Implementation of the Pay Transparency Directive

The amended draft bill contains several clarifications and adjustments. The most important ones include the following:

Who qualifies as an employer

The term “employer” no longer follows the concept of an undertaking under the Works Councils Act (WOR). Instead, it refers to the party who is the actual employer in practice: the person or entity with whom the employee has entered into an employment agreement or public‑law appointment.

Job evaluation and classification

The obligation to have “wage structures” is replaced by the requirement to have a system for job evaluation and job classification (referred to in the Directive as “wage structures”). This system must enable a comparison of the value of different positions and provide clarity on how roles relate to one another within the organisational structure. It must be based on objective criteria and form the foundation for ensuring equal pay for equal or equivalent work. This obligation applies to all employers.

Further specification of concepts by governmental decree

The bill provides for extensive pay reports that include various figures on pay differences. The core concepts from the Directive will be incorporated into Article 1 of the Equal Treatment (Men and Women) Act (Wgbmv). Further specification of concepts such as “pay” and “pay gap” may be set out in a governmental decree to promote uniform application and compliance.

Reporting at group level

As a rule, pay reporting takes place at the entity level. Each subsidiary within a group must report independently since remuneration policies can differ per entity. Consolidated presentation in the annual financial statements is permitted, provided that the pay data for each subsidiary is broken down separately. Reporting at group level is only possible if the parent company actually functions as the employer, such as when remuneration policy is centrally determined and subsidiaries have no discretion to deviate.

Adjusted role of the works council

The requirement for works council (WC) approval of the pay report has been removed. Instead, the WC must be consulted on the faithfulness of the report. The management board remains responsible for the accuracy of the data provided. The WC’s right of consent continues to apply to decisions on establishing, amending or withdrawing the remuneration or job evaluation system, the classification of employee categories, the approach to unjustified differences and the pay evaluation, including an action plan to address such differences.

Temporary agency workers

Determining the number of employees is based on the previous calendar year, including agency workers counted at the hiring company and part‑timers expressed in full‑time equivalents. In the pay report, the hiring company must distinguish between its own employees and temporary agency workers. For temporary agency workers, the hiring company relies on the employment conditions provided by the supplier under Article 12a of the Waadi. The categories of employees performing equal or equivalent work must be identical in both sections. A simplified reporting obligation applies to agency workers, allowing employers to rely on existing arrangements with agencies. As a result, additional data streams should no longer be necessary.

Use of personal data

Personal data processed for information requests, reporting obligations and evaluation requirements may only be used for the purpose of applying the principle of equal pay.

Pre-employment transparency

The existing obligation to provide pay transparency during recruitment has been strengthened: pay information (starting salary or salary range and objective, gender‑neutral criteria) must now be provided before salary negotiations or otherwise prior to employment.

The Advisory division acknowledged the importance of reducing pay disparities but also expressed concerns about the administrative burden for employers and the lack of a clear evaluation framework to measure the effectiveness of the measures. It also noted legislation alone does not guarantee real change in practice.

Regarding pay reports, the Advisory division pointed out the Directive allows member states to have all or part of the reports prepared by a public authority, which could reduce the administrative burden for employers. The bill does not make use of this option. The Advisory division considers this insufficiently justified and recommends further explanation and reconsideration.

The Advisory division also notes that the proposed implementation is not timely. The Directive must be transposed by 7 June 2026, while the bill is expected to enter into force on 1 January 2027. The legislation’s first reporting date of 7 June 2028 for employers with 150 or more employees is later than the 7 June 2027 date specified by the Directive.

Furthermore, the Advisory division stresses the need for clarity regarding the monitoring body. Although the explanatory memorandum states the authority will be the 'Uitvoering van Beleid' (part of the Ministry of Social Affairs and Employment), the feasibility of these tasks is insufficiently substantiated. The Advisory division advises assigning these responsibilities more explicitly to the Minister of Social Affairs and Employment.

On privacy, the Advisory division highlights the tension between transparency and data protection, particularly where pay information can be traced back to individual employees. It recommends applying the GDPR legal basis more explicitly and limiting the use of identifiable data strictly for ensuring equal pay.

Finally, the Advisory Division raises concerns on gender registration. While sex registration is required for the purposes of pay reporting, the bill does not sufficiently clarify how non‑binary employees should be treated or how their pay is to be reflected in the relevant calculations.

The CMS publication “Wetsvoorstel loontransparantie mannen en vrouwen: naar gelijke beloning in Nederland” specifies the obligations under the draft bill in detail. Employers who have not started preparing should do so now. 

The Verwey‑Jonker Institute has published a practical guide, commissioned by the Ministry of Social Affairs and Employment, which provides a step‑by‑step guidance on developing gender‑neutral and objective pay structures, including job descriptions, job evaluation and remuneration policy. Although the legislative process is ongoing, this guide offers a valuable starting point for employers’ preparations.

Would you like to discuss the impact of this legislation on your organisation or gain insight into the necessary preparatory steps? Please contact us, we look forward to discuss this with you.