Closing the Gap: The influence of the EU Pay Transparency Directive in the Netherlands

The Dutch Ministry of Social Affairs and Employment announced that the implementation of the EU Pay Transparency Directive (Directive) will be postponed until 1 January 2027. This means that the Dutch legislator will not implement the Directive on 7 June 2026 as required under the Directive. The consequence of the delay is that if there is a claim before the court, the court will as of 7 June 2026 interpret the current legislation against discrimination between male and female in line with the objectives of the Directive.

Even though the implementation has been delay, we still advise to start preparations for the implementation of the Directive to avoid last-minute compliance. It will take some time to review the current policies and to potentially revise the policies in accordance with the Dutch legislative proposal.

Background and objectives

The Directive aims to eliminate pay discrimination and support efforts to close the persistent gender pay gap between men and women who perform the same or equivalent work. It introduces a range of rights and obligations for both employers and employees that should lead to better pay transparency. Pay transparency and improved access to remuneration information help uncover potential pay gaps and raise awareness among both employees and employers about differences in compensation.

Employers must establish objective pay structures and comply with the transparency obligations for their workers and also their job applicants. In this blog we will discuss the impact of the Directive.

Transparency obligations

The law introduces several obligations that employers must adhere to. These obligations are summarized below.

Job applicants

In practice, we see often that it is unclear for job applicants what they could earn. Under the proposed legislation employers will be legally required to disclose either the initial salary or the applicable salary range for the position in question. This applies to both the base salary and any supplementary or variable components.

This information must be included in the job advertisement or, at the latest, communicated prior to the interview stage. Consequently, it will no longer be permissible to include vague or non-specific terms such as ‘competitive salary’ or ‘market-conform remuneration’ in job advertisements. Employers must ensure that salary disclosures are clear, objective, and gender-neutral, in line with the principles of equal pay for equal work or work of equal value.

The employers are not allowed to ask the job applicants about their pay history from their current or former employment relationship. The Netherlands Institute for Human Rights (College voor de Rechten van de Mens) has indicated that the use of the most recently earned salary as a basis for salary determination does not constitute a neutral criterion, and differences in work experience do not justify significant disparities in remuneration.

Job applicants are still able to voluntarily disclose information regarding their previous salary to the prospective employer. In practice, job applicants will still negotiate with prospective employers. Prospective employers must be aware of the risk that if the job applicant is hired and will earn more than the employees with a similar position and tasks, the employer will have to be able to demonstrate that the salary is based on a neutral objective, such as more work experience. If the employer fails to do this, the employee could bring a claim against the employer.

Information obligations

The Directive gives employees the right to request and receive in writing information on

• their individual pay level; and
• the average pay levels, broken down by sex, for categories of workers performing the same work as them or work of equal value to theirs.

In addition, in case the employer has at least 50 workers, employees have the right to information about how the companies’ remuneration policy is structured and how salaries develop over time.

Employers must inform all workers, on an annual basis, of their right to receive the information and of the steps that the worker is to undertake to exercise that right. Employers shall provide the information within a reasonable period of time but in any event within two months from the date on which the request is made. This is a brief period of time if the employer still must investigate and prepare the information.

Reporting obligations

Employers with more than 100 employees are required to report to the designated authority on the gender pay gap within their organisation. The frequency of this pay gap reporting depends on the total number of employees in the organisation:

• 100 – 149 employees: every 3 years, first report: 7 June 2031;
• 150 – 250 employees: every 3 years, first report: 7 June 2028;
• 250 or more employees: every year, first report: 7 June 2028.

The company reports the percentage pay gap between male and female employees and the ratio between the remuneration of the highest-paid individual and the median remuneration of its employees. Employers must also break down the gender pay gap by categories of employees and by supplementary and basic components of pay.

The role of the works council

The works council will have the right of consent for almost every decision relating to equal pay (e.g. how a gender pay gap is determined and addressed). The works council already has the right of consent regarding a pay structure or a job evaluation system. In addition, the works council will also have the right of consent regarding:

• the objective and gender-neutral criteria underlying the company’s pay structure;
• the classification into categories of employees;
• the manner in which unjustified differences between men and women are remedied; and
• the wage evaluation including an action plan to address unjustified differences, see below.

The employer must conduct the wage evaluation and develop an action plan together with the works council under the following circumstances:

• The wage report shows a pay gap of at least 5% within a category of employees.
• The employer cannot justify this pay gap based on objective and gender-neutral criteria.
• The employer does not remedy the unjustified pay gap within six months after the date on which the information was provided to the institution responsible for collecting and promptly publishing the received data on pay differences.

Enforcement

There are two ways to enforce employers to comply with the legislation.

From a civil law perspective, an employee can bring a wage claim against their employer in court. Under the new law, employees who have suffered pay discrimination based on gender must be fully compensated, which includes payment of all outstanding wages as well as any related bonuses or benefits in kind.

The burden of proof in wage discrimination cases previously rested with the employee. Now, it is up to the employer to demonstrate that they have not breached the rules regarding equal pay and pay transparency. Additionally, there is a change concerning the awarding of legal costs. While the main rule in civil proceedings remains that the losing party must pay the costs, under the legislative proposal, the court may order the employer to cover the legal expenses if it finds that the employee had legitimate grounds to bring the claim.

Administratively, non-compliance may result in fines. These fines can amount to €10,300, with the possibility of even higher penalties for repeated violations.

Our advice

Although the final text of the legislation is still forthcoming, we recommend that employers begin preparing by taking the following steps:

• Review the pay structures and, where necessary, revise the pay structure in consultation with the works council to ensure compliance with upcoming legislation.
• Develop systems capable of providing information that the employee may request;
• Analyze existing pay disparities to identify and address any unjustified differences ahead of the first reporting deadline in 2028; and
• When required, establish a works council to ensure that the organization can fulfill its obligations under the new legislation.

Contact

The lawyers at Blenheim can assist employers and works councils regarding the implementation of the Directive. We provide tailored advice and guidance in the process of implementation.

Do you have any questions about the Dutch implementation of the EU Pay Transparency Directive? Contact our labor law team for assistance.