The implementation of the European pay transparency rules is at the door. The arrival of Directive (EU) 2023/970 obliges employers in all member states to make their pay policy more transparent and to counter unjustified pay differences between men and women.

This directive was originally supposed to have been implemented into national law in multiple countries before 7 June 2026, but the Netherlands is already not going to make that deadline. The intended entry into force has therefore been postponed to 1 January 2027 at the latest. That sounds far away, but anyone who waits until that date is too late. Now is the moment to already get the basics in order.

In this blog, we set out what will change for you and what you can, and should, already do now.

The starting point: equal pay for equal or equivalent work

The principle of equal pay and a ban on distinguishing between men and women is not new. This principle is already enshrined in European legislation (Article 157 TFEU) and Dutch legislation (Section 7:646 of the Dutch Civil Code and the Equal Treatment of Men and Women Act). What is changing is that the legislator is making this principle concretely enforceable through transparency and reporting obligations.

The core is that women and men must receive equal pay for equal or equivalent work. It is also important that the concept of pay is interpreted very broadly; it is therefore not just about base salary. The comparison between pay levels also takes place at job level, not at the level of the individual person.

Below, we give a brief overview of the main obligations for employers.[1]

Obligation 1: set up a job evaluation and classification system

Every employer (regardless of the number of employees) must have a system for job evaluation and classification that safeguards equal pay for equal or equivalent work. This system must be based on objective and gender-neutral criteria, taking into account various factors such as skills, effort (mental, psychosocial, physical), responsibilities and working conditions. All factors are weighted, and it is also possible to use additional criteria such as educational requirements or soft skills, provided these are applied objectively and in a gender-neutral way.

In practice, many (small) employers work with historically grown salaries, negotiated starting salaries, no formally recorded job structure, and the well-known statement: “We roughly know what someone is worth.” Going forward, this will not be sufficient to comply with the legislation.

It is therefore important for employers to start working with consistent criteria, documented job descriptions and substantiated salary placements. Naturally, what is on paper must match reality.

Obligation 2: classify employees into categories

Employers must classify employees into categories of equal or equivalent work. But what exactly does that mean? Categories that are too broad increase the chance of visible pay gaps, while categories that are too narrow make the system unworkable again. For that reason, it is essential to set up a careful job evaluation system.

Obligation 3: be transparent towards job applicants

Employers or intermediaries must inform applicants themselves in advance about the pay or pay range for the role and the objective and gender-neutral criteria on which this is based. This must happen before the discussion of terms of employment, but does not need to be included in vacancy texts or similar.

*Note: there is a ban on asking about a candidate’s pay history.

For many SME employers who rely on individual negotiation, this will bring about a major change.

Obligation 4: be transparent towards employees

Under the new transparency legislation, employees will get the right to request, in writing, information about their individual pay level and the average pay levels within their category, broken down by gender. If an employee submits such a request, the employer must respond within two months. Employers must also inform and remind their employees of this right annually.

So be aware that the data within your organisation needs to be in order, the employee categories need to be clearly defined, and you need to be able to produce a quick analysis (with the help of a legal adviser).

Obligation 5: protection of personal data

The new legislation explicitly stipulates that personal data may only be used for applying the principle of equal pay. In essence, this concerns the personal data of employees that is recorded in connection with the right to information (see Obligation 4) about the average pay level, the reporting obligation and the pay evaluation. This privacy obligation applies to everyone who gains access to the personal data.

Obligation 6: the reporting obligation — only for 100+ employees

For companies with fewer than 100 employees, there is no reporting obligation, but the obligation to have a proper system and be transparent does apply.

The heavy reporting obligation applies to:

• 100–149 employees: every 3 years, and by 7 June 2031 at the latest (for 2030)
• 150–249 employees: every 3 years, and by 7 June 2028 at the latest (for 2027)
• > 250 employees: every year, and by 7 June 2028 at the latest (for 2027)

That report includes, among other things: the average and median pay gap, the pay gap in variable pay, and the pay gap of women relative to men. Note: a large part of this data will be made publicly accessible.

NB: for counting the number of employees, for example, agency workers hired in are also counted at the hiring company.

Obligation 7: the pay evaluation — only for 100+ employees

For employers with 100 or more employees, a (pay) evaluation obligation applies if:

• The pay gap within a category is 5% or more;
• This difference cannot be objectively justified;
• The difference is not remedied within 6 months.

In that case, a formal pay evaluation must be carried out, including an action plan, in close cooperation with the works council.

Obligation 8: obligations where a works council is present

With the implementation of Directive (EU) 2023/970, the Works Councils Act is also being amended. The works council (OR) is given a right of consent (Section 27 of the Works Councils Act) with respect to, among other things:

• The job evaluation and classification system;
• The objective criteria;
• The classification into categories;
• The approach to unjustified differences;
• The pay evaluation

The works council must also be able to assess the accuracy of the reporting information. For employers, this means more consultation, more documentation and more preparation for setting up all the mandatory elements, such as the objective and gender-neutral criteria.

Note: Do you not have a works council while you are required to, because you have 50 or more employees? Then a reinforced reversal of the burden of proof applies in pay claims.

Conclusion: don’t wait until 2027!

If pay transparency obligations are not complied with, the employer must demonstrate that no prohibited distinction has taken place. The litigation risk increases considerably due to internal information requests, possible public reports and proceedings.

In short, pay transparency is becoming a structural compliance issue. Anyone who invests now in a clear, explainable pay system avoids expensive disputes, proceedings and, not to be forgotten, reputational damage.

Do you need help implementing this new legislation?
Pay transparency is rarely purely administrative. It touches on employment law, works council law, privacy law, compliance and legally strategic decisions around pay policy. The corporate lawyers of The Legal Company guide employers – from SMEs to larger organisations – with:

• legally reviewing and setting up job evaluation systems;
• support in determining categories of equal or equivalent work;
• preparing for information requests;
• carrying out pay analyses and risk scans;
• guiding works council processes.

Would you like to know where your organisation stands and what risks you are running? Please feel free to contact us via info@thelegalcompany.nl or call 020-3450152.

[1] By employer is meant: the contractual employer that enters into an employment contract with the employee. Staffing agencies will also be responsible for temporary workers, whereby the agencies (where a reporting obligation applies) must split the report between their own employees and those they have placed with hirers.