Pay transparency legislation: the possible changes for employee participation

The Directive introduces changes in three areas: recruitment and remuneration, reporting obligations on pay differences between men and women, and the legal protection of employees. The Dutch bill also includes changes regarding the involvement of employee participation bodies. In this blog, we briefly set out these proposed changes for employee participation:

On the basis of the Directive, employers must have a transparent remuneration policy. The works council (OR) will be granted a right of consent with respect to elements that affect the core of the remuneration policy, including:

• the establishment of objective, gender-neutral pay criteria and a transparent weighting thereof;
• the classification of employees into categories of work of equal value;
• the approach to (minor) unjustified pay differences;
• the carrying out of a joint evaluation, to be initiated with the consent of the works council, in the event of a pay gap of more than 5%, including the action plan if this pay gap cannot be explained or resolved within six months.

Please note!

• The Directive does not require the introduction of a job evaluation system;
• The primacy of the collective labor agreement (CLA) remains in force: if remuneration is substantively and exhaustively regulated in the CLA, the works council’s right of consent lapses;
• The works council already has a right of consent in the event of changes to recruitment or promotion policies.

In addition to additional rights of consent, the works council (OR) will also receive an enhanced right to information, which mainly concerns the reporting obligations:

• The works council must be consulted on the pay gap reports, including the assessment framework and the methodology used, and confirms their accuracy. The absence of such confirmation does not lead to direct sanctions, but does not relieve the employer of its reporting obligation;
• The works council has the right to request, in writing, data on average remuneration by gender within equal or equivalent positions.

What can management, HR and the works council already do now?

Although the current situation still involves a bill, definitive legislation will have to be adopted within a relatively short period of time. Timely awareness, strategic choices, insight into remuneration structures, and clear process arrangements, including agreements on the role of the works council, can make a real difference. Organizations that are aware of the upcoming changes and already start mapping their position and taking steps now can distinguish themselves. A careful pay transparency policy cannot be achieved with a single policy document. It requires a joint effort by management, HR and the works council, in which strategy, implementation and employee participation are properly aligned.

We are happy to help you get started with preparing in advance for this new legislation. If you have any questions, please contact Barbara van Dam, egal assistant Employment & Employee Participation, or Thomas Catersels lawyer Employment & Employee Participation.

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