The Netherlands has become the latest country to release draft legislation transposing the EU Pay Transparency Directive into national law.
Its proposed amendments, released near the end of March this year, to the Equal Treatment of Men and Women Act incorporate all of the directive’s transparency and reporting requirements.
As organizations operating in the Netherlands prepare for compliance, understanding the key elements of the proposal and how they compare to the directive is essential.
Overview of Proposed Amendments
The Netherlands’ draft legislation aligns closely with the EU Pay Transparency Directive, covering pay transparency, reporting obligations, and enforcement mechanisms. Key provisions include:
- Pay gap reporting deadlines: Employers with at least 150 employees must submit pay gap reports by June 7, 2027. Employers with 100 to 149 employees have until June 7, 2031 to comply.
- Expanded definitions: The law provides additional clarity on terms such as “additional or variable components,” which include holiday pay, bonuses, overtime compensation, training allowances, and other variable wage elements.
- Salary information disclosure: Employees can request salary information broken down by gender and category of employees, with employers required to provide the data within two months.
- Salary progression criteria: Employers with at least 50 employees must provide transparency into the criteria used to determine an employee’s salary progression, ensuring workers understand how pay decisions are made.
- Government oversight and enforcement: The law establishes an administrative body responsible for:
- Analyzing wage gaps,
- Collecting and publishing employer pay gap data (available for four years),
- Managing joint pay assessments,
- Handling complaints against non-compliant employers.
- Legal and financial implications:
- Employers found non-compliant with the Act may face fines.
- Even if an employer successfully defends against a pay discrimination lawsuit, they may still be required to pay legal costs if the employee had a valid reason for bringing the claim.
- Employer accountability:
- Company management must certify the accuracy of pay gap reporting metrics.
- Work councils must be consulted on the formulation and accuracy of the reported pay gap data.
Comparison to the EU Pay Transparency Directive
The Netherlands’ approach adheres to the EUPTD’s core provisions while adding clarifications to wage components and strengthening employer obligations. Notably:
- The reporting deadlines and employer size thresholds remain unchanged from the directive.
- The definitions of wage components provide employers with clearer guidance on what constitutes additional or variable pay.
- The law implements a cost shifting provision wherein employers may still have to pay for legal costs in discrimination suits brought by employees..
- Company management must certify pay gap data.
Preparing for Compliance in the Netherlands
Organizations operating in the Netherlands should take proactive steps to comply with the proposed law. Some key considerations include:
- Assess pay transparency readiness: Employers must be prepared to disclose pay information to employees and ensure that salary progression criteria are well-documented and justifiable.
- Conduct pay equity analyses: Given the reporting deadlines, organizations should assess pay gaps now to avoid compliance risks.
- Strengthen internal governance: Establishing a clear process for consulting work councils and certifying pay gap data will be critical for compliance.
- Prepare for data collection and reporting: Employers should evaluate whether their current HR and payroll systems can track pay gaps by gender and job category.
How Trusaic Can Help
Trusaic provides end-to-end pay transparency solutions to help organizations comply with the Netherlands’ proposed requirements and the broader EUPTD. Our suite of solutions includes:
- Leverage PayParity® to understand, explain, and resolve pay inequities across gender, race, age, and more. Conduct proactive or compliance-driven analyses to pinpoint disparities, reduce legal risk, and build trust by ensuring fair, transparent pay practices across your workforce. And now, with R.O.S.A., you can remediate pay inequities with precision. This innovative tool enables you to run hundreds of simulations quickly to find the most impactful pay adjustments, ensuring your budget is spent where it matters most.
- Leverage the Regulatory Pay Transparency Reporting™ solution to confidently report and comply with global pay transparency requirements like Netherlands.
- Leverage our pay equity product suite to communicate narratives and share salary ranges with confidence. Shape perceptions of your pay practices by leading the conversation.
Trusaic is GDPR compliant and can assist any organization in any EU state in meeting its obligations under both the EU Corporate Sustainability Reporting Directive and the EU Pay Transparency Directive.