Pay Equity Audit for Companies in Spain

What are the differences between a pay audit and a pay register?

As set out in Articles 5 to 8 of the Royal Decree 902/2020, of 13 October, on equal pay between women and men, the pay audit or remuneration audit entails more obligations than those required under the Pay Register (see our blog post at the link below).

Documento Archivo Link to the Pay Register

Josep Conesa. employment lawyer (Barcelona)

Written by Josep Conesa

Employment and insolvency lawyer

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What is a Pay Audit or Remuneration Audit?

The purpose of a remuneration audit is to ensure compliance with the principle of effective equality between men and women in matters of pay, by gathering the information necessary to verify whether the company's remuneration system meets this standard in a comprehensive and cross-cutting manner.

A Pay Audit seeks to identify the pay gap where work is of equal value to other work. This is the case where the nature of the duties or tasks actually assigned is equivalent, that is, where, for the same work, the following conditions are equivalent:

educational,
professional or training requirements for carrying out the role,
factors strictly related to their performance,
working conditions under which those activities are carried out.

How often must a Pay Audit or Remuneration Audit be carried out

The remuneration audit shall remain valid for the duration of the equality plan of which it forms part, unless a shorter period is specified within that plan.

DO I HAVE TO PROVIDE SALARY DATA TO EMPLOYEE REPRESENTATIVES AND TO THE NEGOTIATING COMMITTEE UNDER THE EQUALITY PLAN

Speaking generally rather than case by case, case law is increasingly reaffirming the right of members of the Negotiating Committee to access salary data, on the same basis as the rights already held by legal employee representatives (who receive a basic copy of each employment contract, which already contains salary information).

Companies are generally reluctant to disclose all salary data, in order to prevent the identification of any individual's remuneration (which may well have changed over time and may differ from what was stated in the basic copy provided at the time of initial hire).

Salary data is also, in many cases, highly confidential information that companies seek to keep out of the hands of competitors.

We reproduce below the relevant statutory provisions on this matter which, as you will see, make it essential that such information is necessary for the purpose of achieving the equality plan. We will need to wait for the courts to rule more specifically on what "necessary" means in practice. In the meantime, contact our specialist to help you define the limits of what is required:

Organic Law 3/2007 provides in its Article 47, on Transparency in the implementation of equality plans, that "Access is guaranteed for the legal representatives of workers or, failing that, for the workers themselves, to information on the content of Equality Plans and the achievement of their objectives". It further states that "this shall be without prejudice to the monitoring of the development of agreements on equality plans by the joint committees of collective bargaining agreements to which such competences are assigned."
The Royal Decree 901/2020 also sets out in Article 7 that "Once the negotiating committee has been established, and for the purposes of drawing up the situation assessment, its members shall have the right to access any documentation and information that is necessary for the purposes set out herein, with the company being obliged to provide it in accordance with the terms established in Article 46.2 of Organic Law 3/2007 of 22 March."
Organic Law 3/2007 establishes in paragraphs 1 and 2 of Article 46, on the concept and content of corporate equality plans, that:
- 1.- "Corporate equality plans are a structured set of measures, adopted following a situation assessment, aimed at achieving equality of treatment and opportunity between women and men within the company and at eliminating discrimination on grounds of sex.
  Equality plans shall set out the specific equality objectives to be achieved, the strategies and practices to be adopted in pursuit of those objectives, and the establishment of effective systems for monitoring and evaluating the objectives set."
- 2. "Equality plans shall contain a structured set of measurable measures aimed at removing the obstacles that prevent or hinder effective equality between women and men. As a prior step, a negotiated assessment shall be drawn up, where applicable, with the legal representatives of the workforce, which shall cover at minimum the following areas:
  - a) Recruitment and hiring processes.
  - b) Professional classification.
  - c) Training.
  - d) Career advancement.
  - e) Working conditions, including the pay audit between women and men.
  - f) The shared exercise of rights relating to personal, family and working life.
  - g) Under-representation of women.
  - h) Remuneration.
  - i) Prevention of sexual harassment and harassment on grounds of sex."

Obligations of the pay audit

In addition to those relating to the Pay Register, the pay audit must reflect...

the arithmetic means
the medians

... once jobs of equal value within the company have been grouped together in accordance with the results of the quantitative diagnosis and qualitative diagnosis

Where a difference of 25% or more is identified in the arithmetic mean or median of total remuneration within the company between genders, the equality plan must include a justification demonstrating that this difference is attributable to reasons unrelated to the sex of the workers concerned.

Use the official tool for the equality plan:

Get help from our equality plan specialists on how to prepare the pay register or pay audit.

Normalising and annualising pay components in the equality plan:

Below are essential concepts such as normalising pay components and annualising pay components:

→ Equalisation criteria
A. Same working hours throughout the year. Remuneration must be normalised to the same
working hours (full-time).

