15 November 2023 was European Equal Pay Day. This day focuses on the - still - existing pay gap between men and women. Symbolically, women work for nothing for the rest of the year from that day onwards, as the gender pay gap currently stands at around one and a half months' salary per year. Every year, the European Commission pays attention to this day and the date is chosen based on the latest figures of the existing pay gap. To combat this pay gap, an EU equal pay directive has been published and the Gender Equal Pay Act is currently pending in the Netherlands. Equal pay for men and women therefore is a good starting point for a responsible ESG policy.
Men and Women Equal Pay Act
On 7 March 2019, the Gender Equal Pay Act was submitted. This legislative proposal amends the Equal Treatment (Men and Women) Act and introduces several instruments to combat unequal pay. Based on this legislative proposal, the responsibility for equal pay will rest with the employer. The main instruments included in this proposal are:
- Large companies (with more than 250 employees) must demonstrate through a certification system that they pay men and women equally.
- For employers without certification, a presumption of proof is introduced and the burden of proving equal pay rests with the employer. The employer must provide facts to rebut the presumption of gender pay inequality.
- Employers must provide information in their annual reports on the extent of pay differences between female and male employees.
- Companies that have a works council will be required to provide information to the works council once a year on pay differences between women and men in comparable positions.
- Companies with at least 50 employees will be obliged to provide access to (anonymised) pay data within the organisation upon request by an employee.
- If an employee notices unexplained differences in the amounts of pay, the employee can file a complaint with the employer. The employer must notify the works council of the complaints filed and deal with them within two months. If the complaint is not dealt with properly or within two months by the employer, the employee can file a complaint with Netherlands Institute for Human Rights.
- The Social Affairs and Employment Inspectorate will monitor compliance with this law and can impose a fine on employers in case of violation.
This legislative proposal is currently being debated in the House of Representatives, after which it will be voted on.
EU directive on equal pay
In addition to the (more far-reaching) Dutch legislative proposal, the EU directive on pay transparency was published in the Official Journal on 17 May 2023 (Directive (EU) 2023/970). This directive requires companies in the EU to exchange information on the remuneration of men and women for equal work. As part of this, companies with more than 250 employees must report annually to the competent national authority on the gender pay gap within their organisation. In doing so, EU companies must take action when the gender pay gap at their company exceeds 5 per cent. It is up to the employer to prove that it has not violated EU rules on equal pay and pay transparency, introducing a presumption of proof in the European framework as well. The directive entered into force on 6 June 2023 and must be transposed into national law by 7 June 2026.
Important notes in practice
Applying the conditions proposed in the Gender Equal Pay Act and enshrined in the applicable EU directive is important for companies to comply with applicable ESG principles. In the context of ESG objectives, besides sustainability and the environment, the social aspect and corporate responsibility also play a major role. Your organisation should protect employees and provide a safe and equal working environment for all employees. Complying with regulations on equal pay for men and women, and of course actually rewarding men and women equally, plays an important role here.