Statutory framework
The right to equal pay for men and women is embedded in various national and international laws. In the Netherlands, Article 7:646 of the Dutch Civil Code (“DCC”) and the Equal Treatment (Men and Women) Act (Wet gelijke behandeling van mannen en vrouwen, or “Equal Treatment Act”) are particularly relevant.
Under the Equal Treatment Act, pay for work of equal or near-equal value for men and women must be calculated using equivalent criteria. If pay differences arise, it is up to the employer to prove that the differences ensue from the equivalent application of the same, sound pay criteria. If a pay system lacks transparency, the employer must prove that it is not discriminatory.
In short, employers can only differentiate in pay if they have a neutral, objective reason for doing so, for example because of demonstrable differences in education or previous work experience. Salary negotiations and most recent salary are not considered neutral criteria. Unequal pay without this justification constitutes unjustified discrimination on the grounds of gender.
Reference worker method
To determine whether an employer is complying with the principle of equal pay, the ‘reference worker method’ is applied. This involves three steps:
- The person claiming to have been prejudiced (the complainant) refers to someone of a different gender who receives more pay for work of equal or near-equal value (the reference worker).
- An assessment is made of whether the reference worker is paid more than the complainant.
- If the reference worker does in fact earn more than the complainant, an assessment must be made of whether the pay difference is the result of equal, equivalent or unequal criteria. If the employer fails to demonstrate that the pay difference is the result of the application of an equivalent, neutral criterion, the wage difference is considered to be discriminatory on the grounds of gender. If the criteria have not been applied transparently, verifiably and systematically, a lack of equivalence will be readily assumed.
The Pay Transparency Directive
Employees’ legal position will be further reinforced with the introduction of the Pay Transparency Directive. The Directive requires employers, among other things:
- to provide information about pay levels and pay criteria;
- to give employees access to information about the pay of colleagues in similar jobs;
- to report pay gap information if they are a large organisation; and
- to request works council approval for the adoption of gender-neutral pay criteria and for a pay assessment if a pay gap of more than 5% is reported.
The Dutch legislature is currently in the process of transposing the Directive into Dutch equal treatment legislation.
Recent judgments: unequal pay for work of equal value
Recent judgments show that equal pay is already a hot topic, even before the entry into force of the Pay Transparency Directive and its implementing Act, and may have major implications, including financial consequences.
In the case examined by the Gelderland District Court (in Dutch), a care home employee stated that she had structurally received less pay than a male colleague for years, even though she performed similar work. The employer disputed this, arguing that the work was not equal or of equal value. According to the employer, the male colleague had more duties and greater responsibility, whereas the employee only performed instructions. To substantiate her position, the employee called up six current and former colleagues as witnesses, including the male colleague in question. They unanimously stated that the work of the two employees was the same. The only differences between them were their age and number of years of service.
Ruling that the employer had insufficiently substantiated that the pay difference was objectively justified, the District Court established that there had been unequal pay on the grounds of gender, in conflict with Article 7:646 DCC and the Equal Treatment Act. The District Court also held that the employee was entitled to be assigned to the same pay scale as her male colleague and ordered the employer to pay over 75,000 euro in back pay, including a 20% statutory increase.
The Netherlands Institute for Human Rights (“the Institute“) reached a similar conclusion in decision 2025-60 (in Dutch). This case was about an excellence bonus. The employer, a medical clinic, offered medical specialists an ‘excellence bonus’ of up to 15% for above-average performance, especially for additional work outside working hours. A female specialist’s bonus was lowered from 15% to 10% after a reassessment, whereas a male colleague in the same job retained his 15%. The woman then filed a complaint with the Institute for discrimination on the grounds of gender. To assess whether discrimination on the grounds of gender could be established, the Institute applied the ‘reference worker comparison’ and established that the two specialists had similar jobs, years of service and additional work. Nevertheless, there was a pay difference. This gave rise to suspected discrimination. It was then up to the employer to refute this suspicion with objective justification. The employer argued to that end that the male specialist showed more initiative and ‘kept things moving’. In addition, they claimed that a careful procedure had been followed.
The Institute ruled that moving things forward was a subjective (unequal) qualification that did not ensue from the formal assessment criteria. This qualification was not an objective justification of the pay difference. In addition, the Institute held that the assessment procedure was not careful, as it did not provide advance clarity about how work was to be weighed or subsequent transparency about the assessment. For that reason, the procedure was unverifiable and could not serve as an objective justification of the pay difference, according to the Institute.
The Institute concluded that the clinic had unlawfully discriminated on grounds of gender. No claims for pay can be lodged with the Institute. For payment of back wages, the employee will need to lodge proceedings with the Subdistrict Court. While the Institute’s decision is not legally binding, it will be taken into account by the Subdistrict Court.
Action items for employers
We believe that equal pay will become a more prominent issue in the coming years. The judgments discussed above illustrate this development’s potential consequences. Employers would do well to critically assess their remuneration policies. This includes in any event:
- Transparency: apply clear, objective and accessible pay criteria;
- analysis: regularly perform an equal pay assessment within the organisation; and
- documentation: accurately describe why certain pay differences exist and how they are justified.