It also questions the proposed deviation from the Pay Transparency Directive’s transposition timeline and raises concern that enforcement by the Labour Inspectorate is expected to be primarily administrative rather than an assessment of report accuracy. Alongside the Council’s opinion, new guidance has also been published on how employers should design fair, gender-neutral pay structures in practice.

For further background on this bill, see our earlier article Implementation of the Pay Transparency Directive – update.

The Council of State’s opinion

Set out below are the Council of State’s key observations.

Administrative burden and uncertain impact

The Council supports the objective of reducing the gender pay gap, but expresses reservations about the proposed means. Obligations such as pay reporting, transparency towards job applicants and employees, and the (re)design of job evaluation systems will result in significant administrative burdens and increased regulatory pressure for employers. At the same time, it is unclear how the effectiveness of these measures will be assessed and whether they will in fact contribute to closing pay gaps. The Council therefore cautions that expectations should not be set too high; legislation alone is unlikely to change practice.

The Council refers to the fact that, in a response letter dated 12 December 2025, the Labour Inspectorate noted that the Pay Transparency Directive allows for pay reports to be largely prepared by a national government agency, which could reduce administrative burdens and improve comparability. However, the explanatory memorandum currently considers this option unworkable due to insufficient available data.

Supervision, enforcement and transposition

The Council also raises concerns about enforceability. The Labour Inspectorate’s supervision is expected to focus primarily on whether a pay report has been produced, rather than on the accuracy of its content. For employers, this means that the emphasis will be on formal compliance, while employees may still dispute the substance of the information provided.

The bill also introduces a monitoring body to collect and publish wage reports, likely to take the form of an implementing agency of the Ministry of Social Affairs and Employment. The Council stresses that clarity on this point is needed as soon as possible and that, if this task is allocated to the Ministry, this must be explicitly regulated by law. There is also uncertainty as to whether the necessary preconditions and resources are in place.

Timing of transposition

The Pay Transparency Directive must be transposed by 7 June 2026 at the latest. However, this deadline appears unachievable, as the intended date of entry into force of the bill is 1 January 2027. The Council observes that the consequences of this delay have not been sufficiently explained and should therefore be clarified.

In addition, the proposal deviates from the Pay Transparency Directive by postponing the first pay reporting obligation for employers with 150 or more employees to 7 June 2028, rather than 7 June 2027. According to the Council, the Pay Transparency Directive does not allow for such a postponement, and this could undermine the effectiveness of EU law. The Council therefore recommends aligning the reporting deadline with the Pay Transparency Directive.

Privacy and pay data

The Pay Transparency Directive requires employers to record employees’ gender. However, the explanatory notes do not clearly address how non-binary employees should be treated; and the Council recommends that this be clarified. The Council also highlights the tension between transparency and privacy, as pay information may be traceable to identifiable individuals and may only be used for limited, defined purposes.

As a result, employers must not only meet their transparency obligations, but also ensure that pay data is processed, stored and accessed appropriately, with regard to privacy requirements and internal governance arrangements.

Guidance on pay structures - key takeaways for employers

To help employers prepare for 1 January 2027 (the intended date of entry into force of the bill), the Verwey Jonker Institute, commissioned by the Ministry of Social Affairs and Employment (SZW), published detailed guidance on April 2026 on designing fair, gender neutral pay structures. The message is clear: compliance is about systems, not just reporting.

Why this matters

The guidance highlights a persistent reality gap: In 2024, women in the Netherlands earned 10.5% less per hour than men (EUR 27.15 vs EUR 30.32). At 85% of the 3,000 largest Dutch companies, men earn more on average. Yet 78% of employers believe their pay practices are already gender neutral. The widest gaps are in financial services (21.7%), retail (20.4%) and business services (18.7%). While of course it’s well-established that organisation-wide pay gaps can exist without indicating a fundamental pay equality issue, persistant and significant pay gaps can and are taken as a concerning sign.

What every employer must have

According to the guidance, all employers, regardless of size, must operate a pay structure based on objective, gender neutral criteria. This requires four key components:

• clear job descriptions for every role;
• consistent job evaluation, using at least skills, effort, responsibility and working conditions;
• salary scales derived from those evaluations; and
• a transparent and documented remuneration policy.

Employers with 250 or more employees must also factor in education and work experience.

This will be a challenge for larger organisations which tend to develop pay ranges / structures on a more ‘granular’ basis - looking at market benchmarks for particular job families or even roles, rather than at a ‘grade’ level (which often comprises a variety of roles and disciplines paid differently).

Hidden bias: common traps

The guidance warns that pay systems can appear neutral but still produce unequal outcomes. Some risk areas include:

• over weighting physical or technical criteria; 
• undervaluing communication, interpersonal and psychosocial skills; 
• anchoring pay to previous salary; 
• granting permanent salary guarantees; and
• awarding pay rises inconsistently.

Labour market shortage allowances are permitted only if the shortage is demonstrable, the allowance is temporary, applied equally and clearly identifiable as a separate component.

Enforcement risk: the burden shifts

Where transparency is lacking, the burden of proof in equal pay claims shifts to the employer. Employees may challenge both job grading and pay outcomes and courts can order corrections.

Works councils must approve changes to job evaluation or pay policy and with around 75% of Dutch employees covered by collective agreements, compliance will often need to be addressed through collective bargaining.

What employers should do now

The guidance recommends that employers:

• audit job descriptions for completeness; 
• test evaluation methods against the required criteria; 
• ensure pay policies are documented, objective and consistently applied; and 
• review pay structures every two to three years, or following mergers or reorganisations.

The Pay Transparency Directive does not require a complex analytical job evaluation system, but it does require that every pay decision can be objectively justified, explained and audited.

It is therefore essential that employers begin preparing at an early stage, with particular attention to pay data, job evaluation systems and privacy compliance.

A version of this post was originally authored by Ius Laboris and is reproduced here with their permission.