Netherlands: Pay Transparency and the Expanding Role of Works Councils

Pay transparency is becoming an increasingly important issue for employers across Europe. In the Netherlands, proposed legislation implementing the EU Pay Transparency Directive is expected to introduce significant new obligations for employers, while also strengthening the role of Works Councils in remuneration policy and addressing gender pay differences.

Under the proposed rules, employers will be expected to use objective and gender-neutral criteria for job evaluation and classification. Employers will also no longer be permitted to ask job applicants about their previous salary during recruitment or negotiations over employment conditions. In addition, organisations with more than 100 employees will be required to report periodically on differences in pay between female and male employees, helping to identify whether employees are receiving equal pay for equal work or work of equal value.

An expanded role for Works Councils

One of the most significant aspects of the proposed legislation is the expansion of the Works Council’s right of consent under Article 27 of the Dutch Works Councils Act.

Employers will be required to seek Works Council consent regarding the objective and gender-neutral criteria they intend to use within their remuneration policies. Where unjustified pay differences are identified, employers will also need to explain how these will be addressed. Wage evaluations, action plans and proposed remedial measures will therefore become important areas of Works Council involvement.

This represents a considerable strengthening of the Works Council’s position. A right of consent is one of its strongest statutory powers: where consent is required but not obtained, an employer will generally not be able simply to proceed with implementation.

The change may also bring Works Councils much closer to discussions concerning remuneration itself. Although salary levels are traditionally regarded as a primary employment condition, the explanatory materials accompanying the proposed legislation recognise that consultation over pay transparency and corrective measures could result in employers and Works Councils reaching agreements that affect remuneration.

For Works Councils, this creates both greater influence and greater responsibility. Understanding whether remuneration criteria are genuinely objective and gender-neutral can require detailed analysis, and access to appropriate expertise and training is therefore likely to become increasingly important.

When apparently neutral criteria create inequality

A March 2026 decision by the Netherlands Institute for Human Rights illustrates the complexity employers and Works Councils may face.

The case concerned female trainee judges whose starting remuneration had been determined by reference to their previous salaries. Although previous salary might initially appear to be a neutral criterion, the Institute found that its use perpetuated existing gender-based differences in pay within the labour market.

The consequences extended beyond starting salary. A lower initial classification could continue to affect remuneration over subsequent years, as well as pension contributions, holiday pay and other salary-related benefits.

The Institute found that there was no sufficient objective justification for the resulting distinction. Although the underlying aim was legitimate — ensuring that financial considerations did not deter suitable candidates from moving into the judiciary — less discriminatory alternatives were available. These could have included increasing salaries more generally or providing a labour-market allowance linked to the position rather than the individual employee.

What should employers consider now?

The case demonstrates an important principle for employers preparing for greater pay transparency: a remuneration criterion does not necessarily become fair simply because it is applied consistently.

Employers should consider not only whether their pay and classification criteria appear neutral, but also whether those criteria could indirectly reproduce existing inequalities. Recruitment practices, starting salaries, job evaluation systems, promotion structures and other remuneration policies may all warrant review.

For international organisations operating in the Netherlands, the proposed changes also underline the importance of considering local employee-representation requirements alongside wider European pay-transparency obligations. Early engagement with Works Councils, supported by appropriate employment-law advice, can help employers identify potential issues before new remuneration policies or corrective measures are implemented.

As European pay-transparency requirements continue to develop, multinational employers will need to balance consistent global remuneration strategies with the specific employment and employee-representation rules applicable in each jurisdiction.

By Hocker, Netherlands, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact netherlands@transatlanticlaw.com

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