Earlier I already wrote about the pay transparency obligations that are on their way. These stem from the European Pay Transparency Directive (Directive (EU) 2023/970), which aims to better enforce equal pay for equal work between men and women. As already explained in that publication, the implementation deadline of 7 June 2026 will not be met. This means that transposing the directive into Dutch legislation is being delayed.

When does the law take effect?

The new pay transparency rules are expected – subject to parliamentary approval – to take effect as of 1 January 2027. This means the Netherlands is behind the formal implementation deadline set out in the directive, but employers would be wise not to wait to prepare until the law has actually been adopted. 1 January 2027 may seem far away, but the expectation is that employers already need to start preparing for this legislation now. Mapping out and, where necessary, revising pay structures, job profiles and HR processes takes a great deal of time in practice. There is doubt as to whether organisations, particularly without good preparation, will manage this in time.

New obligations for employers

That uncertainty relates in particular to two new obligations arising from the law, aimed at safeguarding equal pay for equal or equivalent work.

In essence, it concerns the following obligations:

• the reporting obligation on pay gaps between male and female employees, which is expected to be introduced in phases, with larger employers going first;

• the statutory right of employees to access pay information, including insight into the average salary level of colleagues who perform equal or comparable work, broken down by gender.

Further elaboration and practical preparation

For many employers, this means they will need to get their pay structure, job architecture and job evaluation methodology in order more quickly than planned. At the same time, it is not yet fully clear exactly how certain concepts in the law will be interpreted. This is expected to be further elaborated through a general administrative order (AMvB), which will, among other things, clarify what exactly falls under “pay”, which fixed and variable components must be included, and which employers will fall under the reporting obligation.

As long as those administrative orders remain outstanding, it stays difficult for employers to take fully targeted preparatory measures for the legislation. This is all the more relevant because, from the moment the law takes effect, employees will be able to ask direct questions about their position within the pay structure. Any pay differences will then need to be substantiated, for example on the basis of objective criteria such as education, experience, job weight and relevant competencies. It is therefore advisable to carry out an internal pay analysis in good time and to identify, and where necessary correct, any unexplainable differences.

Privacy risks also play a role

In smaller organisations, where smaller job groups also exist, sharing average pay data can quickly become traceable to individual employees. The legislator has, however, made clear that in this context the interest of pay transparency in principle prevails, although the General Data Protection Regulation (GDPR) of course continues to apply in full.

Consequences for larger and smaller organisations

Larger organisations in particular will need to critically review their job architecture and pay structure and adjust it where necessary, partly in consultation with the works council. Think of updating job profiles, recalibrating salary scales and recording objective pay criteria. Smaller employers, although presumably exempt from (parts of) the reporting obligation, will also be confronted with the right of access and will need to prepare for this by making their pay policy more transparent and better explainable.

Role of pay transparency in the termination of employment contracts

Finally, the right of access is expected to also play a role in termination situations. Employees negotiating a settlement agreement may first want insight into their pay position relative to colleagues. This can give rise to additional pay claims, possibly with retroactive effect, for example where unexplainable pay differences between men and women turn out to exist. For employers, this brings not only financial risks, but also potential reputational damage and a greater chance of proceedings concerning unequal pay.

Recommendations for timely preparation

It is therefore advisable not to wait until the law formally takes effect, but to start in good time with a legal and practical stocktake of the current pay structure. Think of mapping out functions and scales, reviewing past pay decisions, recording objective criteria and documenting the reasoning behind any deviations. In practice, it turns out that precisely this preparatory phase is decisive in limiting risks and preventing disputes and claims afterwards.

Support with pay transparency and pay policy

Do you have questions about the impact of this legislation on your organisation, or would you like support in mapping out and legally testing your pay structure? Please feel free to contact the corporate lawyers of The Legal Company via info@thelegalcompany.nl or call 020-3450152. We are happy to think along with you about a practical, future-proof and legally sound approach.