Companies must prepare for their new salary record obligation

Focus on tackling the pay gap between women and men has intensified in recent years. Following the European Commission’s recommendation of March 7, 2014, the government and trade unions have signed an agreement on the new Equal Pay Regulation (currently pending publication in the Official Gazette of the Spanish State). The agreed regulation, developing the principle of pay transparency introduced by Royal Decree-Law 6/2019, will specify the scope of the new obligation for companies to keep an exhaustive salary record. 

Pay transparency means the company’s salary information must be accessible and that the workers and their representatives can see how much is individually earned in each job.

As part of this, within six months of the new Royal Decree taking effect, all companies, regardless of their size, will be required to have a salary record, allowing workers, through their legal representatives, to have access to the averaged salaries, disaggregated by gender, including executive staff. Although the name of the individual is not identified, the information on salaries will be thorough: it must reflect the arithmetic mean and the median of what is actually received by category or posts at the same level, identifying salary, supplements, non-salary benefits, and payment method. Failure to do so could lead the Labor Inspectorate to take action or the company to be sued for gender discrimination.

The measure is complex and arrives at a difficult socio-economic time, but fundamental rights are at stake. Moreover, it is commendable that this new pressure measure levels the playing field for companies in the market, and it may have a positive impact on attracting and keeping female talent in companies.

The record will show if workers are receiving a salary aligned with that of the individuals of the opposite sex in a role at the same level and with similar experience requirements.  

If pay gaps greater than 25% are identified between roles at the same level, the company must provide objective justification (not directly or indirectly related to gender) explaining it. Despite the company’s possible justification, any difference may still be treated as evidence of discrimination and, if the reasons offered are insufficient, it may have to increase some salaries to correct any unacceptable pay gaps.

In view of this complex scenario, Human Resources departments have an absolutely strategic role, and they have six months before the obligation goes into effect to address the following critical points, for example:

• First, the record will require companies to review the competences policies and job descriptions. This is because training, academic level, versatility, planning and organization skills, among other factors, will help offset possible indications of pay discrimination.
  
• In turn, the internal professional classification will be a decisive factor, identifying the roles in each company at the same level. Organizational charts will thus cease to be merely a guidance document and will become evidence that a particular individual is at the same level as another but receives a different salary.
  

• Furthermore, the company’s internal documents, such as catalogs of existing roles, will become very important. It will not be enough for them to define functions and competences, but rather they will become a tool to compare salaries and identify unjustified pay gaps.
  
• In terms of occupational risk prevention, factors such as the arduousness and difficulty of the work, awkward positions, and repetitive movements will be relevant to justify the salary assigned to each role.
  
• Obviously, the company’s remuneration policy must be reviewed, paying attention to discretionary variable pay, bonuses and supplements, the amounts of which can be negatively affected by indirect factors related to stereotypes and women’s roles (e.g., reduced schedule or part-time work).
  
• Finally, remote working, which has evolved from a residual tool to an essential form of work in the current context, could also prove key in reviewing remuneration policies. This is because it must considered whether teleworking or remote working, traditionally used more by women, influences the bonuses of on-site roles or travel bonuses in the pay system and gender equality policies.

Keep in mind that the salaries record must be previously discussed with the workers legal representatives, so all the critical points mentioned should be analyzed before implementing them to ensure an appropriate response to possible pay gaps between women and men that may arise.

Todo lo anterior conduce a una redefinición urgente de las políticas All this will lead companies to urgently redefine their remuneration policies, which will have to be designed from a multifaceted approach (salaries + professional classification + definition of competences + internal promotion), neutralizing any direct or indirect influence the worker’s gender and gender bias may have on them.

Ultimately, in this process, companies have the opportunity to optimize their approach to the salaries they pay. They must be designed not only to fulfill accounting objectives but must also serve to promote the company’s corporate image, as it cannot run the risk of failing to respect fundamental rights in any case.