Spain: Draft Royal Decree on Pay Transparency (Transposing EU Directive 2023/970)

Overview

Spain is in the process of transposing Directive (EU) 2023/970 on pay transparency into its national law through a Draft Royal Decree. This legislative initiative, officially titled "Proyecto de Real Decreto sobre la aplicación del principio de igualdad de retribución por un mismo trabajo o un trabajo de igual valor entre hombres y mujeres a través de medidas de transparencia retributiva y mecanismos para su efectivo cumplimiento," aims to reinforce pay transparency and equal pay rights in the workplace. The Ministry of Labour and Social Economy (MITES) opened a public consultation on this draft in 2026, which ran from April 24 to May 8, 2026. The European Union mandates that member states transpose Directive (EU) 2023/970 by June 7, 2026.

This new Royal Decree will introduce additional obligations concerning pay transparency, audits, and reporting, building upon Spain's existing framework for pay equality. Spain already has a relatively developed legal framework, including Real Decreto 902/2020 on equal pay and Real Decreto 901/2020 on equality plans. The forthcoming decree is designed to complement and partially amend this 2020 framework, addressing areas where current rules do not fully meet the Directive's standards. The core objective is to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women, making inequalities visible and easier to challenge.

Scope and Coverage

The EU Directive (EU) 2023/970 applies to both public and private employers and encompasses all workers with an employment contract or relationship. This includes part-time workers, those on fixed-term contracts, temporary agency workers, managers, and, where criteria of employment are met, platform workers.

Spain's existing Real Decreto 902/2020 already mandates a pay register for all companies, irrespective of their size. Pay audits, under the current framework, are obligatory for companies required to have equality plans, which generally applies to those with 50 or more employees. The new Royal Decree is expected to broaden workers' rights to information and impose stricter duties on employers, thereby expanding the scope of existing obligations.

Key Obligations

The Draft Royal Decree, transposing Directive (EU) 2023/970, will introduce several new and reinforced obligations for employers:

• **Transparency Before Recruitment:** Employers will be required to provide information on the initial remuneration or salary range for a position in job advertisements or before the interview.
• **Prohibition of Salary History Inquiries:** Companies will be prohibited from asking candidates about their previous salary history, aiming to prevent the perpetuation of prior pay discrimination.
• **Access to Pay Information:** Workers will have enhanced rights to access individual and aggregate pay information.
• **Systematic Reporting of Gender Pay Gaps:** There will be new obligations for systematic and periodic reporting on gender pay gaps.
• **Objective Job Classification:** The decree will require the use of objective, gender-neutral, and transparent systems for job classification and valuation.
• **Enhanced Rights During Employment:** The Directive also strengthens rights during the employment relationship, allowing employees to request and receive detailed pay information.
• **Clearer Consequences for Non-Compliance:** The new regulation is expected to establish clearer consequences for non-compliance with pay transparency and equality provisions.

Pay Transparency Specifics

The Draft Royal Decree will significantly enhance pay transparency throughout the employment lifecycle. Prior to recruitment, companies must include the initial remuneration or salary band for the position in job offers or communicate it before the first interview. Furthermore, employers will be explicitly prohibited from inquiring about a candidate's salary history.

During the employment relationship, employees will gain the right to request and receive information on their individual pay level and the average pay levels, disaggregated by sex, for equivalent professional categories or work of equal value. This information must be provided in writing within a maximum of two months from the date of the request. This builds upon the existing Real Decreto 902/2020, which already requires all companies to maintain a pay register detailing average and median remuneration, disaggregated by sex, professional group, category, and type of remuneration.

Reporting and Pay Gap Analysis

The new regulation will introduce systematic and periodic reporting obligations regarding gender pay gaps. Specifically, companies with 150 or more employees will be required to provide standardized information on their pay gap by June 7, 2027, using data from the previous year. Subsequently, companies with 250 or more employees will report annually, while those with 150 to 249 employees will report every three years. Companies with 100 to 149 employees will submit their first report by June 7, 2031, and then every three years.

A crucial element of the new framework is the requirement for a joint pay assessment if a pay gap of 5% or more is detected between men and women in the same professional category, and this difference cannot be justified by objective and gender-neutral criteria. This assessment, conducted in cooperation with workers' legal representatives, will involve a detailed diagnosis, identification of the causes of the gap, and a review of previous measures taken by the company. This significantly lowers the threshold for mandatory justification compared to the existing Real Decreto 902/2020, which requires justification only if the pay gap exceeds 25%.

Enforcement and Penalties

The Draft Royal Decree is expected to introduce clearer consequences for non-compliance with the new pay transparency and equality provisions. A significant change brought by the Directive (EU) 2023/970, and thus expected in the Spanish transposition, is the reversal of the burden of proof in pay discrimination cases. This means that if a worker can establish a prima facie case of pay discrimination, the employer will bear the burden of proving that the pay difference is based on objective and gender-neutral factors.

The application of this Directive will substantially increase business obligations and associated legal risks, particularly concerning salary comparison between workers, the justification of pay differences, and the burden of proof in potential conflicts. Employers will need to be prepared for heightened scrutiny and potential legal challenges if pay disparities cannot be objectively justified.

Implementation Timeline

The deadline for all EU member states, including Spain, to transpose Directive (EU) 2023/970 into their national law is June 7, 2026. The public consultation for Spain's Draft Royal Decree was conducted from April 24 to May 8, 2026. While the specific effective date of the Royal Decree is yet to be determined, the Spanish government is working to meet the transposition deadline.

Practical Implications for Employers

The new Royal Decree will necessitate significant adjustments for employers in Spain. Companies will be required to review and potentially redesign their existing legal tools and instruments related to pay structures, internal transparency, vacancy management, pay audits, data protection, and complaint and redress procedures. It will be crucial for businesses to define and professionalize their salary bands and ensure objective job valuation processes.

Anticipation and thorough preparation are essential to ensure regulatory compliance before the Directive's transposition deadline. Employers should be aware of the increased legal risks associated with remuneration management, particularly regarding salary comparisons, the justification of pay differences, and the reversal of the burden of proof in discrimination cases. Proactive measures to identify and address potential pay gaps will be vital to mitigate these risks and foster a more equitable workplace.

Sources and References

• https://www.mites.gob.es/es/participacionPublica/tramites/consultaPublica/2026/transparencia-retributiva/index.htm
• https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023L0970
• Real Decreto 901/2020, de 13 de octubre, por el que se regulan los planes de igualdad y su registro.
• Real Decreto 902/2020, de 13 de octubre, de igualdad retributiva entre mujeres y hombres.
• Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 on strengthening the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.
• Public consultation on the Draft Royal Decree by the Ministry of Labour and Social Economy.
• Information on the Directive's implications for companies.