Update on Dutch implementation of EU Pay Transparency Directive: proposal submitted to House of Representatives

The Netherlands will not meet the Directive’s implementation deadline of 7 June 2026. 

The Minister notes that the risks of late implementation primarily rest with the State. Provisions of the Directive may have direct effect in the vertical relationship between the government and individuals, provided they are sufficiently precise and unconditional. This means that, under certain conditions, public-sector employees may already rely on rights under the Directive prior to its implementation, such as the right to information on pay criteria and pay progression. In addition, the State may incur liability for damages resulting from late implementation, including vis-à-vis employees of private-sector entities. The European Commission may also initiate infringement proceedings. 

For private-sector employers, directives do not have direct effect and must first be transposed into national law. Until then, the Directive does not impose direct obligations on private employers. Dutch courts will interpret national law in line with the Directive where possible, but not contra legem (i.e. an interpretation contrary to the law). Consequently, no additional obligations arise for employers beyond existing national law. 

Due to the delay, the first wage report for employers with 150 or more employees has been postponed by one year, from 7 June 2027 to 7 June 2028 (covering the 2027 calendar year). Despite the Council of State’s recommendation to align the deadline for the first wage report with the Directive, the legislation proposal remains unchanged on this point.

The Directive does not contain specific rules on its application in an international context (for example, where an employer is established outside the EU but employs staff within the EU). The explanatory memorandum now clarifies which employers fall within the scope of the Dutch pay transparency obligations and which employees must be included in wage reports. 

An internationally operating employer must first assess whether it is subject to Dutch pay transparency legislation. This is the case if:

1. the employment relationship is governed by Dutch law;
2. the employer is established in the Netherlands; or
3. the employer employs workers in the Netherlands. If one or more of these criteria are met, the obligations under the legislative proposal apply. 

For the practical application of the reporting obligation, compliance is linked to the presence of an RSIN number. In order to assess whether the reporting obligation applies, the size of the organisation is, as a main rule, determined based on employees subject to Dutch payroll tax. If an employer has 100 or more employees who are subject to Dutch wage tax, a reporting obligation applies in the Netherlands. The same starting point is used to determine which employees must be included in the report as is used for determining the size of the organisation. This means that all employees who are subject to Dutch wage tax are included in the report.

Compliance with the transparency obligations under the Directive may, in certain cases, result in an employee receiving pay data that can be traced back to an individual employee. This may occur, for example, where there is only one male or one female employee within a particular job category, as a result of which (average) remuneration information becomes effectively identifiable. However, this does not preclude the disclosure of such information. 

Following the advice of the Council of State, the Minister clarifies that the processing of such data is based on a statutory obligation to comply with pay transparency requirements. In this context, such data may only be used for the application of the principle of equal pay. 

Although this purpose limitation (doelbinding) already follows from the GDPR, the legislative proposal now also includes an additional provision under which employers may require employees to use this data exclusively for the application of the principle of equal pay. Non-compliance by the employee may have employment law consequences, such as a warning or other disciplinary measures.