Plans for the implementation of the EU Pay Transparency Directive are on the way. Employers will soon be required to be more transparent about salaries, make pay differences visible, and take action where necessary. That sounds logical, as there is little debate that equal pay for equal work should be the guiding principle. However, the Council of State has raised several significant concerns about the legislative proposal - and these are relevant for every employer.
The core of the proposal is clear: greater transparency should help reduce pay differences between men and women. However, the Council of State has indicated that the measures are far-reaching, impose significant burdens on employers, and that it remains uncertain whether they will actually be effective. This last point is particularly interesting, because despite all the rules, it is unclear how it will be measured whether the pay gap is truly decreasing.
For employers, this means, among other things, that salaries or salary ranges must be included in job vacancies, that questions about salary history are no longer allowed, that employees may request insight into pay differences, and that a reporting obligation will apply to organizations with more than 100 employees. Employers must also take action in the case of unexplained pay differences. This requires more than just an HR tool or reporting—it goes to the core of your remuneration policy.
What stands out is that the Labour Inspectorate will mainly be able to check whether reporting has taken place, but not whether the figures are substantively correct. This creates a risk of “box-ticking” behavior. The report may be there, but the question is whether anything truly changes. This is exactly the tension highlighted by the Council of State.
There is also still considerable uncertainty. How should non-binary employees be included in reporting? How do you safeguard privacy if salary information can be traced back to individuals? Who will supervise compliance, and how effective will that be? Notably, implementation is being delayed, while Europe leaves little room for postponement.
Waiting is not a smart strategy. It is better to start now:
Not only because it will become mandatory, but also to avoid falling behind.
Legislation can help, but it will not solve the pay gap on its own. The real question is what kind of employer you want to be. Modern, transparent, and guided by equality? Or mainly reactive because it is required? Only when that choice is made consciously will real change occur.
Would you like to learn more about what the Pay Transparency Bill means for your organization? Please contact Renée Huijsmans-Zwijnenburg or one of our other specialists within the Employment, Employee Participation & Mediation team!
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