On 7 June 2023, the European Pay Transparency Directive came into effect. Member states of the European Union are required to implement the directive into their national legislation by no later than 7 June 2026. In this context, the Dutch legislator has drafted a proposed law (the “Implementation Act on Pay Transparency for Men and Women”). The public consultation for this proposal began on 26 March 2025, and will run until 7 May 2025.
Here is a summary of the key points from the Pay Transparency Directive and the proposed Implementation Act:
- Job applicants will have the right to receive information about the starting salary or the salary range associated with the position they are applying for.
- Employers will no longer be allowed to ask job applicants about their previous salary.
- Employees will have the right to access information about the criteria used for salary progression and career development, as well as their own pay level compared to the average pay level for equal or equivalent work, broken down by gender.
- Employers with more than 100 employees will be required to report on various aspects, including the gender pay gap in salaries, additional and variable pay components for employees performing equal or equivalent work, the number of employees receiving variable pay components, and the median gender pay gap.
- Employers will be required to address any unjustified differences in pay.
- If an employer’s report reveals a pay gap of more than 5% that cannot be justified by objective, gender-neutral criteria, the employer must conduct a joint pay assessment in collaboration with employee representatives.
- If an employer fails to comply with the obligations set out in the Pay Transparency Directive, the burden of proof in cases of alleged pay discrimination will shift to the employer.
- The Labor Inspectorate will have the authority to enforce compliance through administrative measures if employers fail to meet their obligations.
The reporting obligation will take effect on 7 June 2027, for employers with 150 or more employees, and on 7 June 2030, for employers with 100 to 149 employees. This legislation introduces significant additional obligations for employers. It is crucial to begin assessing pay structures and identifying any disparities within the organization in a timely manner. Our employment law team is ready to assist you in preparing for the implementation of the new law.