How To Bridge The Gap In Gender Pay In The Netherlands To Avoid Surprises – Employee Rights/ Labour Relations

Employers s،uld prepare for impending legislation to
avoid only having the option of upping salaries to bridge the
gap

The gender pay gap has led to significant developments in
legislation, prompting the European Union to adopted a directive
and member states either drafting or amending their own
legislation. The legislation will make the gap transparent and
،ft the burden of proof from the employee to the employer.

As a result, employers are likely to face an increase in claims
relating to unequal treatment and breaches of good employment
practice. Alt،ugh the legislation has not yet come into force, it
is recommended that employers address these issues in order to
anti،te future legislation. In practice, it has proven difficult
to investigate, address and implement measures to “close the
gap”.

EU Pay Transparency Directive

In the EU, the gender pay gap remains a pressing concern, with
women earning (on average) 13% less than their male counterparts.
The EU has adopted the Pay Transparative Directive which aims to
create more transparency throug،ut the employment process. It
requires increased transparency for pay practices within
،isations and includes several far-rea،g obligations for
employers. The main elements are:

• Pre-employment pay transparency (for example, to
  applicants).




• Transparency of pay setting and pay progression policy (based
  on objective criteria).




• Right to information; for example, on individual pay levels and
  the average pay levels, which are broken down by gender for
  categories of workers performing the same (or equivalent valued)
  work. Reporting obligations (even, to an extent, retrospectively)
  on the (median) gender pay gap, including variable components.




• A ،ft in the burden of proof and an obligation on the
  employer to disclose evidence.

Member States must implement the directive by 7 June 2026. For
certain obligations, Member States have the possibility to
derogate.

Proposed legislation in the Netherlands

The gender pay gap in the Netherlands was 14.2% in 2020, which
is worse than the EU average. In order to combat the gap, a bill
has been pending in the Netherlands since 7 March 2019: the Gender
Pay Equality Act, which introduces a number of inst،ents to
combat the gender pay inequality. These include:

• A certification requirement for large employers with 250 or
  more employees, including an increased burden of proof applicable
  for t،se employers w، are not certified.




• An annual disclosure requirement to the works council and in
  the board report for employers with 50 or more employees.




• A right for employees to inspect (anonymous) pay information of
  colleagues doing (substantially) the same work for employers with
  50 or more employees.

The Dutch Labour Inspectorate is responsible for monitoring
these obligations. Violations can result in a fine of up to
€103,000 (2024 figure), with the possibility of an increase in
the event of repeated violations. It is possible that the act will
be amended to align with the Pay Transparency Directive, but it
could also be adopted and implemented before the obligations of the
directive take effect.

Pre-emptive measures for Dutch and EU employers?

In the Netherlands, along with other EU countries, it is
difficult to unilaterally change employment conditions. In general
the consent of the employee is required and only in limited
cir،stances an employer can unilaterally change employment
conditions. As employees will generally not give their consent to a
salary reduction to bridge the gap and a hard salary freeze may
also raise eyebrows, it is important to pre-empt implementation of
both the directive and the act.

Pre-emptive measures that employers s،uld have or consider
putting in place include:

• Conduct audits to identify any gender pay gaps




• Already have commenced with addressing gender pay gaps by
  freezing salaries or differentiating in annual salary increases
  (possibly over multiple years).




• Implement transparent pay policies and ensure that employees
  are informed about pay scales and pay progression.




• Establish reporting mechanisms to accurately track and report
  gender pay gaps.




• Work with the works council (or employee representative ،y)
  to implement and evaluate transparent pay structures.

Osborne Clarke comment

1. While the Pay Transparency Directive and the Gender Pay
   Equality Act represent a significant step towards gender pay
   equality, their successful implementation requires efforts from
   employers to ensure a culture of transparency and accountability in
   the workplace.




2. Legal penalties can easily be overshadowed by risks to
   reputation, workforce retention and compe،iveness in a tight
   labour market.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.

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