Portugal and Spain Publish Drafts to Implement Portions of the EU Pay Transparency Directive

Portugal and Spain published draft legislation to transpose portions of the EU Pay Transparency Directive (“Directive”) into their respective country’s laws. This adds two more drafts employers need to consider as they work to align compliance with a patchwork of member state laws. This article will place the Portuguese and Spanish drafts into the continuum of laws we are seeing across the European Union. 

In general, the drafts amend existing local requirements to bring them up to the baseline or exceed the requirements set by the Directive. Although both drafts are at the beginning of the legislative process and provisions may change, there are a number of country-specific requirements employers should watch. 

Legislative Status

Portugal: The draft proposal clearly states the purpose is to transpose the Directive partially, by amending the existing Equal Pay Law No. 60/2018, and Labour Procedure legislation. The public consultation period has ended, but the proposal may still be amended before and during the parliamentary process. The draft proposal is partial in that it leaves certain topics to be dealt with in future legislation, such as reporting format and data processing entity, and legal status of employee representatives to exercise the rights provided in the Directive.  

Spain: The Spanish Government published a revised draft Royal Decree amending Royal Decree 902/2020 on equal pay between women and men. The proposal constitutes a partial transposition of the Directive and follows several rounds of negotiations with trade unions and employer organizations. The key items left out of the draft are pre-employment transparency obligations, salary history restrictions, the Joint Pay Assessment mechanism, the 5% threshold and, above all, the remedies and enforcement framework required under Chapter III of the Directive. Social dialogue discussions are ongoing, and negotiations are expected to resume in September 2026, meaning that further changes remain likely before final adoption.

Timing

Although both drafts contain provisions governing entry into force once enacted, neither Portugal nor Spain has indicated when the legislative process is expected to be completed. As a result, it remains difficult for employers to predict when day-one compliance obligations will actually begin to apply. Per the Portuguese draft, the legislation would enter into force on the first day of the month following its publication. Therefore, recruitment, pay-policy and employee-information obligations could become applicable relatively quickly after enactment, notwithstanding the later phased reporting deadlines. 

In Spain, the draft legislation would enter into force on the day following its publication. However, gender pay gap reporting obligations would be subject to a phased implementation timetable.

Notable “Gold Plating” of the Directive Baseline 

The drafts include a few areas of potential gold plating—instances in which the draft imposes rules that are stricter than the minimum requirements laid out in the Directive. These are areas employers should watch as the legislation develops:  

Mandatory Reporting (Portugal and Spain): The Directive requires mandatory pay gap reporting for employers with at least 100 workers. However, both the Spanish and Portuguese drafts are proposing to extend the mandatory reporting to employers with at least 50 workers. Reporting will be a new obligation for all Portuguese employers, whereas for Spanish employers, the draft substantially extends the scope of previous obligations under Spanish law. 

In both drafts, the proposed timing for mandatory reports is:

• Employers with 250 or more workers must report annually, with the first report due July 2027;
• Employers with 150-249 workers must report every three years, with the first report due July 2027;
• Employers with 50-149 workers must report every three years, with the first report due July 2031. 

Significantly, the Spanish draft further broadens the scope of existing pay audit requirements. Per the draft, employers will be required to analyze at least three years of data, including workforce composition, pay trends, causes of pay differences, and the impact of family-related leave, promotions, and career progression decisions to identify pay gaps. Where unjustified pay differences are identified, the Directive requires a joint pay assessment if the gap is not rectified within six months of the mandatory report.  By contrast, the Spanish draft uses the six-month period as the deadline for implementing corrective measures once unjustified pay differences have been identified. Spanish law has historically required employers to identify and address unjustified pay disparities through pay audits and equality plans, but it has not imposed a specific statutory deadline for remediation. Therefore, while the existence of a six-month period is not, in itself, stricter than the Directive, the fact that the Spanish draft establishes a concrete timeframe for corrective action could be viewed as going beyond the current Spanish framework and may have practical significance for employers. Notably, the Spanish Draft does not include any regulations regarding joint pay assessments. 

Enforcement (Portugal): The Directive, Article 25, sets out general protections for workers who exercise their rights under implementing law. In its draft, Portugal introduces a presumption that a dismissal or disciplinary sanction imposed within three years after an equal-pay complaint is abusive. This places a heavy burden on the employer to prepare for and plan for such a presumption if raised in dismissal claims. Complaints will need to be dealt with thoroughly and the entire process properly documented. Additionally, in court proceedings, the draft would allow the judge to award full pecuniary and non-pecuniary damages and interest arising from an equal-pay infringement even where the claimant has not made a specific claim for those amounts.

Additional Information Rights (Spain): Employers with 50 or more workers may be required, upon request, to provide workers, worker representatives, and the newly created Pay Transparency Monitoring Commission with gender pay gap information by grouping of jobs of equal value covering the previous four years. Employers must also provide any necessary explanations regarding identified pay differences and the methodologies used to generate the reported information, within a maximum period of two months.

Works Councils / Employee Representatives (Portugal and Spain): Implementation necessitates that the drafts provide clarity and teeth to the broad role worker representatives are given in the Directive, resulting in indirect gold-plating. For example, the Portuguese draft grants employee representatives access to category-level gender pay gap information. They can also request additional and detailed explanations, to which the employer will need to respond within 30 days.

In Spain, worker representatives already play a central role in equal pay compliance through remuneration registers, pay audits, and equality plans. As a result, implementation of the Directive is likely to reinforce an already extensive framework of information and consultation rights, increasing scrutiny of job classifications, pay structures and corrective measures.

Insights 

Overall, the Portuguese and Spanish drafts are broadly consistent with other draft implementing measures emerging across the European Union. While both proposals contain certain elements of potential gold-plating, their primary objective is to align existing national frameworks with the baseline requirements of the Directive.

For multinational employers, however, important uncertainties remain. The drafts are silent or unclear on several practical issues, including minimum category sizes for privacy purposes, final reporting formats, and the consequences of disagreements with worker representatives during pay transparency processes.

Regardless of how the legislative process evolves, the Directive and the draft bills already make it possible to anticipate the outcome of future audits aimed at identifying pay discrimination. Furthermore, the expansion of pay audits, the introduction of mandatory reporting requirements for employers with 50 or more employees, and the obligation to remediate unjustified pay differences within six months are likely to be the most operationally significant aspects of the proposals if adopted. Employers can and should therefore start assessing their position now, identifying potential areas of misalignment with the obligations that will soon come into force, as well as the corrective measures that will need to be implemented.