Applicable cases:
a. Workers on a part-time contract.
b. Reduced working hours.
Methodology: "Normalising" means converting figures so that they are comparable on the basis of the percentage of working hours. The amounts to be considered are those corresponding to full-time hours. Where individuals working less than full-time (whether under contract and/or on reduced hours) are included, their remuneration must be scaled up proportionally to full-time equivalent. Examples:

– If an employee receives an actual remuneration of €2,000 per month under an 80% working hours contract, their salary must be "normalised" by multiplying it by 1.25 (1/80% = 1.25), giving a normalised remuneration of €2,500.
– If an employee receives an actual remuneration of €1,500 for 100% working hours, their normalised remuneration would be the same as that of an employee working 50% hours and earning €750. The normalisation of €750 is calculated by dividing that amount by 50%, yielding €1,500 (meaning the normalised figures would be equal in this case).

B. Same duration of services provided throughout the year. An annualisation
of remuneration received over periods of less than one year must be carried out.

Applicable cases:
a. Fixed-term contracts for individuals who have not been employed for the full year, either because they were hired after the year began or because their contracts ended before the year concluded.
b. Individuals whose contracts have been suspended for any reason set out in Article 45 of the Workers' Statute, or who have taken a leave of absence at any point during the year.
Methodology: The amounts to be considered shall apply to the full year in question (the reference period). Actual remuneration must be proportionally scaled up to reflect a full year (for example, if a person has been employed for 6 months, their remuneration must be "annualised" by multiplying it by 2).
Solely for the purpose of enabling and facilitating comparability and applying the equalisation criteria described, where a person has held more than one different contractual arrangement during the reference period, the most recent one shall be taken into account.
There may be certain pay components that are not subject to this adjustment (i.e. they cannot be normalised or annualised) because the company pays them in full to all employees regardless of actual hours worked or period of employment; this should be noted where applicable.
Some examples may include (where applicable in each case): full payment of the transport allowance to employees with reduced working hours, full payment of company bonuses during maternity leave, etc.

How to calculate the average (i.e. the mean) in the Equality Plan

The average or mean is calculated by adding all the numbers in a dataset and then dividing by the number of values in that dataset.

In the dataset 23+29+20.32+23+21+33+25=206

The mean is 25.75, since 206/8=25.75, which is used to assess the central tendency of this dataset.

How to calculate the arithmetic mean or median in the Equality Plan

The arithmetic mean or median is the middle value of a dataset arranged in ascending order. That is, it is the number that falls in the middle when the values are ordered from lowest to highest. In the example given, there are two middle numbers, since the dataset contains an even number of values (8):

20+21+23+23+25+29+32+33

To find the median, we need to calculate the average of these two central numbers: (23+25)/2=24.

24 is the median of this data set.

The mode

The mode is the number that appears most frequently in the data set. In this example, it would be 23.

How to conduct a Pay Audit or Remuneration Audit

The remuneration audit must analyse the following tables to identify where pay gaps exist, to discuss what corrective actions can be taken to address those gaps, and to agree on individually planned measures scheduled over time to effectively close those gaps.

Table 1: Workforce broken down by sex
Table 2: Percentage of workforce on permanent contracts, broken down by sex
Table 3: Legal Staff Representation
Table 4: Unitary representation
Table 5: Union representation
Table 6: Distribution of legal representation by age
Table 7: Distribution of legal representation by job category
Table 8: Trade unions with representation
Table 9: Distribution of workforce by age
Table 10: Distribution of workforce by contract type
Table 11: Distribution of workforce by seniority
Table 12: Distribution of workforce by department and hierarchical level
Table 13: Distribution of workforce by job category
Table 14: Distribution of workforce by job category and educational level
Table 15: Distribution of workforce by salary band, excluding non-salary compensation
Table 16: Distribution of workforce by salary band, including non-salary compensation
Table 17: Distribution of workforce by job category and annual gross salary, excluding non-salary compensation
Table 18: Distribution of workforce by job category and annual gross salary, including non-salary compensation
Table 19: Distribution of workforce by weekly working hours
Table 20: Distribution of workforce by work shift
Table 21: New hires and departures
Table 22: New hires via temporary staffing agencies (ETT)
Table 23: New hires in the past year: type of contract
Table 24: New hires in the past year via temporary employment agencies (ETT) and type of contract
Table 25: New hires in the past year: job categories
Table 26: New hires in the past year: job categories
Table 27: Permanent departures in the past year
Table 28: Permanent departures in the past year by age
Table 29: Temporary leave, permits and unpaid leave in the past year
Table 30: Family responsibilities: number of children
Table 31: Family responsibilities: number of children with disabilities
Table 32: Family responsibilities: ages of children
Table 33: Family responsibilities: ages of children with disabilities
Table 34: Family responsibilities: dependants (excluding children)
Table 35: Promotions in the past year
Table 36: Types of promotion in the past year
Table 37: Promotions in the past year: job categories to which employees were promoted
Table 38: Training in the past year

Content of the Pay Audit (Salary Audit)

A. The Pay Audit must evaluate each role in relation to...

the pay structure
the promotion system

... taking into account the tasks and functions of the role, the sector of activity, the type of organisation and other relevant characteristics, regardless of the type of contract in place.

inequalities identified in the design or application of work-life balance measures
obstacles to career progression
obstacles to pay progression
discretionary decisions regarding mobility
unjustified discretionary requirements relating to availability

B. The Pay Audit must include an action plan to address pay inequalities, setting out: