European legislator assigns crucial role to employers in addressing gender pay disparities
Equal pay for equal work. It may sound straightforward, but in practice, it is more challenging. In the private sector in The Netherlands, women earn on average nearly 7% less than men for the same work, while in the public sector, the difference is approximately 2%. Furthermore, there is a gender pay gap, which refers to the average earnings of women compared to men. In the private sector, this gap is around 16%, and approximately 5% in the public sector. This disparity can arise from various factors, such as the number of hours worked, work experience, and the sectors in which men and women are employed. Discrimination against women can also be a contributing factor.
To promote equal pay for equal work and to reduce the gender pay gap, the European legislator adopted a directive in 2023. This directive must be transposed into Dutch law by June 2026. Employers will then be subject to new and significant obligations. This blog outlines the five most important obligations:
- Transparency in pay policies: Employers must provide their employees with insight into the criteria used to determine pay and salary progression. These criteria must be objective and gender-neutral.
- Pay transparency for job applicants: Employers will be required to inform job applicants about the starting salary or pay scale for the position, ensuring that salary negotiations can proceed transparently and with full knowledge. Employers will be prohibited from inquiring about the salary at a current or previous employer. Additionally, employers must ensure that recruitment procedures are non-discriminatory, including the formulation of gender-neutral job titles and descriptions.
- Right to information for employees: Employees will have the right to request and receive information (in writing) about their individual pay level as well as the average pay level, broken down by gender, within the category of employees performing equal or equivalent work. Employers must provide this information within a reasonable timeframe, and in any case within two months of the request. Employers are also required to actively inform their employees – at least annually – of this right to information.
- Reporting obligation on the gender pay gap: Employers with 100+ employees will be required to publicly report on the gender pay gap within their organization. The timing and frequency of these reports will depend on the specific number of employees. Employers with more than 150 employees are first in line, and must report no later than June 7, 2027.
- Joint pay assessment for large employers: Employers with 100+ employees will be required to conduct a joint pay assessment if it is established that there is an pay gap between men and women of at least 5%, the difference cannot be explained by objective and gender-neutral criteria, and this gap is not rectified within six months of the submission of the report. Based on this joint pay assessment, a plan must be developed to close the gender pay gap.
Employers are advised to begin preparations for this upcoming legislation without delay. First and foremost, because the equal treatment of men and women is of great importance, and secondly, because employers should be mindful of the penalties that may be imposed for non-compliance. Also, the reputation of organizations is at stake: the reporting obligation will make the gender pay gap within organizations public. I bet no employer would wish to find themselves at the top of a gender pay gap list. If you would like to learn more about the directive and how to best prepare as an employer, please attend our workshop on September 11 at the Spiegeltent on the grounds of Kasteel Waardenburg. We will then delve deeper into this subject. To register, please send an email to info@vanbladeladvocaten.nl.
