addresses its significant gender pay gap in both private and public organizations. The legislation will take effect on Feb. 21 to promote equal pay in a nation that’s unadjusted gender pay gap is 17.5%.

Under the new law, all companies are required to have a transparent compensation policy based on an objective evaluation of employee jobs, which accounts for differences related to productivity, merit pay, attendance record and seniority.

Further, companies must use annually updated data from the labor authority to calculate their gender pay gap. Employers with 250 or more employees must submit an annual assessment of their gender pay gap, an action plan for eliminating the gap during the coming year, and a report on their progress in fulfilling the previous year’s plan. The assessment and plan must be submitted within 120 days of the labor authority’s publication of the pay gap data. In the annual progress report, organizations must set out justified salary differences and the reduction of unjustified pay gaps. Gender pay differences that are not corrected or justified will be presumed to be discriminatory.

“Portugal’s new law goes a step further than the United Kingdom. In the UK, companies are required to disclose the difference between salary and bonus for all male and female employees, and they are encouraged to publish an action plan to address any inequities, but it isn’t mandatory,” said Melissa Murdock, director of external affairs at WorldatWork, adding the Portuguese legislation is one more example of policy makers trying to figure out what laws and policies will be effective to force companies to address the gender pay gap.”

Portuguese employers with at least 50 employees will be required to assess gender pay gaps and publish an action plan three years after the law goes into effect. Trade unions and worker representatives can ask a government committee to review specific allegations of gender pay discrimination. In such cases, employers would have to provide information to the committee within strict timeframes. The committee’s report will be binding and organizations found to have discriminated must set out remedial steps.

Companies will face penalties for noncompliance and a two-year ban on tendering for public contracts.

About the Author

Brett Christie is a staff writer at WorldatWork. 

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