March 28, 2025
We have read the 140 page long draft of the Dutch transposition of the Pay Transparency legislation - here's the key takeaways you need to know.
Category:
Pay Transparency
The Netherlands has been proactive and has provided us with their draft on the implementation of the Pay Transparency Directive. There’s a lot to dive into, and for the adventurous, I highly recommend brewing a cup of tea, grabbing a blanket, and getting comfy before starting to read the approx. 150 pages.
For the more impatient ones, this article aims to give you a high-level overview of the key items you should be aware of—including the requirements under Dutch law, the deviations from the EU directive, and some subtleties that I believe many rewards/HR professionals have been eager to find answers to.
If you have any questions about the legislation, how to approach it, or are perhaps even looking for a platform to help automate the compliance process across countries—don’t hesitate to reach out. I’m happy to share our experience from working with companies of all sizes in preparing for this.
Enough pitching—enjoy the read! :-)
To align with the new EU directive, the Dutch government made focused updates to a few existing laws — mainly the Equal Treatment of Men and Women Act (Wgbmv), the Works Councils Act (WOR), and the Law on the Allocation of Labor Force by Intermediaries (Waadi).
The Dutch approach to implementing the directive has been pretty straightforward — no added national rules or “gold-plating.” The idea is to stay compliant without making things overly complicated for businesses. As a result, only minor adjustments are needed to meet the directive’s standards.
Now, here's my take: when the Dutch government talks about “minimal adjustments,” they’re mostly referring to processes and legal tweaks. But from an employer's point of view, the increased transparency expected under the directive is a big deal. It can hugely influence employee satisfaction and retention. The real challenge? Making sure your people truly understand why they’re paid the way they are. That’s not just about compliance — it’s a major communication task.
Let’s have a look at the core obligations that you as an employer of Dutch employees will face. This is very much aligned with what we already knew, although they are being more direct in their interpretation of salary transparency prior to employment.
Pre-employment pay transparency: Employers must clearly specify salary ranges or detailed compensation criteria within all job ads and recruitment materials, providing objective, gender-neutral benchmarks. Employers must disclose any applicable collective bargaining agreements and their provisions concerning pay to ensure full transparency from the outset of the recruitment process. I can’t hide that I’m excited to see this gaining traction – in my opinion it creates a much better alignment of expectations between the employer and candidates.
Salary history ban: Employers are explicitly prohibited from asking candidates any questions related to their current or previous salaries during recruitment. This measure aims to prevent future pay gaps from emerging and encourage pay equity from the very beginning of employment.
Transparent pay structures: Employers are obligated to establish and maintain clear, objective, and gender-neutral pay-setting criteria. These structures must explicitly detail how pay, pay increases, and career advancements are determined, based strictly on criteria such as skills, effort, responsibilities, and working conditions. Behavioral skills should be valued without bias. These structures should be easily available for the employees. Employers with less than 50 employees are exempt from having to make this readily available for its employees.
Right to information: Employees have the right to request and easily obtain detailed information regarding their individual pay levels, gender-specific average salaries for their respective job categories, and the criteria used to set and adjust pay. Employers must provide comprehensive written information within two months upon request. Additionally, employees must be informed annually about this right and the procedures required to exercise it.
Reporting Components: Employers with more than 250 employees must annually report extensive pay gap data. The reports must include the following components.
Reporting Frequency: Companies with 100 to 249 employees are required to report this data every three years. Companies with 250 or more employees must report the data annually. I have attached the table below, showing the thresholds and frequency.
Joint Pay Assessments: If reported pay gaps exceed 5%, employers are required to conduct thorough pay evaluations. These assessments must include analyses of gender distribution within job categories, reasons for identified gaps based on gender-neutral criteria, and actionable plans to remediate unjustified gaps within six months of disclosure. Compliance deadlines for these measures are phased between 2026 and 2031 depending on the size of the company.
Employees benefit from substantial rights and legal protections, including the explicit right to request comprehensive written information about their individual pay level and the gender-specific average pay levels for comparable employee categories. Employers are required to provide this information within two months upon request. If an employee finds the information provided to be incomplete or incorrect, they can request additional clarification, which the employer must provide promptly. Employees are also explicitly protected from retaliation or any form of disadvantage for making such requests, discussing pay openly, or assisting colleagues in addressing pay gaps. Crucially, the burden of proof shifts to the employer in pay discrimination claims if they fail to comply with pay transparency obligations, and as soon as the employee has statistical proof that they are paid differently without justification.
