Rosa Acevedo
LABOUR AND SOCIAL SECURITY DIVISION
European legislation on pay transparency is redefining the rules governing the management of remuneration policies. Traditionally, remuneration has been one of the most closely guarded areas of employment relationships: salaries were negotiated behind closed doors, protected by confidentiality clauses and often determined by inertia or discretion rather than by objective, verifiable criteria. Directive (EU) 2023/970 on pay transparency and equal pay for women and men is set to put an end to this lack of transparency.
The deadline for Spain to transpose the Directive into national law expired on 7 June 2026. Formal transposition has not yet taken place, placing Spain technically in breach vis-à-vis Brussels and exposing it to the risk of infringement proceedings. This administrative delay, however, should not distract from what matters: the obligations imposed by the Directive are substantial, and companies that have not yet begun preparing are already losing valuable time.
Spain is not starting from scratch. Organic Law 3/2007, Royal Decree-Law 6/2019 and Royal Decree 902/2020 already require pay registers, pay audits and equality plans for companies with more than 50 employees, as reinforced by Law 15/2022 on equal treatment. Nevertheless, the Directive significantly raises the bar. Whereas the current Spanish framework focuses primarily on internal transparency, the European legislation introduces transparency requirements before recruitment, throughout the employment relationship and, for companies exceeding certain thresholds, through external reporting.
Among the most significant new requirements is the obligation, during the recruitment process, to inform candidates, before any interview takes place, of the initial remuneration or salary range for the position and of the applicable collective bargaining agreement provisions, based on objective, gender-neutral criteria. Employers will also be prohibited from asking candidates about their salary history in previous employment, a practice that perpetuates existing pay disparities, particularly to the detriment of women.
Likewise, during the employment relationship, employees will have the right to request and receive written information on their individual pay level and on the average pay levels, broken down by sex, for employees performing the same work or work of equal value. Employers will be required to publish the criteria used to determine remuneration and pay progression, remind employees of this right annually, and will not be permitted to prevent employees from disclosing their salary. This will require a review of the salary confidentiality clauses commonly used in many sectors.
One of the most innovative mechanisms is the 5% threshold: where there is an average pay difference of 5% or more between women and men, if the company cannot justify the difference on the basis of gender-neutral criteria and fails to remedy it within the following six months, it will be required to take corrective measures. Companies with more than 100 employees will have to carry out a joint pay assessment together with employee representatives.
This is accompanied by an obligation to report externally. Companies with more than 250 employees will have to report annually to the competent authority on their gender pay gap from 7 June 2027 onwards. Companies with between 150 and 249 employees will be subject to the same deadline but will report every three years. Companies with between 100 and 149 employees will be required to report from 7 June 2031, also on a three-yearly basis. Companies with fewer than 100 employees will be exempt from the reporting requirement, although they will remain subject to the other transparency obligations. This information may also be made publicly available.
Particular attention should be paid to the reversal of the burden of proof in pay discrimination litigation. Employees will no longer be responsible for proving discrimination; instead, employers will have to demonstrate, through objective and traceable documentation, that they have complied with the principles of equal pay and pay transparency. Employers unable to substantiate their compliance will bear the consequences, including compensation providing full recovery of arrears and benefits, as well as effective, proportionate and dissuasive penalties. Spain already classifies breaches relating to equality as serious infringements, carrying fines of between €751 and €7,500. This regime is likely to be strengthened by the future transposing legislation.
The Directive also introduces, for the first time in this area, intersectional discrimination — that resulting from the combination of gender with other factors, such as ethnicity or sexual orientation — which will require diversity policies to broaden their focus. The legislation also contains specific provisions to take into account the needs of workers with disabilities.
Against this backdrop, and even though Spanish transposition remains pending, companies would be well advised to review their recruitment processes now, removing references to salary history and establishing objective salary ranges; audit their remuneration systems to document that any differences are based on objective, gender-neutral criteria; identify and proactively address potential pay gaps; and adapt employment contracts, internal policies and codes of ethics to the new principles of pay transparency and equal pay.
The real challenge posed by Directive (EU) 2023/970 is not technical but cultural: from now on, differences in remuneration will have to be capable of being explained.
