Equal Pay Act: What does this new legislation mean for your organisation?

Equal pay

In the Netherlands, a bill has therefore been put forward to ensure that men and women are paid equally for the same work. In practice, there are still pay differences between men and women performing the same roles.

The original timeline for the law to take effect appears to be unfeasible. The intended effective date has therefore been postponed to 1 January 2027. Employers will be required to draw up an action plan if pay differences are identified. Employers will also no longer be allowed to ask applicants about their previous salary (to gain an advantage during salary negotiations). Below, we explain what your organisation can do to prepare.

Transparency

Under current legislation, it is up to employees themselves to prove that a colleague performing the same work is paid more. In practice, this means employees must discuss salaries among themselves before they can raise concerns about inequality. This creates a risk of conflict and potential complaints. The new legislation aims to put an end to this by requiring companies to be open and transparent about salaries and pay structures within the organisation. Enforcement will take place both internally, through the works council or employee representation, and externally. The Ministry of Social Affairs and Employment will develop tools to support employers in assessing whether they meet these obligations.

Organisations will be required, at an employee’s request, to provide information about the pay of other employees in the same role. Employees may not be disadvantaged for requesting this information.

Organisations with more than 50 employees will have a duty to provide information on pay differences to the works council and include this information in the management report.

In addition, organisations with 100 or more employees will be required to report on pay differences. If there is a pay gap between men and women, the organisation must be able to explain why this exists and what steps will be taken to resolve it.

From 2027, organisations with more than 250 employees will be required to obtain a certificate every three years demonstrating that they pay men and women equally for equal work. An independent body will be established to develop a transparent standard for this. If this certificate is missing, the burden of proof for the organisation becomes heavier, as there will be a presumption of unequal pay. Finally, companies that are required to prepare an annual report must include figures on the pay ratio between men and women and the policy they apply to address this. This new legislation will also lead to amendments to Article 27 and Article 31 of the Dutch Works Councils Act (WOR). If you are a member of a works council, be aware of this.

Discussing salary during the job interview

Under the new rules, as an employer you will be required to provide information about the salary in advance. This salary must be determined in an objective and gender-neutral manner. Employers will no longer be allowed to ask about an applicant’s previous salary during the interview. As a result of this bill, the initiative for discussing salary lies with the employer. Because the terms of employment must be clear to the applicant beforehand, there will be no surprises during salary negotiations.

Equality in secondary employment benefits

This bill does not only address equal gross salaries, but also secondary employment benefits. Inequality is not limited to differences in gross pay between men and women, but often also exists in benefits. Travel allowances, the possibility of a company car, bonus schemes and training opportunities must also be aligned.

Establishing a salary structure and job framework

To be well prepared for this upcoming legislative change, it is advisable to start reviewing your current salary structure. We also recommend setting up a job framework. Without such a framework, it is not possible to properly assess the weight of a role and the corresponding pay.

We can assist you in setting up a salary structure and job framework. Our HR Services colleagues are happy to work with your organisation to design a pay structure and the associated job profiles.

Salary information in job vacancies

Once a salary framework has been developed, you may choose to include the starting salary, salary range and secondary benefits in your job vacancy text. This way, applicants know what the remuneration looks like as soon as they apply. This creates the right expectations from the outset and avoids surprises during negotiations. If a different salary is agreed, you are required to document this properly so you can explain why the salary deviates.

Need assistance?

Do you need help conducting a benchmark study and/or addressing pay inequalities within your organisation? Please contact our HR Services colleagues. Would you like advice on this topic? Feel free to email your question to hradvies@crop.nl. We are happy to think along with you.