In 2023, the EU Pay Transparency Directive (2023/970) was adopted. This directive requires employers in the European Union to increase transparency in pay and aims to achieve equal pay for men and women for the same work. The Netherlands is working on a draft 'Equal Pay' bill to transpose this directive into national legislation. This is because the directive must be implemented by June 7, 2026.
What does the directive mean?
The Directive imposes various obligations on employers, including:
- Recruitment process
Employers must now offer vacancies and job descriptions including salary information. Vacancies and job titles must also be gender neutral and the recruitment process non-discriminatory. - Information obligations
Job applicants are given the right to request information from the prospective employer about the starting salary or pay scale of the position for which they are applying.
Employees should have access to the criteria on which their pay is based (both individual pay levels and average pay levels, broken down by gender, for categories of employees performing equal or equivalent work). - Reporting requirement
Employers with 100 or more employees must report on pay differences between male and female employees within the organization. This information must be shared with employees and employee representatives. - Enforcement
Employers risk sanctions if they fail to comply with the Directive. In addition, there is a right to compensation for the affected employee if there is pay discrimination by the employer. A reversal of the burden of proof also applies. If discrimination is suspected, the employer must prove that it does not exist.
What does it mean for you as an employer?
Employers in particular may face major administrative and financial consequences as a result of the measures to improve wage transparency. Employers must be able to demonstrate that employees, both men and women, are paid equally for comparable work.
Although the implementation deadline of the Pay Transparency Directive is still some time away, as an employer it is wise to be prepared. Think about actions such as: adjusting the application process, defining job criteria, formulating transparent remuneration criteria and/or reviewing salary scales or checking whether a salary evaluation is required. Where necessary, also adjust HR systems to run the necessary reports in due course.
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