Pay Transparency: The Dutch Way

How the EU law on pay transparency is being implemented

You may already know that in June 2026, significant changes will come in the area of remuneration. The Netherlands will implement the European directive on pay transparency (EU Directive 2023/970). The goal? To finally close the persistent pay gap between men and women. In 2022, women in the EU still earned 12.7% less on average than their male colleagues. The Netherlands had an unadjusted pay gap of 12% in 2024. The adjusted pay gap was between 6 and 10%.

But what does this new legislation mean for employers and employees in the Netherlands? And does the Netherlands choose to supplement the European rules? (Spoiler alert: yes it does!)

The basics: what does the European directive contain?

The European directive requires employers to be more open about remuneration in order to reduce the pay gap between men and women. I have previously written about the content of the directive, as well as its different aspects. Here are the main measures:

• Transparency before employment: employers must disclose what you will earn in the form of salary or salary range before the job interview
• Right to information: employees may learn what colleagues in comparable positions earn
• Reporting obligation: companies with 100 employees or more must report on pay differences between men and women
• Mandatory evaluation: if there are unexplained pay gaps of more than 5%, the employer must take action
• Sanctions: there will be fines for companies that do not comply with the rules

What’s the Dutch approach?

The Netherlands largely follows the European directive, adding some of its own elements. The Netherlands opts for a clean implementation: no rules are included other than those strictly necessary for implementation. Additionally, they want to limit the administrative burden for smaller employers.

What is the same?

• Timeline: In accordance with the EU directive, the legislation will be introduced by June 7, 2026
• Phasing for different company sizes: The reporting obligation will first apply to large companies (250+ employees) from June 2027, while smaller companies (100-149 employees) will have until June 2031
• Burden of proof: In cases of suspected pay discrimination, the burden of proof lies with the employer
• 5% threshold: A pay gap of 5% or more requires an in-depth evaluation and action plan

Where does the Netherlands add a local flavor?

1. Legislation
   • The Netherlands chooses to supplement three existing laws instead of creating a new, specific law for pay transparency. According to the proposal, these three laws will be amended:
   • Equal Treatment Act for Men and Women
   • Works Councils Act
   • Allocation of Labor by Intermediaries Act
2. Important definitions
   • Dutch legislation consistently refers to “loon” (wage) instead of “salaris” (salary)
   • The wage level is the wage, expressed in two figures: the gross annual wage and the corresponding gross hourly wage.
   • To make reports comparable, the Netherlands will soon further define “additional wage components”
   • The workforce is expressed in four quartile wage scales. A quartile wage scale is a scale consisting of a quarter of all employees of an employer, grouped based on their wage level, from low to high.
   • The calculation of the number of employees is based on labor year units (so-called FTE). Temporary workers count toward the organization where they perform their work.
   • Objective criteria for determining categories of work/functions must contain at least the following four factors: skills, efforts, responsibilities, and working conditions.
3. Transparency for all employers
   • Articles 5 to 7 of the directive apply to all employers regardless of company size:
     • Transparency about remuneration before employment (5:1)
     • Prohibition to ask about salary history during employment terms conversations (5:2)
     • Gender-neutral job titles and vacancies (5:3)
     • Openness about pay development (6)
     • Right to information (7)
   • An employer with at least fifty employees must provide employee access to the criteria used to determine the pay development of employees.
4. Pay development
   • Employers must provide their employees with access to the criteria used to determine the pay, pay levels, and pay development of employees. Employers with fewer than fifty employees are exempt from the obligation to provide access to the criteria for determining pay development. However, even these employers must determine pay development based on objective and gender-neutral criteria.
5. Pay structure
   • Every company has a pay structure, enabling you to establish categories of employees and determine work of equal value.
     • The structure is based on objective criteria;
     • The structure is gender-neutral;
     • The criteria and categories of employees are established by the employer with the Works Council or trade union in case of a CLA.
   • Employers who do not have a pay structure will have to introduce one in their organization.
6. Pay components in the reporting
   • In the pay report, employers must provide an overview of the basic wage and the additional components.
   • To keep the reporting obligation feasible for employers and ensure comparability, regulations will specify which pay components employers must report on.
   • Examples of additional or variable components are holiday pay, thirteenth month, bonuses, private use of a company car, an Individual Benefits Budget (IBB), overtime pay, allowances for work on Sundays and holidays, irregular hour allowances, training allowances, allowances for sports subscriptions, and shares or bonuses from the parent company.
   • Components that are not tracked at the individual level, such as costs that employers can register under the work-related expenses scheme (“werkkostenregeling” – for example, company parties or work clothing) will likely not need to be included in the report.
7. Stronger role for works councils
   • The Works Council gets the right of consent for:
     • Remuneration structures and job evaluation systems (it’s not mandatory to have a job evaluation system)
     • Objective and gender-neutral criteria for pay structures
     • Classification of employees into categories
     • Approach to unjustified pay differences
   • The Works Council must confirm the accuracy of pay reports before the board can do so.
   • If a company with more than fifty employees does not have a Works Council, the company does not comply with the Works Councils Act. The legislator will not provide an alternative. In other words, the company will have to establish a Works Council to comply with the pay transparency legislation.
8. Right to information
   • Employees will have the right to request and receive written information about their individual pay level and the gender-disaggregated pay levels for categories of employees performing the same or equivalent work. Employers must inform their employees annually about that right and how it can be exercised.
   • Temporary workers can request information about their individual pay level from the employer, the employment agency. Regarding the average pay level of employees performing equal or equivalent work, the temporary worker can request information from the hiring company because only they have this information.
   • The legislator has weighed the fundamental right to equal pay against the fundamental right to data protection. This consideration has led to the fundamental right to equal pay being decisive. This is partly because if disclosure leads to identification of an employee, only a limited number of people will have access to this information.
9. Reports
   • The numbers on the pay gap relate to pay levels, in both annual and hourly wages. The calculation takes into account the part-time factor, so that pay differences per hour are clear, regardless of the number of hours worked. The part-time factor can cause major differences in the entire pay gap for annual wages, especially in the Dutch situation with relatively many part-time workers.
   • The board of the employer confirms the accuracy of the information after this has been confirmed by the Works Council
   • The reporting and evaluation obligation applies to each individual company within a group.
   • Pay reports must be available for four years. Pay evaluations must also be kept for four years.
10. Follow-up on pay differences
    • If there are unjustified differences and the employer does not resolve them within six months after the report, the employer must conduct a pay evaluation. But even when the employer has remedied unjustified differences, there may still be prohibited discrimination in an individual case. The Dutch Institute for Human Rights (College voor de Rechten van de Mens) will always look at a case of an individual employee, even if the employer indicates that the pay differences in this category of work have already been resolved.
11. Special attention for temporary workers
    • Hiring companies and temporary employment agencies must exchange information about pay levels. The information is the same as for permanent employees.
    • The temporary worker falls under the reporting of the hiring company, not the temporary employment agency.
    • The temporary employment agency remains the formal employer. If there is suspicion of unequal pay, the temporary worker first contacts the temporary employment agency. The temporary employment agency has the responsibility – together with the hiring company – to pay the correct wage.
    • The temporary employment agency also reports itself, but only includes employees who perform work for the benefit of the temporary employment agency.
12. Clear enforcement
    • The Labor Inspectorate (Arbeidsinspectie) enforces, can set requirements, and impose fines.
    • Fines follow the Criminal Code (Wetboek van Strafrecht), Article 23:4, third category, currently a maximum of €10,300.
    • The fine can be increased by 100% in case of repeated violation within 5 years.
    • The decision imposing an administrative sanction will not be made fully public (given the personal data). However, there is a possibility for publication of warnings and sanctions.
13. Lawsuits
    • If the principle of equal pay is violated, compensation or reparation for the employee is not limited by a maximum amount.
    • The limitation period for claims in the context of equal pay is set at five years.
    • The court can order an employer to pay the procedural costs, even if the employer prevails, if the employee had valid reasons to bring the case.
14. Caribbean Netherlands
    • The legislation initially applies only to European Netherlands, not to Bonaire, Sint Eustatius, and Saba.

