Reducing the wage gap continues to be one of the European Union’s strategic objectives. To this end, on May 10, 2023, Directive 2023/970 was issued to reinforce the principle of equal pay between men and women who perform the same work or work of equal value.

The new European legislation strengthens the social aspect of pay equity and requires employers to provide salary transparency. This obligation will require the adaptation of Spanish regulations to incorporate the Directive’s obligations into Spanish law. Specifically, the Directive places a central focus on pay transparency as a tool to eradicate wage discrimination. Therefore, among the approved measures, companies will be required to disclose salary information both prior to employment and once the employee becomes part of the organization.

The following describes employers’ new obligations:

1. In the selection phase, the employer must ensure that the salary information for the offered position is public by disclosing the specific salary or salary levels in the job posting. Informing a job applicant about the position’s salary privately during a job interview would not suffice to comply with the regulation.

Additionally, in this phase, candidates cannot be asked about the salary they currently receive or have received in the past. This is a provision of particular impact because the selection process is a point that allows applicants to ask about the salary they aspire to receive, and where, unconsciously, gender biases can be perpetuated for candidates coming from a starting situation with significant pay differences.

2. During the term of the contract, the Directive requires employers also to make available to the workforce the criteria used to determine the remuneration of employees, their salary levels, and pay progression, which will lead companies to review their pay policies.

3. The obligation for greater transparency and depth comes with a new right that emerges in favor of workers, and we can undoubtedly affirm that it is one of the most relevant measures introduced by the Directive. Specifically, companies will be required to provide workers, within a maximum period of two months from their request, with individual information regarding their salary level and the average salary levels, broken down by gender, of those who perform the same job or a job of equal value.

Note that current legislation only requires providing information to workers in the absence of union or legal representation, and such information is limited to the wage differential percentage. However, this individual right is expanded and appears now to be an independent right, in which the Directive places workers first, regardless of the salary information that the individual or union representative has the right to know.

Company management teams will be the ones to assume the responsibility of confirming the accuracy of the information provided.

4. The gender pay gap is where the Directive focuses most of its efforts, which currently stands at around 25% in Spain, and which the Directive reduces to 5%, which will have a clear impact. Thus, when a company has a gender pay gap of 5% or more in any worker category and cannot justify it based on objective and gender-neutral criteria, a joint pay evaluation with the legal representation of the workers will be required.

5. Another key measure is the obligation to publish the gender pay gap, broken down to the level of professional categories or positions of equal value. This aspect of the Directive reveals the marked social character of the norm, going beyond the company's scope and generating an expansive effect by requiring the publication of information that has so far been carefully guarded within each company.

This measure will require companies to report annual data on the pay gap to equality promotion bodies, so that this information is public, easy to access, and allows for comparison among employers, sectors, and regions of Spain. This can undoubtedly act as a natural corrective element for the gap, beyond any coercive measures that the Labor Inspectorate may impose through sanctions.

Therefore, the publicity of the data that companies will be required to disclose represents an exercise in salary transparency that was previously inconceivable. This requirement will have, as we anticipated, an indirect reputational effect that will motivate companies to reduce the gap. At the same time, this requirement may have some negative effect on competitiveness, to the extent that salaries become known.

6. Finally, alongside the new measures for access to information, the Directive establishes anti-retaliation protections for those who believe they have been discriminated against and want to take legal action seeking redress.

In Spain, as in the rest of Europe, there are not many claims regarding wage discrimination, due to, among other reasons, the difficulties in obtaining comparable salary information, as well as the evidentiary difficulties of the process. To address this situation, the Directive establishes the reversal of the burden of proof, so that companies accused of pay discrimination must demonstrate that such discrimination has not occurred in relation to pay. This reversal will occur when the reported facts allow for the presumption of discrimination, or when the accused company has not complied with the direct information obligations imposed by the regulation regarding pay policy and the pay gap.

As a result of these claims, liable companies not only face the restitution of the wages that should have been paid before the pay discrimination occurred, but they must also face other uncapped damages that create a true deterrent element, which the courts are obliged to impose.

The measures being introduced are of undeniable significance, and despite the June 2026 deadline for the transposition of the Directive in Spain, it is highly advisable for employers to conduct a self-check now to assess their situation regarding the new pay equality criteria, so that there is sufficient margin to act on them before the time comes to disclose.

Thus, companies will need to review their pay policies because they will have to explain why they pay their employees as they do. At the same time, many will intensify efforts to reduce the gap to below 5% to avoid having to conduct a joint pay assessment.

In this scenario, the questions each company should ask are: Do I have a pay policy? Is it based on neutral criteria? Is my gap below 5% in positions of equal value? Depending on the answers, a strategy for reviewing the pay policy should be drawn up, which, with legal certainty, leads the company to adjust its pay structures in such a way that, while reducing the pay gap, also aligns the pay policy with corporate objectives and values, as well as serves as a tool for attracting and retaining talent.