As of 7 June 2023, the EU Pay Transparency Directive has entered into force. The directive aims to counter pay gaps between men and women and requires organisations to make pay differences more transparent, explainable and verifiable.
Contents
Stay informed
We are happy to provide you with new (international) insights in the areas of finance, business operations, strategy, governance, risk, compliance and more.
The Netherlands has not met the European implementation deadline of 7 June 2026. The Dutch implementation law is expected to take effect on 1 January 2027. Many organisations are waiting for this definitive legislation. That is understandable, but it is not without risk.
Once the law comes into effect, organisations will have to comply with the implementation law immediately. This means that organisations must provide insight into remuneration (upon request). When there are differences of more than 5 per cent, these differences must be actively substantiated and, where necessary, corrected.
Waiting therefore does not mean that the risk starts later. Above all, it means there is less time left to get the basics in order. For organisations that have not yet started, the greatest risks lie in three areas: legal claims, reputational damage and time pressure.
Insufficient substantiation can lead to claims
In practice, problems around equal pay rarely arise due to deliberate policy. Pay differences are more often the result of individual negotiations, historical decisions, differences in management style or organically evolved job structures.
This is exactly what changes with the new directive. Once the legislation comes into force, organisations will have to explain pay differences based on objective and gender-neutral criteria. And that is where the risk lies. Organisations get stuck because:
Pay criteria are not clearly defined
Job groups are not consistently structured
Documentation is missing or fragmented
A difference in pay does not have to be a problem, but it becomes one when there is no objective explanation for pay gaps of more than 5 per cent. If such an explanation is missing, it may constitute prohibited discrimination. Employees or their representatives can then file a civil claim, the costs of which can rise enormously.
Pay differences also become a reputational issue
Within the organisation, there are various disciplines, in addition to the HR department, involved in the implementation law.
Think of:
Governance: who is responsible for the remuneration policy and its review?
Finance: what is the impact of corrections or potential claims on the organisation?
Legal: how is differentiation legally assessed and substantiated?
Data and IT: how reliable and complete is the available salary data?
In addition, the role of employee participation is strengthened. Pay structures will therefore become more widely visible within the organisation and, depending on the obligations, also externally.
Unexplained pay gaps can impact employee trust, attractiveness as an employer and reputation in the market. Pay transparency is therefore not only a compliance issue but also a strategic theme for good employment practices.
Preparation takes more time than often thought
A common reason for not starting yet is that national legislation is not yet definitive. Yet waiting is often the least effective strategy. Preparation takes time.
Collecting and cleaning data, restructuring job roles and defining pay criteria are steps that take a long time. Particularly in organisations where systems, departments and countries are intertwined, it is difficult to review HR processes.
Moreover, if the implementation date of 1 January 2027 is met, the first reporting obligation for employers with 150 employees or more must already be completed shortly afterwards, namely no later than 7 June 2028. Organisations that only start in January 2027 risk missing the deadline or making decisions under time pressure that are difficult to correct later.
What can you do now?
The directive does not require a completely new pay model. The core lies in getting the basics right. Organisations can already start with several concrete steps. These steps form the basis for compliance but also immediately give you more control over your organisation.
Do you want to know which steps you can already take?
Organisations that start now reduce the likelihood of legal disputes, limit reputational risks and create room to carefully investigate and, where necessary, correct pay differences.
This ensures that your organisation complies with the implementation law when it comes into effect. Do you want to know where your organisation stands and which steps are most urgent? We are happy to work with you on a short initial assessment.
The Advisory Division of the Council of State (the Division) issued advice on 1 April 2026 on the Dutch legislative proposal to implement the European Pay Transparency Directive. The Division endorses the objective of the Pay Transparency Directive.
Despite decades of policy at European and national level, the pay gap between men and women in the Netherlands continues to persist. With the introduction of European Directive and the Dutch government bill implementing this directive, the focus is now on structural change through the introduction of several measures.