A key part of the new bill is the right for employees to access average salary data for colleagues in comparable roles. While this promotes pay transparency and helps address pay gaps, it raises concerns in small teams where averages may (in)directly reveal individual salaries.
The Dutch government recognizes this risk - particularly in cases where only one or two people share the same job title. However, it has been decided not to apply the optional safeguard from Article 12(3) of the EU Directive, which would restrict access to such data to employee representatives or authorities. Instead, the bill allows employees direct access to this information to empower them to assess potential pay gaps themselves.
Legally, this approach is supported by the GDPR (AVG), as the data processing is necessary for a task in the public interest: enforcing equal pay. The bill includes purpose limitations and data retention rules to ensure privacy is respected as much as possible.
In short, even in small teams, average salary data can be shared - because without this transparency, the right to equal pay cannot be properly exercised.
Primary enforcement responsibilities rest with the Labor Inspectorate, which is going to adopt a programmatic approach by focusing on the largest risks first to obtain the highest social impact. This involves internal and external supervision mechanisms to ensure compliance effectively.
Internally, employee representation such as works councils play an important role by having explicit consent rights on pay evaluations, verification of pay reports, and involvement in remedying pay differences.
Externally, enforcement combines civil and administrative law measures. Civil enforcement allows individual employees or their representatives to initiate legal actions against employers in cases of suspected pay discrimination, strengthened by enhanced transparency obligations and reversed burden of proof provisions. Administrative enforcement enables the Labor Inspectorate to impose formal warnings, compliance orders, administrative fines (up to €10,300), and publicly disclose violations to ensure effective deterrence.
However, it is extremely important for employers to remember that administrative fines and penalties - while intended to be deterrents - still represent the smallest risk when transparency increases. Backpay, resulting from an inability to justify outliers, can quickly accumulate. For example, an underpaid employee with a 10-year tenure could claim compensation for the entire period of underpayment, with their salary adjusted to match the average (not median) of the comparable group. This can pose a significant risk if, as an employer, you have not done your due diligence to mitigate it by identifying and justifying outliers - and correcting those that cannot be justified.
In transposing the EU Pay Transparency Directive into Dutch legislation, existing national definitions and structures have been kept as much as possible to ensure legal continuity and coherence. Several key concepts are central to the implementation of the new measures, particularly concerning remuneration, pay gaps, and the underlying factors that influence pay equity.
Not all pay differences necessarily amount to unlawful discrimination. Dutch law allows for objective criteria - such as education, work experience, performance, or even labor market conditions - to justify variations in pay. However, employers must be able to demonstrate that these factors are legitimate, relevant, and unrelated to gender.
If no objective justification is provided, a presumption of discrimination may arise, requiring corrective action.
All employers - regardless of size - are required to have pay structures in place. These structures define how jobs are assessed and linked to pay levels. The aim is to ensure salaries are determined in a systematic, transparent, and gender-neutral way.
While the law does not mandate a specific system, it does require that the chosen approach be objective, consistent, and applicable across the organization.
The criteria used in pay structures must be both objective and gender neutral. According to EU guidelines and the Directive, at least four core factors must be used to evaluate the value of work:
Employers can assign different weights to these factors based on the relevance to each job. Additional criteria - such as required qualifications or soft skills like communication or collaboration - can also be included if relevant and justified. Importantly, the criteria must not result in direct or indirect gender bias, whether in design or application.
For example, it would be discriminatory if male employees were systematically placed in higher pay grades than female employees for similar roles, or if certain job attributes commonly associated with female-dominated roles (like caregiving or communication) were undervalued.
Employee representatives play a crucial role in safeguarding transparency and fairness in pay structures. In organizations where a works council (ondernemingsraad) or other employee representation is required, these bodies must be involved in setting the criteria and employee categories within the pay system.
Where pay structures are embedded in CLAs, trade unions fulfill this role. This ensures a level of checks and balances, promoting shared accountability between employers and employees.
While the Dutch implementation of the Pay Transparency Directive may appear minimal on paper, its impact in practice is anything but. For employers, this isn't just a compliance task, it’s a chance to strengthen trust, improve communication, and demonstrate commitment to pay equity.
As the deadlines are fast approaching, I can only recommend companies to get started with establishing the pay structures. If you don’t already have it, you will most likely underestimate the amount of work it takes. In addition, you have one salary review left until the deadline hits – so unless you wish to report on unadjusted numbers, then now is the time to get an overview of how far your organization is from being compliant.
As mentioned in the beginning. I am more than happy to run you through the directive, its implications for your organization and how you should approach it. Shoot me a message and we can schedule a call.
+45 60 14 35 51
