The 2023 directive on equal pay for men and women contains a series of pay transparency measures that Member States will have to adopt. Although Spanish legislation already contains measures in this subject, the directive goes further. It is therefore advisable to prepare for the regulatory changes that will come with its transposition into Spanish law. Below we analyze the main novelties.

On May 17, 2023, the Official Journal of the European Union published Directive 2023/970 of the European Parliament and of the Council of May 10, 2023, which strengthens the application of the principle of equal pay for equal work or work of equal value for men and women through pay transparency measures and mechanisms for its enforcement (more information here). This is a matter on which there is already regulation in Spain.

Royal Decree 902/2020, of October 13, on equal pay for men and women, developed a set of measures for pay transparency (more information here and here).

However, although we could say that Spain has already made part of the way set by the European Union, the directive goes further and, to fully comply with it, major legislative changes will be necessary, which will entail an important turn in the management of the remuneration policy in companies. The most innovative measures are highlighted below:

  • Pre-employment compensation transparency. Companies (i) will have to provide information on the initial salary or salary band that will apply to the job applicant, indicating the applicable provisions of the collective bargaining agreement that affect the initial salary; and (ii) may not ask job applicants about their salary history or the salary they receive at the time of the selection process (as has been common practice up to now).
  • Transparency in compensation setting and pay progression policies. Companies will have to make available to their personnel the criteria (objective and gender-neutral) used to determine pay, pay levels, and pay progression.
  • Individualized information on the criteria for determining pay, pay levels and pay progression. Employees may request companies to provide information on their individual pay levels and on average pay levels, broken down by gender, for categories of employees performing the same work or work of equal value to their own.
  • Information on the pay gap between male and female employees. Companies with more than 100 employees, after consulting with workers’ representatives, must provide information on the gender pay gap; the gender pay gap in the complementary or variable components; the median gender pay gap; the median gender pay gap in supplementary or variable components; the proportion of female and male employees receiving supplements or variables; the proportion in each quartile of the pay band; and the gender pay gap, by category of employee, broken down by regular base salary or wage and by supplementary or variable components. Companies will have to provide this information to the labor authority, which will publish it, without prejudice to the disclosure made by the company on its website or by other means.
  • Joint remuneration evaluation. Companies with more than 100 employees must carry out a joint remuneration evaluation with the workers’ representatives when: (i) there is a difference in the average remuneration level of men and women of at least 5% in any category of employees; (ii) the company has not justified this difference in the average remuneration level on the basis of objective and gender-neutral criteria; and (iii) the unjustified difference in the average remuneration level has not been corrected in the six months following the date of submission of the information on remuneration.

The directive also establishes avenues for effective compliance and redress for employees who have been harmed by companies’ failure to comply with their obligations in relation to pay transparency.

In view of the measures included in the directive and current Spanish legislation, significant changes are expected in the latter in the coming years (the deadline for transposition of the directive ends on June 7, 2026), so it is advisable to start preparing for effective compliance with future Spanish legislation on pay transparency.

Marta Castro Rodríguez