As organizations strive towards equal and inclusive workplaces, laws and regulations on equal pay and gender reporting continue to develop globally. With the existing gender reporting obligations and the EU Pay Transparency Directive on the horizon, it’s essential for companies to be aware of current and upcoming requirements.
Gender diversity: Gender reporting and the EU Pay Transparency Directive
As organizations strive towards equal and inclusive workplaces, laws and regulations on equal pay and gender reporting continue to develop globally. With the existing gender reporting obligations and the EU Pay Transparency Directive on the horizon, it’s essential for companies to be aware of current and upcoming requirements.
Gender reporting
Companies may need to report on gender diversity, focusing on the female-male ratio within their organizations. In the Netherlands, this includes reporting requirements to the Social Economic Council (SER). Listed and large non-listed companies must set ambitious gender diversity targets and report on gender diversity at the board and (sub) top levels. Furthermore, on the supervisory board of listed companies, each gender must be represented by at least 1/3rd. New supervisory board member appointments will be void if this ratio is not met. Ensuring compliance with local legal requirements is crucial, especially for companies operating in multiple jurisdictions with varying obligations.
The EU Pay Transparency Directive
The EU Pay Transparency Directive aims to enhance pay transparency and ensure equal pay for equal work, addressing gender-based pay disparities. All EU member states must implement its provisions by 7 June 2026. The Dutch draft implementation legislation is still pending.
The directive requires employers to provide very detailed information on the average pay levels of male and female employees, broken down by categories such as job type, seniority, and working hours. This level of transparency is intended to highlight any existing pay disparities and encourage employers to take corrective actions where necessary. Additionally, the directive mandates that companies provide explanations for any significant pay gaps and outline the measures they plan to implement to address these disparities.
The Directive goes beyond mere transparency, likely resulting in greater involvement from workers and their representatives in addressing pay equity and imposing potentially burdensome requirements for regular equal pay audits, including assessments of equal value. Identifying non-compliance areas now is crucial; employers operating in the EU should evaluate how the Directive will affect their recruitment, pay, progression, and reporting practices, and develop a compliance strategy accordingly. The Directive sets minimum standards, so implementation may vary, and local legislation may enhance worker and representative rights. The Directive is expected to elevate the importance of equal pay and pay transparency rights across the EU, potentially leading to more equal pay litigation.
Risk Management Implications
Adhering to gender target and pay reporting obligations is crucial not only for compliance but also for managing reputational risk and employee relations. Some reporting obligations, such as gender target reporting in the Netherlands, may not directly incur penalties. However, these reports are public, and companies risk scrutiny for their gender diversity strategy, or lack thereof, as data becomes public.
Key takeaways
The EU Pay Transparency Directive is another step towards gender (pay) equity in the EU. It is important to have gender and pay reporting requirements on the radar and to understand their implications. If you have any questions about the international gender diversity and equal pay landscape or how these developments may affect your organization, please feel free to reach out to Mirjam de Blécourt, Daniele Pinedo or Maya Boot.
