EU Pay Transparency Directive

The EU Pay Transparency Directive (EU) 2023/970 is no longer a distant prospect: the transposition deadline is 7 June 2026, and the Spanish Ministry of Employment has just closed the public consultation ahead of the royal decree that will incorporate the directive into Spanish law. The window to prepare is closing fast.

Rather than viewing this as a threat, companies that get ahead of this new reality will gain in internal transparency, attract better talent and reduce the gender pay gap. In this article we explain what the directive requires, when it applies and how HR departments can turn this challenge into a competitive advantage.

What is the Pay Transparency Directive?

Directive (EU) 2023/970 has a clear goal: to eradicate the gender pay gap, ensure pay equity and promote fairer hiring processes across the European Union. It sets common binding objectives, but leaves each Member State free to decide how to transpose them into national law.

While Spain's royal decree is still being drafted, the lines that Europe has drawn are already clear — and they will transform how companies manage their recruitment processes and internal pay policies.

What the directive requires: the three main obligations

Main obligations for employers

These are the three key requirements introduced by the directive:

• Prior salary information: Candidates have the right to know the pay range or salary band for a vacancy before the first interview. The directive does not strictly require it to be published in the job advert (this will depend on Spain's transposition), but it must be communicated before that stage.
• End of pay history: It will be strictly prohibited to ask candidates about their pay history — i.e. salaries received in previous jobs. This measure aims to prevent perpetuating historical pay gaps.
• Internal transparency and reporting: Employees will have the right to request information on average pay levels, broken down by gender, for categories of workers doing the same work. Companies with more than 100 employees will be required to publish periodic reports on their gender pay gap.

These three obligations are not optional: non-compliance will carry financial penalties that each Member State must set in its transposition legislation. In Spain, the regulatory trend points to sanctions similar in weight to those for mandatory time tracking.

Pay transparency and good people management: two sides of the same coin

Beyond the legal requirement, the lack of visibility on pay is one of the biggest inefficiencies in today's recruitment processes. Hiding salary creates information asymmetry, wasted time in interviews with misaligned expectations and, often, frustration in the candidate experience.

The data speaks for itself: job adverts that include salary information receive up to 16% more applications than those that hide it. Being upfront about pay acts as a powerful magnet for talent, especially for highly sought-after profiles.

How to prepare your company for the new rules

Key actions for HR teams to turn this challenge into a competitive advantage:

• Internal pay equity audit: Before looking outward, get your house in order. Conduct pay audits to identify and correct any unjustified pay gaps within your current workforce. External transparency will expose any internal inconsistencies.
• Structured salary bands: Job offers must be based on objective, gender-neutral criteria linked to the value of the role, competencies and experience — not to the candidate's negotiating ability.
• Training for hiring managers: Recruitment teams must learn to frame salary conversations around the communicated range and assess talent purely on competencies, without asking about pay history.
• Proactive internal communication: Leading companies will not wait for employees to demand data; they will integrate communication of pay policies as part of their talent retention strategy.

How does this affect Spanish SMEs?

The periodic pay gap reporting obligations are phased in according to company size. Companies with more than 100 employees will be the first required to publish detailed reports. Smaller SMEs have a more lenient timeline for reporting, but transparency obligations in recruitment — prior salary information and the ban on pay history questions — apply to all companies from the first employee.

For SMEs, the biggest challenge is not technical but cultural: it means reviewing how salaries are set, how they are communicated internally and how they are presented in recruitment. Companies that already work with documented salary bands and clear pay policies will have a much smoother transition.

Document management and compliance: the role of technology

Pay transparency cannot be managed with spreadsheets or manual processes. It requires systems that can document salary bands, record what information was communicated to each candidate and when, and generate the periodic pay gap reports the regulations will require.

HR platforms that integrate document management with electronic signatures will be especially valuable here: they allow companies to formally communicate the salary range to the candidate before the interview in writing, with a timestamp and full traceability — which can be crucial in the event of an inspection or claim.

Horalia includes a document management module with advanced electronic signatures that lets you send, sign and archive any document with legal validity — from contracts to pay policy communications — with full traceability. Discover the documents module →

An opportunity, not just an obligation

The Pay Transparency Directive is not the end of salary negotiation: it is the beginning of an employment relationship built on trust and equity. Companies that approach it as an opportunity — not just a legal formality — will emerge stronger: they will attract better talent, reduce turnover and build fairer, more resilient organisational cultures.

The time to wait until the last moment has passed. Try Horalia for free and discover how a complete HR platform can help you manage regulatory compliance without the hassle — both the new pay transparency directive and the mandatory digital time tracking regulation coming into force in 2026.