Pay transparency and equal pay for equal work in the Netherlands: New (legal) challenges for employers
The introduction of the EU Pay Transparency Directive will soon present employers with new challenges. In this article, employment law specialist Elzemieke Schouten explains what you, as an employer in the Netherlands, can expect.
EU Pay Transparency Directive
The EU Pay Transparency Directive was adopted in 2023. The aim of the Directive is to reduce the pay gap between men and women and to make pay more transparent. The Directive must be transposed into Dutch law by 7 June 2026 at the latest and imposes various additional obligations on employers to close the pay gap.
Objective of the Pay Transparency Directive: not entirely new
Under current rules, it is not permitted to discriminate on the basis of gender when remunerating employees – equal cases must be treated equally. What is new, however, is that employees and job applicants will soon have more rights. In addition, the obligations for employers will increase.
Equal work, equal pay
Equal work, equal pay is a fundamental principle in Dutch labour law. It means that employees who perform the same or equivalent work are entitled to equal pay, unless there is an objective justification for unequal pay. A claim for equal pay will only be successful if the work is the same. A ruling by the European Court of Justice shows that even in cases of discrimination on grounds such as gender, it must first be assessed whether the work is equal. This ruling concerns female cabin crew members of an airline who take the position that they should receive the same pay as their male colleagues in the cockpit (CJEU 4 October 2024, ECLI:EU:C:2024:842). The female employees’ request was rejected, but this would have been different if the court had ruled that the work was indeed equal. The Pay Transparency Directive makes the question of whether work is equal and pay is equal more important.
Obligations for employers and rights for employees
The Pay Transparency Directive obliges employers to be more open about how salaries are determined by imposing information obligations. Gender-neutral job advertisements and job titles must be drawn up. Employers are not allowed to ask applicants about their previous salary with a previous employer. Furthermore, applicants will have the right to information about the starting salary or pay scale for the position they are applying for. Remuneration structures within the organisation must also become more transparent. Employees must be given insight into how their salary, salary scales and salary development opportunities are determined. Employers will be subject to extensive reporting obligations. The frequency of these reporting obligations will depend on the size of the company’s workforce.
Employers with fewer than 100 employees are not required to prepare a pay report. Employers with more than 100 employees are required to do so, with employers with 150 or more employees required to report annually on the pay gap per job group (every three years for 100-249 employees).
If the pay report shows that there is an unjustified pay gap of ≥5% and this is not remedied within six months, a pay review must be carried out. Employees are expected to be more likely to take legal action on pay equality because the burden of proof shifts from the employee to the employer. The employer will have to prove that there is no pay discrimination. If the obligations arising from the Directive are not complied with, the employer risks sanctions/fines and a claim for damages from the aggrieved employee.
Avoid legal problems
Although the Directive will not be implemented until 2026, it is wise to investigate in good time whether action needs to be taken. This includes mapping out the remuneration structure, drawing up guidelines for salary determination and job evaluation, adjusting the application procedure, and collecting data in connection with the future reporting obligation. Prevent wage discrimination claims!
Bowmer Nuiten Noteboom is of course at your service if you encounter any issues relating to Dutch employment law.
Thanks to our many years of experience and specialisation in the field of employment law, we can, among other things, perform a quick scan for you and help you draw up a balanced remuneration policy. For example, do you have very similar positions within your company that are not subject to the same salary structure? If so, it is wise to seek advice at an early stage.
Would you like to know more about the consequences of the EU Pay Transparency Directive in The Netherlands? Please contact Elzemieke Schouten, employment law solicitor (+31786133966/ Schouten@bnnlegal.nl.)
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