Pay Transparency Directive 2026: what it is and how it affects you

The transposition of Directive (EU) 2023/970 represents one of the most significant changes of recent years in the field of equal pay.

Although Spain already has obligations in place such as the pay register and equality plans, the new European regulation goes a step further. It not only increases pay transparency but also strengthens workers' rights and requires companies to be better able to justify their pay decisions.

The transposition deadline has already passed and, although Spain has not yet adapted its legislation, ignoring it is not an option.

What changes and why it matters

The threshold that requires companies to justify pay differences drops from 25% to 5%. Before the new European Pay Transparency Directive, Spanish regulations established that companies had to justify pay differences equal to or greater than 25% between women and men performing work of equal value, using objective, reasonable and gender-neutral criteria.

However, Directive (EU) 2023/970 introduces a new reference threshold of 5% for certain mechanisms to monitor and correct pay differences, particularly in relation to the joint pay assessments provided for in the regulation.

Although this does not automatically replace the current 25% threshold set out in Spanish regulations on the pay register, its practical implications are significant. It means that companies will have to explain, using objective criteria, even small pay differences between men and women. The challenge is no longer to detect large pay gaps, but to demonstrate how compensation decisions are made.

Transparency begins before hiring

Companies will be required to inform candidates of the position's pay range before hiring.

In addition, companies will not be able to request information about candidates' previous pay history. This change aims to prevent historical pay inequalities from being carried over from one job to the next.

More transparency for employees

Once the employment relationship has begun, workers will be able to request written information about:

• Their individual pay and how it compares with the average for those in the same position, broken down by sex.
• The criteria that determine pay and pay progression.

Finally, companies must report annually on the existence of these rights and on how to exercise them.

New reporting obligations for companies with more than 100 employees

Companies will have to provide regular information on various indicators related to the pay gap, including:

• Mean and median pay gap.
• Gap in variable pay.
• Distribution of the workforce by pay quartiles.
• Pay differences by professional category.

Transparency will no longer be an internal matter and will become a formal communication obligation.

Compliance will no longer be merely documentary

The directive strengthens the penalty regime with:

• Joint pay assessments where there are unjustified pay gaps.
• Full compensation with no maximum limit for workers who have suffered pay discrimination.
• Reversal of the burden of proof: the company will have to prove that it does not discriminate, not the person who works for it.
• A reinforced penalty regime, with effective and dissuasive sanctions.

The European Pay Transparency Directive is much more than a new legal obligation. It represents a shift in the way compensation is managed, moving from formal compliance to being able to explain and justify how pay decisions are made.

Has Spain missed the deadline and what does this mean in practice?

The deadline expired on 7 June 2026 and Spain did not approve the transposition law in time. This already has real consequences: the European Commission has opened an infringement procedure and legal uncertainty is a fact.

That said, this does not mean there is a legal vacuum. Equal pay is already protected in Spain through Article 28 of the Workers' Statute, the pay register, pay audits and equality plans. In addition, Spanish courts must interpret current regulations in a way that is as consistent as possible with the directive. And if the State's delay were to cause economic harm, those affected could claim compensation from it.

That is why companies should not wait for the final regulation. Reviewing job classification systems, pay ranges, progression criteria and the justification of pay differences is a smart decision today, and an obligation tomorrow.