In 2023, the European Union took a decisive step towards addressing persistent pay inequality by introducing the Pay Transparency Directive, which needs to be transposed to national law by the member states by 7 June 2026 (see our previous article here). In March 2025, the Dutch government finally published a draft implementing bill. The public consultation period ended in May 2025.

Background and objectives

The directive's primary goal is to promote and facilitate equal pay between men and women by introducing concrete measures to enhance pay transparency. It establishes binding obligations and minimum standards designed to strengthen equal pay compliance through improved transparency and accountability mechanisms.

Despite progress in women's labour market participation and financial independence, significant inequalities persist in the Netherlands, with women on average earning 12% less per hour than their male counterparts (in 2023). The new draft implementing bill aims to make these differences more visible and resolvable by increasing transparency in pay structures, empowering employees in seeking equal pay, and promoting good corporate governance through public accountability.

Current legislation in the Netherlands on equal pay includes the Equal Treatment of Men and Women Act (Wet gelijke behandeling mannen en vrouwen), which establishes the right to equal pay for work of equal value, regardless of gender. In addition, the Dutch Constitution sets out a general prohibition against discrimination in article 1. Although there is increased awareness of gender pay inequality, further steps are needed in the Netherlands to address the pay gap. The implementation of the EU directive will expand and refine current legislation on equal pay.

Implementation in the Netherlands

The Dutch legislature has chosen to implement the Pay Transparency Directive by closely following the text of the directive and including only what is strictly necessary to meet the implementation requirements. The plan is to implement the directive through amendments to various existing national laws, including the Equal Treatment of Men and Women Act, the Works Councils Act (Wet op de Ondernemingsraden), and the Labour Allocation by Intermediaries Act (Wet allocatie arbeidskrachten door intermediairs). The most important amendments in the draft bill consist of reporting obligations for large companies, information rights for employees and job applicants, and expanded co-determination rights for works councils.

Reporting and other obligations for large companies

Under the draft implementing bill, employers must establish pay structures based on objective and gender-neutral criteria. These criteria must determine the value of work and corresponding pay and include the following four factors: skills, physical and mental effort, responsibilities, and working conditions.

Employees need to be divided into categories so they can be compared with each other. These categories are defined as "employees performing equal or equivalent work". Based on the pay structures established and applied by employers, work of equal value can be determined. Employers can then establish categories of employees within their organisation, focusing on employees performing equal or equivalent work. This involves not only identifying equal work but also grouping employees performing different types of work that is deemed equivalent.

Employers with 100 or more employees must report pay differences to a monitoring body which is yet to be established. The report must detail the average and median pay gap between men and women within the organisation, including basic pay and additional or variable compensation. These data will be published on a public national website. What specific data needs to be published will be set out in further government regulations. If the report reveals a pay gap between men and women that cannot objectively be justified, the employer must take measures to address these differences within a reasonable timeframe.

The frequency of reporting depends on the size of the employer:

• 250 employees or more – annually, for the first time by 7 June 2027
• 150-249 employees – every three years, for the first time by 7 June 2027
• 100-149 employees – every three years, for the first time by 7 June 2031

If the pay report reveals an unjustified 5% or higher difference in the average pay of female and male employees performing equal or equivalent work, and this difference is not resolved within six months of submitting the report, a comprehensive pay evaluation is required. This evaluation involves an analysis leading to an action plan outlining causes of and solutions for the pay gap issue.

Information rights for employees and applicants

Employers must provide employees, if they ask for this, with written information about their individual pay level and the average pay levels for employee categories, broken down by gender. This must be done within two months of a request, and the obligation applies to employers and employment agencies.

When offering a position or filling a vacancy, employers must provide information about the pay offered for the role based on objective and gender-neutral criteria. Applicants do not need to request this information; employers must provide it proactively, and in a timely manner to allow informed and transparent salary negotiations. Employers are prohibited from asking applicants about past salary. Negotiating pay – resulting in unequal pay for the same or equivalent role – remains possible, but the agreed amount of salary must be objectively justified, for example, by differences in relevant experience or performance.

If an employer fails to comply with the transparency obligations at the time of hiring or during employment, or with the reporting obligations, there is a legal presumption that pay discrimination has taken place, which the employer will need to refute. Employees can take legal action against pay discrimination: they can claim compensation, such as for loss of salary or bonuses and for non-material damage. Employers may risk sanctions for non-compliance with the transparency obligations: the Dutch Labour Inspectorate, as the supervisory authority, can launch an investigation. It also has enforcement powers and can issue a fine or an order subject to a penalty.

Extension of co-determination rights

In general, the draft implementing bill contains many new information requirements for companies with more than 50 employees (which have a legal duty to establish a works council). This will most likely lead to more works council involvement in the topics covered by the draft bill.

In addition, a proposal has been made to amend article 27 of the Works Councils Act. If this amendment becomes law, the company must obtain works council consent for any proposed decision to set up, amend or withdraw pay or job evaluation systems. This includes rules on pay structures, objective and gender-neutral criteria, categorisation of employees, methods of addressing unjustified pay differences, and pay reviews. These measures must be developed in close collaboration with the works council.

Response to the draft implementing bill

Various parties such as legal experts, trade unions, industry-wide organisations and individuals responded to the draft bill during the consultation phase. These responses show shared concerns about some fundamental elements of the draft bill.

These concerns in first place relate to the definitions the legislature picked for the following terms:

• "employer" – this aligns with the definition of "enterprise" under the Works Councils Act but causes confusion about the practical question as to who exactly bears the rights and obligations introduced in the draft bill
• "pay structures"– the draft bill does not define pay structures
• "equal or equivalent work" – the assessment of equal of equivalent work under the draft bill requires more guidance than is currently available to companies
• "measures" – it is unclear which measures companies should take to resolve a pay gap. For example, are they allowed to freeze salary prospects?

Other concerns relate to the expansion of co-determination rights. By awarding the works council various rights of consent, the legislature has arguably chosen a more invasive approach than the simple implementation that it envisaged. Notably, the directive itself leaves room to grant the works council less intrusive co-determination rights, such as the right to be consulted on certain topics.

Finally, the consultation responses draw attention to more practical issues such as the administrative burden the draft bill imposes on employers and how to deal with personal data (especially in smaller organisations where information can easily be traced back to an individual).

With the directive's 7 June 2026 implementation deadline less than a year away, the Dutch implementing bill is expected to be submitted to the lower house of parliament in the third quarter of 2025.