What is the Pay Transparency Directive?

The Pay Transparency Directive is intended to create greater openness and fairness around pay. Employers must be able to explain more clearly how salaries are determined, and employees will gain more insight into pay differences within their organisation. The aim is to make unjustified pay differences visible sooner and to better safeguard equal pay for equal work or work of equal value.

Why is the Pay Transparency Directive being introduced?

The EU and the Dutch government are introducing these rules because equal pay for equal work or work of equal value is still not a given in practice. Having a legal right to equal pay has proven to be insufficient, as pay differences are often not visible and are therefore difficult to address or prove.

  • Reducing the gender pay gap: women still earn less on average than men, even when differences in roles and backgrounds are taken into account.
  • Making pay differences visible: employees often do not know how their salary compares to that of colleagues performing similar work.
  • Better identifying discrimination: more transparent and objective pay criteria should help prevent salary differences arising from bias or unconscious preferences.
  • Stronger protection for employees: greater access to information and clearer rules make it easier to raise concerns about unjustified pay differences and enforce rights.
  • Encouraging employers to take a structural approach to pay: rather than only taking action when an individual employee raises a concern.

In short: the Directive moves from a right to equal pay on paper to a system in which organisations must be better able to demonstrate and justify it.

What does the Pay Transparency Directive mean for businesses in the Netherlands?

For Dutch businesses, the Pay Transparency Directive mainly means that pay policies must be better substantiated, more transparent, and easier to explain. Employers will need to adapt their processes around salaries, job evaluation, and recruitment accordingly.

  • Justifying salary structures: roles must be evaluated using objective, gender-neutral criteria, such as skills, responsibilities, effort, and working conditions.
  • Greater transparency towards candidates: employers must be clearer about the salary or salary range in advance and will no longer be allowed to ask about a candidate's current or previous salary.
  • More insight for employees: employees will have more opportunities to request information about their own pay and that of employees performing equal or work of equal value.
  • Reporting requirements for larger employers: organisations with 100 or more employees will be required to report on pay differences between men and women.
  • Greater focus on internal pay differences: businesses will need to identify, investigate, and where necessary address unexplained pay differences at an earlier stage.

Please note: the legislation is still under consideration. Under the current timeline, the Dutch rules are expected to come into effect on 1 January 2027, provided that the proposal be adopted.

What impact will the Pay Transparency Directive have on recruitment?

The Pay Transparency Directive will noticeably change the recruitment process. Salary will become a topic of discussion earlier in the process, and employers will need to be better able to justify decisions around salary positioning. As a result, recruitment, HR, and compensation policies will become more closely connected.

  • Greater transparency for candidates: employers must inform candidates about the starting salary or salary range before the employment terms discussion takes place.
  • Less focus on salary history: recruiters will no longer be allowed to ask about a candidate's current or previous salary. Offers will therefore need to be based more strongly on the role, experience, and objective pay criteria.
  • More consistent salary offers: organisations must have an objective system for job evaluation and salary grading. Recruiters and hiring managers will therefore need to be able to explain why a candidate is placed within a particular salary band or range.

  • FAQ

    Why is Pay Transparency important?

     

    Pay transparency contributes to a fair and transparent working environment. When organisations are clear about salary structures, pay bands, and the way salaries are determined, it becomes easier to identify and address unexplained pay differences.

    Transparency also plays an increasingly important role for candidates. Clarity around salary and employment conditions helps candidates assess whether a vacancy matches their expectations. For employers, a transparent pay policy can also contribute to greater trust, more consistent pay decisions, and a clearer recruitment process.

    What does "equal pay for equal work or work of equal value" mean?

     

    Equal pay means that employees performing the same work, or work of equal value, should receive equal pay. Any differences in salary must be based on objective and gender-neutral criteria.

    When assessing the value of work, factors such as skills, responsibilities, effort, and working conditions may be taken into account. The new rules are intended to ensure that employers can better explain how salaries are determined and why any salary differences exist.

    What is the gender pay gap?

     

    The gender pay gap is the difference between the average earnings of men and women. This does not automatically mean that men and women performing exactly the same role are paid differently. Factors such as the distribution of employees across different roles and levels within an organisation can also affect the overall gender pay gap.

    The pay transparency rules are intended to make these differences more visible. Larger employers will therefore be subject to reporting requirements on pay differences between men and women. Where differences cannot be explained objectively, additional measures may be required.

    What is the difference between equal pay and pay transparency?

     
    • Equal pay is about the principle that employees performing the same work, or work of equal value, should receive equal pay. Any differences must be based on objective and gender-neutral criteria.
    • Loontransparantie gaat over inzicht in hoe salarissen worden bepaald. Denk aan salarisranges, beloningscriteria en informatie over beloningsverschillen binnen de organisatie.
    • Pay transparency is about having insight into how salaries are determined. This includes salary ranges, pay criteria, and information about pay differences within an organisation.
    • Together, they provide greater insight and accountability. Transparency makes it easier to identify unexplained differences and assess whether pay policies are being applied fairly and consistently.

    What does the Pay Transparency Directive mean for small businesses?

     

    Smaller employers will also be affected by parts of the new rules. Employers must be able to justify their pay structures using objective and gender-neutral criteria. Candidates will have the right to information about the starting salary or salary range, and employers will no longer be allowed to ask about a candidate's current or previous salary.

    However, not all obligations apply to every organisation. Under the current Dutch proposal, reporting requirements on pay differences apply to organisations with 100 or more employees and will be introduced gradually. Smaller employers will therefore not have to meet the same reporting obligations, but they will still need to ensure that their salary structures and pay criteria are in good order.

    Is pay transparency beneficial for businesses?

     

    Pay transparency can help businesses make their pay policies more consistent and easier to explain. Clear salary ranges and criteria give candidates and employees greater insight into what they can expect and why certain pay decisions are made.

    At the same time, the new legislation means that existing processes may need to be adapted. This includes job evaluation, salary structures, job advertisements, and the way employment terms are discussed during the recruitment process. A well-structured pay policy not only helps organisations comply with the new rules but can also contribute to clearer and more consistent decision-making.