What does this mean for you?

As an employee:

• Your (future) employer must provide information in advance about the salary or salary range associated with the position.
• Your (future) employer may not ask about your current or previous salary during job interviews. You may indicate what your expectations are, if that is voluntary (and after you have seen the salary range).
• You can request written information about your individual pay level.
• You will know the average pay for your job category, broken down by gender.
• Your employer must respond to information requests within two months.
• Is there a provision in your contract that prohibits you from talking about your pay? That will no longer be valid after the law is implemented (June 2026).
• If you exercise your rights, your employer may not disadvantage you.

As an employer:

• You must use transparent, objective, and gender-neutral criteria for remuneration.
• You must comply with the transparency criteria of the law. This is independent of company size.
• You must share the salary and/or salary range with the candidate prior to the job interview. You may determine how you do this.
• You are obliged to inform employees annually about their right to pay information.
• Depending on your company size, you must digitally report (annually or every three years) on pay differences within and outside your company.
• In case of an unjustified pay gap of more than 5%, you must take measures (read: correct it).
• You must keep the data for four years.
• The Works Council must approve the remuneration structure and approach to pay differences.

Costs and impact

The Dutch government has calculated what the new rules will cost companies:

• One-time costs: average of €255 per employer, approximately €109 million in total
• Annual costs: average of €63 per employer, approximately €27 million in total

Interestingly, research shows that many Dutch organizations are already prepared: 75% of employers have job descriptions, and about 70% of employees are covered by a collective labor agreement with established salary scales.

When does the law take effect?

• June 7, 2026: The law comes into force
• June 7, 2027: First report for companies with 150+ employees
• June 7, 2031: First report for companies with 100-149 employees

You have until May 7, 2025 to respond to the proposal.

Based on experiences in Germany, it is expected that on an annual base approximately 5% of employees will use the right to information about wages.

The Netherlands opts for pragmatism

The Dutch implementation of the EU directive on pay transparency seems a pragmatic solution: no new law but supplementing and strengthening three existing laws. In this way, the EU directive is respected and embedded in Dutch labor culture. Through the strong role of works councils and clear enforcement mechanisms, the Netherlands is getting a system that combines internal with external supervision.

Will this be enough to actually close the pay gap? I assume so, but time will tell. It will strongly depend on the extent to which the Works Council fulfills its task well and whether individual employees dare to ask the right questions. But one thing is certain: from June 2026, pay will be much less secretive in the Dutch workplace.