New Pay Transparency Act: The End of Salary Secrecy

The decision has been made: the draft legislation to implement the European Pay Transparency Directive (the Pay Transparency Act) has been officially submitted to the Dutch Parlement on 21 May 2026. For many employers, this means that the “black box” of payroll administration must be opened. What does this proposal entail, and how can you prepare your organization?

In 2023, the European Union adopted the EU Pay Transparency Directive (EU PTD)—a far-reaching EU directive intended to reduce the gender pay gap and achieve greater transparency. The Dutch Pay Transparency Act constitutes the implementation of this directive in the Netherlands.

In summary, the most important changes are as follows:

The Pay Transparency Act introduces a number of significant obligations for employers:

• All employers must be transparent about pay structures and criteria. These criteria must be objective, clear, and verifiable.
• Transparency starts prior to the application process: an applicant must be informed about the starting salary, the salary range, and other important working conditions. Asking questions about an applicant’s current salary? That will soon be prohibited.
• Employers with 100+ employees have periodic reporting obligation regarding pay gaps. The frequency of reporting depends on the size of the organization.
• If the pay gap exceeds 5% without objective justification, a joint evaluation with the employee representatives is mandatory. In other words: the employer must conduct a pay review and rectify unjustified differences.
• The works council will play a significantly greater role in pay structures.
• The employee’s position is strengthened by a shift in the burden of proof to the employer. If an employee goes to court due to alleged pay discrimination and the employer has not met the transparency obligations, the employer on its turn has the burden of proving that there is no In practice, this is a daunting task.

What can you do already?

Although the Pay Transparency Act is not expected to be fully implemented until January 2027, waiting is not an option especially not if you are a large or medium sizes organisation. Restructuring pay structures and correcting imbalances is a time-consuming process.

1. Assess the current situation: Conduct a baseline assessment and collect all data in a timely manner. Are there unexplained differences between men and women in comparable roles within your organization?
2. Job evaluation: Ensure you have a gender-neutral job classification system. What criteria do you use to determine salary? Is that objectively measurable?
3. Train your staff: The Pay Transparency Act will have a major impact on how organizations share information about compensation and employment conditions with their employees and how the job interview process should be structured. Your employees (and in particular: managers and recruiters) must be prepared to explain the results and any adjustments.

Conclusion

The proposed Dutch Pay Transparency Act will create a more equal playing field, but it also entails a significant administrative and legal burden. Employers who are already investing in a transparent compensation policy not only avoid future legal proceedings but also contribute to fair and balanced compensation and are better positioned in the current tight labor market, where “good employment practices” is becoming ever more important. It is intended that the legislation enters into force as per 1 January 2027.