Entered into force on June 7, 2023, the European Pay Transparency Directive aims to further close the gender pay gap that still exists in Europe and increase transparency about pay. By way of illustration, in 2024, women in Europe still earned, on average, 6% less than their male counterparts for equal work.
Obligations
The Directive contains reporting obligations for employers with more than 100 employees on the average pay, including the average variable pay, of male and female employees.
Employers with 250 employees or more must comply with the reporting obligation every year starting from June 2027. Employers with 150-249 employees must also report from June 2027, followed by a report every three years. Employers with 100-149 employees must report from June 2031, followed by a report every three years.
If the report shows a pay gap of 5% or more in specific employee groups and the gap cannot be justified by gender-neutral factors, then the employer, together with employee representatives, must conduct a pay assessment and define measures to eliminate the pay gap.
Right to information - reversal of the burden of proof
Employees have the right to request information about their colleagues' salaries. This means that when employees suspect that the principle of equal pay has been infringed, it is the employer that is responsible for proving otherwise.
Finally, the Directive empowers victims of pay discrimination to claim full compensation.
The Directive must be implemented in the national legislation of the EU Member States by June 7, 2026.
In the Netherlands, a private members' bill called the Equal Pay for Men and Women Act was submitted in March 2019. This bill also aims to eliminate the pay gap but it has not been considered in the House of Representatives for some time.
Next steps for Dutch employers
The implementation date of June 7, 2026 may still seem far away, but employers would do well to anticipate the upcoming reporting and other obligations now. This is because any pay gap that exists on or after January 1, 2026 will have to be included in the reporting obligation, which starts in June 2027.
We therefore recommend that an assessment of the employer’s pay data be conducted now so that any potential inequalities can be identified. An inventory of possible gender-neutral justifications for any pay differences and of ways to make pay structures transparent and understandable to employees can also be drawn up now.
