It is a relatively short piece of legislation (11 articles and nine provisions on just six pages) which introduces significant new rules aimed at ensuring pay transparency and equal pay for equal work at companies. Thanks to its short length and, at times, vague wording, it is a law that raises a number of questions that will need to be clarified as its implementation by Spanish companies becomes widespread and takes root.
Royal Decree 902/2020 of October 13, 2020 on equal pay for women and men (RD 902/2020), which was published in the Official State Gazette of October 13, 2020, took effect on Wednesday, April 14, 2021.
RD 902/2020 lays down specific measures to carry into effect the right to equal treatment and to nondiscrimination between men and women in compensation matters. Specifically, it establishes the instruments that enable companies to comply with the principle of equal pay for equal work set out in article 28.1 of Legislative Royal Decree 2/2015, of October 23, 2015, approving the revised Workers’ Statute (“WS”).
To this end, RD 902/2020 states that all companies are subject to the pay transparency principle, which is defined as the principle that, when applied to the different aspects that determine a worker’s pay and its different elements, makes it possible to obtain sufficient and significant information on the value that is attributed to such pay.
The application of this principle in practice has given rise to three instruments:
- Job evaluations.
- Pay registers.
- Pay audits.
Before summarizing each of these instruments, we should note that they are all aimed at assisting with the analysis and assessment of whether a company complies with the equal pay for equal work principle defined in article 28.1 of the WS.
The starting point for the other two instruments is the job evaluation. RD 902/2020 provides that a job will have the same value as another where the nature of the functions and tasks actually entrusted, the academic, professional or training requirements for the job, the factors strictly related to its performance and the working conditions in which the job is done are equivalent.
Although RD 902/2020 fleshes this out slightly, the Spanish legislature undertakes to approve a procedure for evaluating jobs before October 14, 2021, by means of an order issued on the joint proposal of the heads of the Ministry of Labor and Social Economy and of the Ministry of Equality. For the time being, this procedure has not been regulated.
Lastly, when it comes to this job evaluation, RD 902/2020 calls on the negotiating committees of collective labor agreements to ensure that the factors and conditions in each of the occupational groups and levels respect the equal pay for equal work principle.
Second, we need to take a look at the pay register. This instrument should not be new, since it has been mandatory for all companies since March 2019, as a result of the entry into force of Royal Decree-Law 6/2019, of March 1, 2019, on urgent measures to ensure equal treatment and opportunities between men and women as regards employment and occupation.
The pay register will cover the entire workforce, including executive personnel and senior officers, as RD 902/2020 makes a point of noting. However, on this point, we should note that article 2 of RD 902/2020 states that it does not apply to special senior management employment relationships (just as the WS does not apply to them either). As a general rule, the reference period for the register will be the calendar year, without prejudice to any amendments which may be necessary in the event of any substantial change in any of the elements registered.
As for the contents of the register, it must include the average (and median) values of wages, pay supplements and nonsalary items received by the workforce, broken down by gender and distributed by occupational groups, occupational categories, or equal jobs or jobs of equal value. RD 902/2020 does not clarify, however, what to do in cases where, for example, the details that must be supplied are easily identifiable because there is only one person of a given gender in the category in question.
This register, according to the terms of RD 902/2020, can be accessed by workers, either through their statutory representatives or, in the absence thereof, directly.
The workers’ statutory representatives also participate in setting up the pay register, so they must be consulted prior to its creation, with at least ten days’ advance notice.
Where in a company with at least fifty workers, the average pay to workers of one gender is higher than the pay to those of the other gender by 25% or more, the register must include a justification stating that it stems from reasons unrelated to the gender of the workers.
Finally, the third instrument regulated by RD 902/2020 for the implementation of the pay transparency principle is the pay audit. This audit is mandatory only for companies which are required to draw up a gender equality plan, of which the pay audit forms part.
The purpose of the pay audit is to obtain the information necessary to ascertain whether the company’s remuneration system applies effectively, across the board and comprehensively, the principle of equality between women and men in relation to pay.
It must also make it possible to define what is required in order to avoid, correct and prevent existing or potential obstacles and difficulties with a view to guaranteeing gender equality in pay and ensuring that the remuneration system is transparent and is properly monitored.
The term for which the pay audit is valid may be equal to or shorter than the term of the gender equality plan of which it forms part. The term of a gender equality plan is limited to a maximum of four years.
The pay audit, in accordance with its aim, imposes two obligations on companies: On the one hand, the obligation to undertake a pay diagnosis which must be based, necessarily, on an evaluation of jobs valued in accordance with the provisions of RD 902/2020 in relation to remuneration for jobs of equal value and systems of promotion. The evaluation factors must be considered objectively and must necessarily be linked strictly to the performance of the work itself.
Similarly, such diagnosis is required to detect and define the factors which give rise to pay disparities, such as, for example, possible deficiencies or inequalities in the design or utilization of work-life balance and shared responsibility measures adopted by the company, or difficulties that workers may face in relation to their professional or financial promotion as a result of other factors, such as steps taken by the employer at its discretion in relation to mobility, or unjustified demands in terms of availability.
On the other hand, the audit is also required to contain, as a result of such diagnosis, a plan of action for the correction of any pay inequalities detected.
In short, it is clear that when it comes to gender equity and, to the question of equal pay specifically, the principle of transparency has firmly taken root.
Garrigues Employment & Labor Law Department