Pay Transparency in the Netherlands (loontransparantie): A Step-by-Step Guide for Employers

The Netherlands has taken a significant step forward in addressing gender pay inequality with the publication of a draft bill to implement the EU Pay Transparency Directive. Released on March 26, 2025, this legislative proposal marks a crucial development for workplace equality in the Dutch employment landscape. The bill introduces comprehensive measures aimed at narrowing the gender pay gap through enhanced transparency obligations, structured reporting requirements, and strengthened employee rights.

For a broader perspective on why pay transparency matters for employee satisfaction and retention, consider this analysis.

Implementation Timeline and Approach

The Dutch government has initiated an internet consultation phase for the draft legislation that will conclude on May 7, 2025. Following this period, authorities will determine whether and in what form to submit the bill to the House of Representatives, with plans to do so in the third quarter of 2025. The intended implementation date aligns with the EU deadline of June 7, 2026.

Notably, the Dutch approach is characterized by pragmatism. The government has opted for a minimal implementation strategy, incorporating only those measures strictly necessary to comply with the Directive without adding supplementary national requirements or "gold plating". This approach aims to minimize the regulatory burden on employers while still fulfilling EU obligations.

If you want to see how the Dutch approach compares to other EU countries’ strategies for pay transparency, this comparative overview is useful.

Key Provisions of the Draft Legislation

Transparency Obligations for All Employers

The draft bill introduces several transparency measures that will apply to all employers, regardless of organization size and across both public and private sectors:

• Employers must inform job applicants about the starting salary or pay scale and relevant collective labor agreement provisions either in job postings or before interviews. As Dutch employers prepare to communicate salary ranges to candidates, it’s helpful to understand the pros and cons of including pay information in job ads.
  
• Organizations will be prohibited from inquiring about candidates' salary history during recruitment processes. With the new prohibition on salary history questions, recruiters may need to rethink their interview strategies.
  
• Job postings and recruitment processes must be gender-neutral and non-discriminatory
  
• Employees gain the right to request and receive written information about their individual pay level and average pay levels by gender for comparable roles
  
• Employers must provide requested pay information within two months
  

Mandatory Pay Structures

Under the proposed legislation, employers will be required to establish objective and gender-neutral pay structures for equal work or work of equal value. These structures must be based on clear criteria, including:

• Skills
  
• Effort
  
• Responsibilities
  
• Working conditions
  
• Other relevant job-specific factors (such as educational requirements or behavioral skills)

This systematic approach aims to create a framework that enables fair categorization of workers and transparent determination of work value and associated compensation.

Establishing objective, gender-neutral pay structures is at the heart of the new law; here’s why a strong job architecture is essential for transparency and compliance.

Pay Gap Reporting Requirements

One of the most significant aspects of the draft bill is the introduction of mandatory pay gap reporting for larger employers. The requirements are tiered based on organization size:

For Organizations with 250+ Employees:

• Annual reporting requirement
  
• First report due by June 7, 2027
  
• Reports must be submitted to a designated authority and communicated internally
  

For Organizations with 150-249 Employees:

• Reporting every three years
  
• First report due by June 7, 2027
  

For Organizations with 100-149 Employees:

• Reporting every three years
  
• First report due by June 7, 2031
  

These reports must include comprehensive pay gap data, specifically:

• The overall gender pay gap
  
• Pay gap in additional or variable compensation components
  
• Average pay gap figures
  
• Average pay gap in additional/variable components
  
• Proportion of female and male employees receiving additional/variable components
  
• Proportion of female and male employees in each quartile pay scale
  
• Employee pay gap broken down by categories and pay components

As you prepare for new pay gap reporting obligations, a practical checklist can help ensure your organization is ready for compliance.

Follow-Up Actions for Identified Pay Gaps

The legislation establishes clear protocols for addressing identified disparities. When reports reveal a gender pay gap exceeding 5% that cannot be objectively justified, employers must take proactive measures:

1. Conduct a thorough pay evaluation within six months
   
2. Develop and implement an action plan to eliminate the unjustified differences
   
3. Take corrective measures within a reasonable timeframe, determined case by case
   

Importantly, the draft bill acknowledges that not all wage differences necessarily constitute discrimination. Objective factors such as skills, effort, responsibilities, and working conditions can justify certain pay differentials. The burden falls on employers to establish and document these objective criteria.

When addressing pay gaps, it’s important to conduct a thorough pay equity analysis—this guide outlines the key steps.

Enhanced Enforcement and Employee Protections

To ensure effective implementation, the draft legislation designates the National Labor Authority (formerly Labor Inspectorate) as the supervisory body responsible for monitoring compliance and enforcement. Employers violating the rules may face penalties of up to €10,300 per violation.

The bill also strengthens legal protections for employees asserting their equal pay rights through several mechanisms:

• Shifting the burden of proof to employers in pay discrimination cases
  
• Protection against retaliation for employees who exercise their rights
  
• Provisions allowing courts to order employers to pay legal costs even if they win the case, provided the claim was brought with reasonable cause

Transparency is also about empowering employees to understand and challenge pay decisions; here’s how open compensation reviews can support this.

Expanded Role for Works Councils

The draft legislation significantly expands the role of Works Councils in addressing pay equity issues. The Works Council's consent rights will be extended to include:

• Decisions regarding the company's wage structure and job-grading system
  
• Establishment of gender-neutral criteria for assessing work value
  
• Pay evaluations conducted when wage gaps exceeding 5% are identified
  

Additionally, employers must seek confirmation from the Works Council regarding the accuracy of information provided in pay gap reports, enhancing accountability in the reporting process.

Practical Implications for Dutch Employers

While the implementation date of June 2026 may seem distant, employers should begin preparing now for these substantial changes. Organizations will need to:

1. Review and potentially restructure existing pay policies and systems
   
2. Establish objective, gender-neutral criteria for determining compensation
   
3. Develop mechanisms for collecting and analyzing required pay gap data
   
4. Prepare for increased transparency in recruitment processes and job postings
   
5. Engage with Works Councils early regarding compensation structures
   

For multinational groups, it's important to note that reporting obligations apply to each employer entity separately and cannot be consolidated. This means each employer within a group must report and inform on its own pay gaps and structures, regardless of the parent company's size or location.

Updating recruitment and pay practices is key—these actionable tips can help your organization adapt smoothly.

Looking Ahead

The Netherlands' draft bill represents a significant step toward greater pay transparency and gender equality in the workplace. While maintaining alignment with EU requirements without adding additional national obligations, the legislation introduces substantial changes that will impact Dutch employers and employees alike.

As the consultation process continues and the bill progresses through legislative channels, organizations should begin laying groundwork for compliance. By taking proactive steps now, employers can not only prepare for regulatory requirements but also advance workplace equity principles that benefit their workforce and organizational culture.

The coming months will likely bring further clarity as the bill advances through the legislative process, potentially with modifications before its final implementation. What remains clear is that pay transparency is no longer just a progressive workplace practice but is becoming a legal imperative across the European Union, with the Netherlands now firmly on the path to implementation.

Ultimately, pay transparency is not just a compliance issue—it’s an opportunity to build a fairer, more engaged workplace.