Should everyone know what you earn? What will change with Spain’s salary transparency law

Those who have ever found themselves wondering how much money their colleagues make may soon have their answer. A new proposed Spanish law may make it a legal obligation to reveal workers’ salaries, but at this time, the only certainty for citizens is that the government will miss the deadline to introduce the law.

Spain to miss a key deadline despite insisting it is a ‘priority’

The key European Union deadline for Spain to introduce the new labour law, which will make salaries more transparent and reduce wage discrimination, is just days away, on Sunday, June 7. However, according to the Ministry of Labour, there is still no final draft of the law, and the process of producing the draft law may still take weeks, despite the new regulation being classified as “urgent” and a “priority.”

The EU’s pay transparency initiative aims at tackling wage secrecy and especially reducing gender-based pay discrimination. However, Spain lags behind as it still does not have the required royal decree to be able to implement the proposed changes.

According to the Secretary of State for Labour and Social Economy, Joaquín Pérez Rey, even if the June 7 deadline is missed, Spain has a “reasonable timeframe” to comply with the law and has noted that the regulation has still not received widespread approval among the 27 member states proposed to implement it. Mr Pérez Rey insists that the law is “one of the legislative priorities” for his department, and that Spain played a “very prominent role” in the law’s approval in Brussels.

What would change under the new law?

To be specific, the law, Directive 2023/970, is expected to significantly increase salary transparency in a number of ways.

First, companies would be required by law to include pay ranges in job listings, which only occurs in some 18 per cent of job listings in the country. This would mean an end to phrases like “competitive salary,” which provide job seekers with no real information about what the pay will be like; oftentimes, those looking for a job are clueless about the pay until they have already gone through with the interview and are offered a job.

Companies would also be obligated to respond to employee requests for salary comparisons, and justify any pay gaps of 5 per cent or more between colleagues, compared to the current threshold of 25 per cent.

Human resources departments would be obligated to explain and justify promotions, bonuses, and general pay increases.

This proposed law would also ban confidentiality clauses in contracts that prevent employees from discussing their salaries, and also would prohibit employers from asking potential candidates about previous salaries.

The aim: Transparency for job seekers and employees who are unsure where they stand

For those seeking a job, the law may help to provide assurance and transparency when it comes to the role they will take on at that particular company. It may also provide more information about potential salary increases, and help them to make an informed decision if they are choosing between two job offers.

For those already employed, the new legislation could come a long way towards knowing if they are being paid significantly more or less than their colleagues.

The law would also help to eradicate gender-based pay discrimination, which Brussels believes disproportionately penalises women.

Will the law actually help the average resident in Spain?

Spain’s method of adopting the law change through a royal decree would allow them to bypass a parliamentary vote, but would hinder broader legal changes, since it reduces the power to amend existing laws. For this reason, critics have claimed that the final draft of the law may not be as groundbreaking as intended when it comes to employee/employer transparency.

It is also notable that while the law would reveal significant pay gaps and detect large and unexplained differences in salaries, it would not allow colleagues to look at each other’s exact payroll.

For now, the extent of the law’s efficacy in Spain, the real-life changes that will result from it in job listings, interviews, and the workplace, as well as when it will be implemented in the country, still remain to be seen.