It has been one year since the enactment of Directive 2023/970 of the European Parliament, also known as the Salary Transparency Law. This law will require all companies to make public the salary ranges of all their employees. In other words, you will know if your colleagues receive the same salary as you for doing the same job.
With this measure, the European Directive aims to strengthen equal pay between men and women for work of equal value, setting the gender pay gap at a maximum of 5%, compared to the current European average of 13%. The law came into force in June 2023, but its implementation will be progressive depending on the number of employees in the company until June 2026.
Salary Transparency for Employees
The European Salary Directive imposes a series of requirements on companies regarding salary transparency that goes beyond their current workforce. Given that the main objective of the measure is to reduce salary inequality, companies will have to make salaries or salary ranges for each position public.
In addition, they will have to share with their employees the criteria used to set these remunerations. They will also have to provide information on salary inequalities within the company, broken down by gender.
Job Offers with Salary by Law
The directive will also affect candidates seeking to join the workforce, as the European regulation will require companies to indicate the salary or salary range corresponding to the position in job offers. According to a PayScale report from 2021, only 12.6% of job offers published worldwide included the salary.
The regulations will prohibit employers from asking candidates about their salary range in previous jobs. In this way, one of the companies’ greatest bargaining chips for salary negotiation is eliminated, as they do not have a base reference on which to negotiate the candidate’s salary downwards.
Employees Will Know How Much Their Colleagues Earn
As of 2026, employees will have the right to request and receive in writing information about their individual salary and the average salary ranges of colleagues performing the same job or one of equal value.
This request must be formalized through the legal representatives of the workers, works councils, or an equality body. In order to maintain competitiveness and privacy, the European directive sets access limits to the information, prohibiting the request of this information for purposes other than the defense of their salary equality rights.
However, the regulations leave a significant gap by prohibiting companies from imposing clauses in their employees’ contracts that restrict the disclosure of such information. Therefore, once the request is justified, the company would be exposed to employees disseminating that information.
They Will Take Their Time
Although the Salary Transparency Law came into force a year ago, the law will not be incorporated into Spanish legislation until June 7, 2026. From that moment on, companies will have between one and five more years to start applying it, depending on the size of the workforce:
- Companies with more than 250 workers will have one year to apply the directive. This implies that they must provide the information before June 7, 2027, and then update it annually.
- Companies with between 150 and 249 workers have two years to apply the new salary transparency regulations from June 2027, which they must then update every three years.
- Companies with workforces between 100 and 149 workers will have until June 2031 to provide the information, and then update it every three years.
On the other hand, Article 9.5 of this directive leaves the door open for each country to decide whether or not to require companies with fewer than 100 employees (which represent 98.86% in Spain according to official figures) to publish this information.
Lights and Shadows of Salary Transparency
Salary transparency is an effective tool for reducing the salary gap for people doing the same job. However, a joint study by several universities in China and Israel pointed out that, despite its advantages, salary transparency could generate tensions among the workforce.
When these regulations are implemented, companies will experience a compression of salary ranges and will have to justify salary increases in more detail. Similarly, employees will be able to learn about the salary ranges offered by competitors for their position, creating opportunities for job changes and encouraging salary competitiveness among companies for the best talent.
