These developments matter for employers, as the contours of the new obligations are becoming increasingly clear, as is the preparation that can already begin.

Background to the draft Bill

The draft Bill implements the European Pay Transparency Directive. Its objective is to reduce the gender pay gap by increasing transparency and strengthening enforcement.

What has changed following consultation and advice?

The explanatory memorandum has been clarified and expanded in several respects. In particular, it more clearly delineates what the Directive and the draft Bill do and do not regulate, and which matters are deliberately left open for further development in practice.

In addition, greater emphasis has been placed on privacy and data protection. The draft Bill now explicitly provides that pay information shared pursuant to the legislation may be used solely for the purpose of applying the principle of equal pay for equal or equivalent work. This requires employers to put in place clear internal arrangements governing the use of and access to pay data.

The relationship with collective labour agreements has also been further elaborated. Collective labour agreements may contain arrangements on job evaluation and pay structures. Where a collective labour agreement is concluded or amended at a later stage and deviates from existing company arrangements, the collective labour agreement will prevail and those company arrangements must be brought into line accordingly.

It has furthermore been clarified that the rights arising from the draft Bill, such as the right to receive pay information, apply to all employees. This means that men and non-binary persons may also rely on these rights.

Amendments to the statutory text and its application

In the draft Bill, the concept of “pay structures” has been replaced by the obligation for employers to have a system for job evaluation and job classification in place. This emphasises that remuneration must be capable of being traced back to objective and gender-neutral criteria linked to the content of the role.

It has also been clarified that pay information prior to employment must, in any event, be provided before salary negotiations take place. This has direct implications for recruitment and selection processes.

The position of agency workers and other seconded workers has also been refined. The reporting obligations rest with the user undertaking, and the pay report must consist of two parts: one relating to the employer’s own employees and one relating to agency or seconded workers. While the practical implementation has been adjusted to improve feasibility, the underlying principle remains unchanged.

Another relevant amendment concerns the definition of employer. The statutory text no longer refers to the concept of “undertaking” as defined in the Works Councils Act. The explanatory memorandum clarifies that the term “employer” is not separately defined in the draft Bill. Instead, the assessment of who qualifies as the employer follows what is customary in practice. This means that the entity with which the employee has entered into an employment contract or a public-law appointment is considered the employer. This clarification is particularly relevant for groups of companies and corporate structures, as transparency and reporting obligations in principle rest at the level of the legal employer and do not automatically apply at group level.

Furthermore, for some employers, both the reporting obligations under this Bill and those under sustainability reporting framework will apply. Under the sustainability framework, subsidiaries are exempt from separate reporting where the parent company already reports at group level.

For the purposes of this Bill, the decisive factor is the identity of the employer. The Bill introduces no new definition and follows established practice, under which the employer is the entity that entered into the employment contract with the employee. Employers must therefore determine the appropriate reporting level and the relevant legal entity.

As a general rule, reporting should take place at the level of the individual subsidiary rather than at group level. This approach is preferable, as consolidated data offers limited insight into where pay gaps arise within the organisation, particularly where subsidiaries apply their own remuneration policies. Data may nevertheless be presented on a consolidated basis, provided that pay information is clearly disaggregated per subsidiary. 

Group-level reporting is permitted only where remuneration policy is determined centrally by the parent company, where subsidiaries have no discretion to deviate from it, and where the parent company can genuinely be regarded as the employer.

The explanatory memorandum, however, reveals an apparent inconsistency: while the employer is defined as the party to the employment contract, the parent company may, in certain circumstances, be regarded as the employer where remuneration policy is set at group level. This would suggest that the contractual employer is not always decisive.

Finally, the role of the works council has been clarified. The works council is not required to confirm the accuracy of pay reports but must be consulted in this respect. It nevertheless retains an important position in relation to pay structures and job evaluation.

Implementation timeline

Although an earlier entry into force had initially been envisaged, it was concluded at the end of 2025 that the original timeline was no longer feasible. Additional time was required to better align legislation and implementation and to limit administrative burdens. The target date for entry into force has therefore been set at no later than 1 January 2027. The European Commission has indicated that it does not accept this postponement.

What does this mean for employers?

A temporary situation may arise in which the Directive is already applicable, whilst Dutch implementing legislation has not yet entered into force. In such circumstances, employees cannot, in principle, directly rely on the Directive against their employer in the private sector. In certain cases, however, employees may be able to rely directly or indirectly on provisions of the Directive that are sufficiently clear and unconditional. This may include, for example, the obligation to provide pay information on time for instance, such as in vacancy notices, and the prohibition on asking about salary history.

Courts are furthermore required, to the extent possible, to interpret and apply national law in conformity with the Directive. This could potentially apply to the obligation to provide information on pay levels, where an employee bases a claim for equal treatment on existing legislation which then needs to be interpreted in conformity with the Directive.

The postponement of national implementation does not mean that employers in the Netherlands can delay their preparations; to the contrary. This applies all the more for employers in the public sector, as the Directive can be invoked directly against the Dutch State where sufficiently clear.

Employers are therefore advised to act in accordance with the Directive now. This includes drafting vacancies in a gender-neutral manner, ensuring that recruitment and selection processes are conducted in a non-discriminatory way and, where possible, being transparent towards employees who request information about their pay position.

Employers will not be required to comply with the reporting obligations for so long as local implementation legislation is not yet in force. This provides employers, at least in the Netherlands, with additional time to prepare for the forthcoming reporting obligations by, among other things, assessing whether pay differences can be objectively justified, ensuring that a well-founded system for job evaluation and classification is in place, and reviewing whether HR, recruitment and payroll processes are equipped to deal with increased transparency. By taking these steps, employers can ensure timely compliance with the obligations arising from the Directive.

This post was originally authored by Ius Laboris and is reproduced here with their permission.