Pay transparency will become one of the major labour challenges for companies in 2026.
Directive (EU) 2023/970 strengthens the application of the principle of equal pay between women and men for the same work or work of equal value. As a result, it introduces new information, justification and control obligations regarding companies’ pay policies.
Member States must transpose it by 7 June 2026. Therefore, its practical impact is getting closer.
Although Spain already has obligations regarding pay records and salary audits, the Directive raises the level of requirements. For this reason, in this article we explain all the key details of the new pay transparency regulations.
Pay transparency from the recruitment process
One of the most relevant changes will affect access to employment. Companies must inform candidates about the initial remuneration or the pay range for the position before hiring. This information may be provided before the contract is signed, but it must allow for informed salary negotiation.
In addition, it should be noted that the Directive prohibits asking candidates about their pay history in current or previous jobs.
In practice, this requires companies to review their recruitment processes, job offers, internal protocols and existing pay bands. Pay policy is no longer intended to remain a purely internal matter. Instead, it will start having an impact from the first contact with the candidate.
Pay records: from a formal obligation to a control tool
The Directive is also strengthening employees’ right to information. This means that employees will be able to request information about their individual pay level and the average pay levels, broken down by sex, of workers performing the same work or work of equal value.
Pay gap of at least 5%: when companies will need to justify and correct it
For larger companies, the Directive has introduced specific obligations depending on the number of employees:
- Companies with 250 or more employees should report on their gender pay gap before 7 June 2027, and every year thereafter.
- Companies with 150 to 249 employees should also do so from 2027, but every three years.
- For companies with 100 to 149 employees, the obligation will begin from 7 June 2031 and will be repeated every three years.
If the information reveals an average pay difference of at least 5% in a category of workers, and the company cannot justify it based on objective and gender-neutral criteria, a joint pay assessment with workers’ representatives will be required.
Burden of proof and penalties: the risk of not having a documented pay policy
The Directive does not only introduce new information obligations. It also strengthens the consequences for companies that cannot properly justify their pay decisions.
Lack of transparency can become a major issue for the company in the event of a claim. If there is insufficient documentation regarding pay criteria or other relevant aspects, it will be more difficult to prove that there has been no pay discrimination.
In addition, the Directive provides that workers may claim full compensation when the principle of equal pay has been breached. It also requires Member States to establish an effective penalty regime.
In practice, the risk is not only having a pay gap but also being unable to explain objectively why it exists.
What companies should start reviewing
This new framework affects both public and private companies. In practice, it also affects international groups and non-resident companies with employees in Spain or subject to labour obligations within the European Union.
For this reason, it is advisable to anticipate the change and review:
- Pay bands and promotion criteria.
- Recruitment processes and job offers.
- Annual pay records.
- Fixed and variable remuneration policies.
- Breakdown of salary concepts in contracts and payslips.
- Professional classification criteria and work of equal value.
- Documentation available in the event of internal requests or inspections.
A fundamental change in pay management
Directive (EU) 2023/970 should not be understood only as a reporting obligation. It represents a fundamental change in the way companies will need to justify their salary decisions.
From LEIALTA’s labour department, we support companies in reviewing their pay policies, salary records and equality obligations, helping them prepare safely for this new regulatory framework.
