New Equal Pay Law

The equal pay law requires employers in Peru to evaluate and categorize jobs to ensure that men and women are being paid the same, not just for doing the same job, but also when performing different jobs if those jobs are categorized as being of equal value.

Congress unanimously passed Law No. 30709, “Law Prohibiting Pay Discrimination Between Men and Women.” Although equal pay for doing the same work has been a long-standing principle of Peruvian employment law, this law introduces the principle of equal pay for work of equal value (i.e., different jobs but classified as having equal value or “comparable worth”).

Despite Article 2.2 of the Constitution prohibiting discrimination and Peru having ratified a number of international treaties that guarantee pay equity for women, including but not limited to the  Equal Remuneration Convention (C100) and the Discrimination (Employment and Occupation) (C111), Peruvian women continue to earn 28.6 percent less than their male counterparts.

In this context, the Peruvian Congress passed the equal pay law in an attempt to close the gender gap and strengthen the legal system to protect women against wage discrimination.

The new equal pay law requires companies to do the following:

• Implement a system for objectively determining pay in the workplace (e.g., via job evaluations).
• Harmonize job categories and duties in accordance with the EPA’s provisions. The law requires those companies that do not have a job category and duties system in place to implement them.
• Inform employees about the applicable compensation policy to provide greater transparency as to how it operates.

The regulations to the new law have introduced a number of exceptions upon which employers can rely to justify differences in pay. The relevant situations include when the disparity is based on a nondiscriminatory reason, such as seniority, performance, collective bargaining, labor shortages for specific positions, cost of living, experience, education, merit, and workplace location. These factors may result in legitimate wage differences even in situations in which jobs are the same or of equal value.

The Ministry of Labor and Employment Promotion has also issued Supreme Decree No. 005-2018-TR, specifying annual equal pay law awareness actions to be carried out and confirming dates for government audits by the National Superintendency of Labor Inspection or Superintendencia Nacional de Fiscalización Laboral (SUNAFIL) (July 1, 2019, or December 1, 2019, for smaller businesses).

Comment

The new equal pay law and its supplementary rules and regulations constitute a significant evolution in Peruvian pay equity legislation that has been welcomed by many.  All businesses will be affected by the new law and may want to take action to ensure compliance.

However, the legislation does have its critics, with some complaining about what they see as gaps, ambiguities, and overlaps. Others have raised concerns about its overly broad scope, which could require employers to compare jobs that are not necessarily female-dominated, as well as the heavy burden for small businesses, which will have to comply with the equal pay law in the same way as large enterprises.

Written by Iván Blume of Rodrigo Elias & Medrano and Roger James of Ogletree Deakins