The upcoming implementation in Spain of Directive (EU) 2023/970 on pay transparency will mark a turning point in how companies manage, communicate, and justify salaries. This is not merely a new formal obligation but a profound shift in pay culture, aimed at ensuring equal pay between women and men through much stricter transparency and control rules.
The directive is based on a clear idea: salary opacity fosters inequality. It introduces individual rights to information, new corporate obligations, and a significant sanctioning regime. The deadline for entry into force is June 7, 2026.
Key obligations for companies
1. Pay transparency prior to employment: changes in recruitment and selection
One of the most visible impacts will be on selection processes, which must follow these guidelines:
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Job descriptions must indicate the salary or, at minimum, the salary range of the position.
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Job advertisements and job titles must be gender-neutral.
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During the selection process, companies cannot ask applicants about their pay history in current or previous employment.
These measures aim to balance negotiating positions and enable more informed career decisions.
2. New rights for employees
Employees will have a strengthened right to access pay information. They can request the following salary information:
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Pay levels: the company’s average pay levels broken down by gender, and those of employees in positions of equal value to the role of the requesting employee.
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Pay criteria: the criteria used to determine employee pay and career progression.
Additionally, salary confidentiality clauses that prevent employees from sharing pay information will effectively be eliminated.
3. Recording and analysis of the pay gap
Companies must maintain clear and structured pay information to detect inequalities.
If a gap greater than 5% without objective justification is detected, a joint pay assessment with the employee representatives is mandatory, including:
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Review of professional classification systems
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Analysis of categories and positions of equal value
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Identification of the causes of differences
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Corrective action plan
4. Pay gap reporting obligations and timeline by company size
Timeline by company size:
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Companies with over 250 employees: by June 7, 2027
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Companies with 150–249 employees: by June 7, 2028
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Companies with 100–149 employees: by June 7, 2031
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Companies with fewer than 100 employees: no periodic reporting obligation, but must comply with transparency in recruitment and individual information rights
Periodic reporting obligations by company size:
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Companies with more than 250 employees: annually
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Companies with 100–249 employees: every three years
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Companies with fewer than 100 employees: no periodic reporting required, but must guarantee employees’ individual rights to access pay information
5. Salary bands alone are not enough
Many companies already use salary ranges, but this does not guarantee compliance.
It is essential to:
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Accurately evaluate positions of equal value
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Define objective criteria for progression and promotion
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Ensure that pay differences within the same band are justified
6. Sanctioning regime: fines and consequences for non-compliance
Non-compliance with pay transparency rules carries a progressive sanctioning system that can significantly impact company finances.
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Fines can range from €626 to €225,018, depending on the severity of the violation. The highest fines apply in cases of deliberate or repeated pay discrimination.
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Companies must also compensate employees who suffered gender-based pay discrimination, including back pay and any other economic losses resulting from the discriminatory situation.
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Non-compliant companies may also lose access to public subsidies, grants, or incentives, and participation in public procurement procedures may be suspended.
A crucial aspect of the directive is the reversal of the burden of proof: it is no longer the employee’s responsibility to prove pay discrimination; instead, the company must demonstrate that pay differences are based on objective and gender-neutral criteria.
What should companies be doing now?
Before the new law comes into force, it is recommended to:
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Conduct an internal pay audit
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Review job evaluation and professional classification
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Define consistent and justified salary bands
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Document pay setting and review criteria
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Adapt job offers and recruitment protocols
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Train HR staff and middle management
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Prepare an internal communication strategy
At Bové Montero’s labor department, we can help companies comply with the new regulations and reduce legal risks.