Pay transparency at law firms: what the European directive requires and what Spain is preparing

Large law firms are also large employers, with dozens or hundreds of lawyers and support staff. Directive (EU) 2023/970 of 10 May 2023, which strengthens the principle of equal pay for men and women through transparency measures, affects them like any other company.

In Spain, the Ministry of Labour and Social Economy has published on its participation portal a draft royal decree amending Royal Decree 902/2020, on equal pay, to transpose the directive in part. At the date of consultation, the text was still a draft, with the approval date left blank.

What the directive requires

Before hiring (Article 5)

• Candidates have the right to receive information on the starting pay or its range for the position, and on the applicable collective agreement provisions.
• The employer may not ask candidates about their pay history.
• Job vacancy notices and job titles must be gender-neutral.

Pay criteria (Article 6)

The employer must make available to staff the criteria it uses to set pay, the pay levels and progression. Those criteria must be objective and gender-neutral. Member States may exempt employers with fewer than 50 workers from the progression part.

Right to information (Article 7)

Each worker can ask in writing for their pay level and the average pay levels, broken down by sex, of the categories doing the same work or work of equal value. The employer must inform staff of this right every year and reply within two months.

Gap reports (Article 9)

Joint assessment (Article 10)

If the report reveals an average difference of at least 5% in any category, not justified by objective criteria and not corrected within six months, the employer must carry out a joint pay assessment with workers' representatives.

What the Spanish draft prepares

According to the text published by the Ministry, the draft:

• Establishes that all companies must keep a pay register of the whole workforce, with averages and medians broken down by sex, on an annual and hourly basis.
• Regulates the pay audit, with job valuation, analysis of differences over the last three years and an action plan. It sets six months as the maximum period to correct unjustified inequalities.
• Recognises the staff's right to information, with a reply within two months.
• Obliges companies with 50 or more people to report gap information to a new Commission for monitoring pay transparency, on a staggered timetable.

In the text consulted, the draft does not include an express obligation to publish salary ranges in job offers. The text itself presents itself as a partial transposition of the directive.

What it means for a firm

Firms have particular pay structures: associate grades by years, bonuses for billing or hours, variable partner pay and support staff under other collective agreements. The directive does not prevent variable pay, but requires the criteria to be objective, neutral and explainable.

Some practical tasks:

1. Review the grades and check that they group work of equal value.
2. Document the criteria for entry, progression and variable pay.
3. Prepare the register with averages and medians by sex.
4. Adapt selection processes: do not ask about previous salary and offer information on the range.
5. Plan for the joint assessment if differences of 5% or more appear without justification.

For lawyers with an employment relationship, these rules add to those of the special regime, which we summarise in the guide to Royal Decree 1331/2006. Candidates will be able to ask for information on the pay range, one more element on top of the rules on notice and non-competition we reviewed in the article on lateral moves of lawyers. More organisational guides in Big law firms and lateral moves.