Pay transparency in the Netherlands: what employers should be prepared for

A new era is dawning for employers in the Netherlands in terms of equal pay between male and female employees. With the upcoming Dutch implementation of the EU Pay Transparency Directive (the Directive), employers will soon face new legal obligations on how to structure, report and communicate on pay. Employers in the Netherlands who start preparing now, will be better positioned to comply with the proposed legislation and avoid both reputational and financial risks.

The following key changes are set to take effect under the current legislative proposal:

1. Pay gap reporting 

Large employers will be required to report on gender pay differences on an overall basis as well as within equivalent job categories, including both basic and variable pay elements. The frequency and timing of these reports will depend on the size of the employer’s workforce:

Employers with 250 or more employees should report annually on gender pay gaps, starting by 7 June 2027;

Employers with 150-249 employees should report every three years, also starting by 7 June 2027; and

Employers with 100-149 employees should also report every three years but starting by 7 June 2031. 

Reports will have to cover gender pay gaps of employees as well as any agency workers engaged by the company. These reports should be submitted to a monitoring authority yet to be established, who will publish the average and median pay gap between male and female employees online. The Dutch government has announced that further details of this process will be developed in the near future. In addition, employers should provide a separate report on pay differences in equivalent roles to their work force and works council (if any). 

It is anticipated that, in the first reporting year employers will need on average 20 hours to set up the reporting process, collect the necessary data, and complete the reporting itself. This includes addressing any unjustified pay gaps and conducting pay system evaluations (please refer to section 3).

2. Implementing pay structures (loonstructuren)

All employers will be required to implement pay structures that enable the assessment and comparison of different roles within the same job categories in terms of pay. These structures should be based on objective, gender-neutral criteria, at minimum based on four categories: the required skills and efforts as well as the responsibilities and working conditions of each role. Such structures and criteria can also be set out in a collective labour agreement. If not already set out in a collective labour agreement, the implementation of a pay structure will require the prior involvement and approval of the works council or the employee representative body (if any).

3. Remedying pay gaps and conducting thorough pay system evaluations

Employers will be required to remedy gender-based pay gaps if the gap results to be at least 5 per cent within a job category and cannot be justified by the objective, gender-neutral criteria. Employers have six months to close the gap, and if not closed, they must conduct a full review of the pay system, along with a concrete action plan to close the gap. Such an action plan should be clearly communicated to employees, must be submitted to the monitoring authority, and would, most importantly, require prior works council approval.

4. Offering transparency in recruitment

Employers will be required to proactively inform job applicants of the start salary or salary range for a relevant job vacancy before salary negotiations begin. This could be done through the posted vacancy or in the application process, as long as the information is provided to job applicants prior to the start of salary negotiations. In addition, employers will be prohibited from asking applicants to provide any details of their current or previous salary levels.

5. Adhering to employee information rights

Employees and temporary agency workers will be entitled to written information about the criteria used to determine their salary level, and if the employer has 50 or more employees, information about their (potential) pay development. Employees may also request information about their own salary and the average salary (by gender) within their category of equivalent roles. Employers must provide such information within two months from the date on which the request was made. Individual salaries remain confidential; only aggregated data must be provided. Clauses restricting employees to discuss and disclose their individual pay information will be deemed void.

If an employee wishes to take legal action to enforce their right to equal pay based on the information received, they can bring a claim before the Dutch civil courts. Employees who succeed in such claims may be awarded full reimbursement for damages they suffered due to the pay discrimination. Even if the employee’s claim is unsuccessful, the court can still require the employer to pay the costs of the proceedings if the claim was made on reasonable grounds.

Enforcement and sanctions

The Dutch Labour Inspectorate will serve as the supervisory authority and will have the power to issue warnings, impose administrative fines and orders subject to a penalty, and to require public disclosure of the results of its inspections in cases of non-compliance. Administrative fines for violations can amount to up to EUR 10,300 per breach, per employee (2024 figure). In addition, protection for employees against retaliation is reinforced, and the burden of proof in discrimination claims will in most cases be shifted to the employer.

Looking ahead: next steps for employers

Once the Dutch House of Representatives will have approved the draft proposal, the Dutch Senate will again review, debate and vote on the draft proposal – potentially resulting in further changes. It is anticipated that the Dutch legislative proposal will be submitted to the Dutch House of Representatives by the end of 2025, and full transposition into national law will be required by 7 June 2026 at the latest. 

Although the Dutch legislative proposal to implement the Directive is still in draft form, it provides a clear indication of what is to come. Employers are therefore advised to begin with:

• Preparing to meet reporting obligations by setting up internal workflows for collecting and reviewing necessary information;
• Reviewing and, if necessary, revising existing remuneration systems to ensure objectivity and gender neutrality; and/or
• Ensuring that HR policies and employee handbooks reflect the forthcoming transparency requirements and information duties (also in recruitment).

The Dutch implementation of the Directive, represents a material shift towards greater pay transparency and gender equality in the workplace. Monitoring further legislative developments and proactively addressing the requirements not only ensures timely compliance but reinforces an employer’s commitment to a fair workplace.