Directive (EU) 2023/970 on pay transparency

The Directive (EU) 2023/970, adopted on 10 May 2023, is a milestone in European regulation on pay equality, significantly strengthening mechanisms to ensure equal pay for equal work or work of equal value between women and men. Its aim is to introduce a uniform and demanding framework for pay transparency and internal control that allows for the identification, prevention, and correction of possible unjustified pay differences.

Currently, Spain has not yet formally started the transposition of this Directive, although the deadline set by the European Union expires on 7 June 2026. This delay is not unique to Spain, as most member states have also made little progress in incorporating it into national legislation. However, Spanish legislation is already relatively aligned with some of the requirements of the Directive due to the prior implementation of Royal Decree 902/2020 on pay equality, as well as the obligation to have equality plans and pay audits in companies with more than 50 employees.

Main novelties of Directive (EU) 2023/970

1. Pay transparency before hiring

One of the main novelties of the Directive is the detailed regulation of pay transparency before hiring. Once transposed, companies will have to:

• Publish the remuneration or salary range in all job offers, avoiding opaque practices that may favour inequalities or unbalanced negotiations.
• Refrain from requesting information about candidates' salary history, a practice that is prohibited to avoid the perpetuation of previous salary discrimination.
• Ensure that job descriptions and selection processes are gender-neutral, reinforcing obligations already present in Spanish legislation.

2. Enhanced rights during the employment relationship

The Directive applies not only at the time of hiring, but also extends workers' rights to information throughout the employment relationship. Key obligations include:

• The employer's duty to make available to staff the criteria used to determine remuneration and salary progression, which must be objective, transparent, and gender-neutral.
• The recognition of the individual right to access salary averages broken down by gender for equal or work of equal value, as well as the evaluation criteria applied to these positions.

Spain already has similar obligations regarding salary records and pay audits, but the Directive expands the scope of the right to information, particularly regarding the accuracy and accessibility of data.

3. Periodic reports on the pay gap

One of the most important obligations for companies will be to prepare periodic reports on the pay gap according to the size of their workforce:

• Companies with 250 or more employees: annual report.
• Companies with between 100 and 249 employees: report every three years.

Although Spain already has the obligation for an annual pay record, these reports will require more rigorous systematisation and the presentation of additional metrics aimed at detecting structural inequalities.

4. Enhanced obligations for pay gaps ≥5%

The Directive introduces a particularly significant control mechanism: if a pay gap of 5% or more is detected between women and men in the same professional category and the company cannot justify this difference with objective and gender-neutral criteria, it must conduct a joint assessment of remuneration with the legal representatives of the workers.

This assessment is not limited to describing the salary difference, but includes:

• A detailed diagnosis by professional category.
• Identification of the causes of the gap.
• A review of the previous measures taken by the company.
• The formulation of corrective and follow-up measures.

The 5% threshold represents a significant change from the current threshold in Spain (25% for reinforced justification of the remuneration record), which will lead to greater internal control and more precise management of remuneration data.

5. Equal value of work and evaluation criteria

The Directive insists on the need for job classification systems to assess the value of work using objective, transparent, and non-discriminatory criteria. This is particularly relevant to avoid traditionally undervalued factors, such as interpersonal skills or care tasks, from perpetuating hidden pay gaps.

In Spain, companies with an Equality Plan have already had to apply job evaluation criteria according to RD 902/2020, so this requirement is already partially integrated into business practice. The European Commission will publish specific guidelines on this analysis, but in the meantime, the Guide for the use of the Job Evaluation Tool from the Ministry of Labour can continue to be used, which is widely adopted for pay audits.

Conclusion

The Directive (EU) 2023/970 represents a substantial evolution of the European legal framework on pay equality. Although Spain has advanced legislation, the Directive introduces additional obligations, particularly regarding pre-contractual transparency, information rights, and the management of pay gaps of 5%, which will require internal adjustments by many companies. Anticipation and preparation are essential to ensure regulatory compliance before June 2026 and to strengthen pay equality policies in a structural and sustainable manner.

Article written by the Labour Law Department of ECIJA Madrid.