Directive (EU) 2023/970 entered into force on 6 June 2023 and member states must apply it by 7 June 2026. What has changed since the 2021 proposal and what it means for employers.
On 6 June 2023 Directive (EU) 2023/970 of the European Parliament and of the Council, of 10 May 2023, entered into force. It aims to strengthen equal pay for equal work or work of equal value between women and men through pay transparency and enforcement mechanisms. It was published in the Official Journal of the European Union on 17 May and entered into force twenty days later. It is the final version of the proposal the European Commission presented on 4 March 2021.
What has changed since the proposal
The road was long. The European Parliament approved the text on 30 March 2023 and the Council gave its final approval on 24 April. Like any directive, it does not apply directly to companies: each member state has to pass its own law by 7 June 2026. Until then, employers’ obligations remain those of the national rules in force.
The most important change concerns the gender pay gap report. The Commission proposed that only employers with 250 or more workers should file it. The final directive extends it to those with 100 or more, on a staggered timetable. Employers with 250 or more will report by 7 June 2027 and every year after that; those with 150 to 249 will also report by 7 June 2027 but every three years; and those with 100 to 149 will report by 7 June 2031 and every three years. The report always covers the previous calendar year. Employers with fewer than 100 workers may report voluntarily, and member states may require them to.
The essentials of the proposal remain. Job applicants will have the right to know the starting pay or its range, based on objective, gender-neutral criteria, in the job advertisement or before the interview, and employers may not ask about their previous pay. Workers will be able to request in writing their individual pay level and the average pay levels, broken down by sex, of those doing the same work or work of equal value, and the employer must reply within a reasonable period and in any case within two months.
Other obligations and rights
There are more pieces. Employers will have to make the criteria used to set pay and pay progression easily accessible to their workers, although member states may exempt employers with fewer than 50 workers from the progression part, and each year they must remind staff of their right to ask for pay information. Member states will prohibit contract terms that stop workers disclosing their pay to enforce equal pay.
And if the report shows an average pay difference of at least 5% between women and men in any category of workers that the employer neither justifies on objective, gender-neutral criteria nor remedies within six months, a joint pay assessment with workers’ representatives will be required, a rule that was already in the 2021 proposal.
The directive also makes claims easier. If a worker establishes facts from which discrimination in pay may be presumed, it is for the employer to prove there was none. The burden of proof also falls on the employer where it has not met the transparency obligations, unless it shows that the failure was manifestly unintentional and minor. Limitation periods may not be shorter than three years, and member states will set effective, proportionate and dissuasive penalties, which must include fines.
What to review
Spain already has a base. Royal Decree 902/2020 of 13 October requires every company to keep a pay register with the average and median amounts paid, broken down by sex and job group, and those that draw up an equality plan must include a pay audit in it. The directive goes further on the information to be given to applicants and workers and on the mandatory report, with set deadlines and content. It is for the Spanish legislator to decide how to transpose it, and the final law may contain nuances that are not yet known.
In the meantime, it makes sense to put the pay structure in order: classify jobs on objective, gender-neutral criteria, document allowances and spot differences without a clear justification, especially if they approach 5%. It is also worth reviewing how pay is communicated in recruitment, in the advertisement or before the interview, and contracts, which will not be able to prevent workers disclosing their pay to enforce equal pay. Ask your employment adviser how it applies to your case.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
