Mind the Gap! Why the Netherlands Still Needs to Work on Equal Pay

To this day, people are still earning different wages for the same work – even though, by law, men and women must be paid the same salary if they hold the same position and have equivalent experience.

While it falls on different dates around the world, the Netherlands observed Equal Pay Day on 14 November 2022. This day, however, is not one that marks the equality in wages between men and women. Quite the opposite, in fact. Equal Pay Day sets out to highlight one big issue – that women in the Netherlands effectively work “for free” from this date up until the end of the year.

Placing such attention on the gender pay gap has not resulted in companies reducing the disparity in salaries. On average, women still earned EUR5 less per hour than their male colleagues in 2020 (ie, a difference of 19%).

Closing this gap in remuneration is of paramount importance and, as such, it is crucial to know how to do this legally and where to start as an employer.

The gender pay gap refers to the difference in average gross hourly earnings between women and men. It is based on salaries paid directly to employees before income tax and social security contributions are deducted.

In 2022, the average gender pay gap was 13% in the EU and stood at just under 15% in the Netherlands (14.2%, to be exact). However, given that only companies of ten or more employees were surveyed, these percentages are possibly even higher.

Readers may be forgiven for wondering how this is possible – and allowed – in today’s times. After all, wasn’t the right to equal pay between men and women introduced in the Netherlands in 1975? Surely sexism is something that was left behind in the 20^th century and no longer tolerated in 2022? Technically it was, and progress has certainly been made, but complete equality remains some way off.

Although the Treaty of Rome introduced the principle of “equal pay for equal work” in 1957, the gender pay gap persists in practice and the past ten years have seen only minor improvements. The fact is that this problem has still not been adequately addressed by many companies in this country – let alone the rest of Europe or worldwide. Equal pay is not a reality yet in the Netherlands; nor is it anywhere else. 

For the first time, Statistics Netherlands (CBS) has investigated whether the type of employment contract makes a difference when it comes to the gender pay gap. The results are overwhelming: the gender pay gap is far wider for women with permanent employment contracts than it is for those who work on a fixed-term basis.

Overall, however, women worked 34 days “for free” in 2022. The disparity is even more noticeable when viewed in terms of lifetime earnings – during her working life, a woman in the Netherlands can earn as much as EUR300,000 less than her male counterpart.

Although salary is determined on the basis of various factors – including the branch, role and even educational level – the gulf between men and women is still seen across the board. When men and women in the same age group (with the same level of education and work experience) are compared, the pay gap amounts to 6%. The CBS cannot explain whether this is a result of discrimination.

An increase in “pay transparency” should start to make it easier to enforce the principle of equal pay. The European Parliament has embraced pay transparency by voting to enter into negotiations with EU member state governments concerning the EC’s proposal for a “Pay Transparency Directive” in April 2022.

In the Netherlands, the Gender Pay Equality Bill was submitted on 7 March 2019. Once the bill is passed, it looks set to put an end to the problem of unequal pay between men and women.

The bill proposes that companies with more than 50 employees will face a duty to disclose the pay gap between women and men in comparable positions to the works council and in the management report. A certification system will also be introduced, whereby it becomes mandatory to provide figures on employee pay every three years. Companies with more than 250 employees must obtain a certificate showing that they pay women and men equally. Where there is unequal pay, the employer will be given a chance to improve the situation; however, failure to do so will result in fines following the initiative bill.

However, these proposals continue to be considered by the House of Representatives (Tweede Kamer). More than three years following its submission, the initiative bill has still not been passed by the House of Representatives. Consequently, women in the Netherlands will have to wait a long time for its introduction.

Closing the pay gap would not only benefit women – it also promises to reduce poverty and stimulate the economy, as women will be able to spend more. On 31 March 2022, the European Parliament revealed that assessments show that reducing the gender pay gap by one percentage point would increase the GDP by 0.1%.

With these actions, the Netherlands and the EC are demonstrably trying to reduce inequality in the corporate world. Of course, this does not mean it is time to sit back and do nothing, because – as mentioned earlier – a lot of companies still do not stick to these rules.

The gender pay gap became a major talking point in the Netherlands again at the beginning of November 2022, when leading Dutch online warehouse Wehkamp made headlines for paying its female in-house lawyer EUR1,000 less per month than her younger male colleague – even though he had less legal experience than her and joined the company just a few months earlier. Wehkamp claimed the reasoning behind the difference in pay was that the male employee had more work experience and therefore deserved more money, even though the woman had been working there for years before they employed him.

After several discussions, Wehkamp promised that the woman would receive the same salary as her male colleague from January 2021 onwards. Just as this was finally about to happen, a manager at Wehkamp informed the woman that there were sudden doubts about her ability to perform the role of in-house lawyer. Whereas previously the company had always been satisfied with her performance, they now informed the woman that her contract might not be renewed because she was not performing well and her attitude was not good.

The woman sued and the case became national news. Ultimately, however, Wehkamp didn’t wait for the court’s ruling and settled the issue with a payment of EUR113,000 for lost wages and severance pay.

Employers should not discriminate between men and women, especially when it comes to pay. It is the responsibility of the employer to watch out for this and not allow it to happen.  It is best to be transparent and take action now by following the law and making sure employees are rewarded equally.

After all, when it comes to litigation, the burden of proof is entirely on the employer – given that the “discriminated party” has the law on their side. The employer must, therefore, provide evidence that it has acted properly and convince the judge that there is indeed a good reason for the wage difference.

This does not only apply to new staff. All employees should be paid correctly. Even though a difference in pay may have made sense in the past (eg, if it was down to a lack of experience at the time), salary should reflect the current situation and the employee’s development within the company.

Nonetheless, it is clear that employers cannot give everyone the same wages. A lot of work goes into determining someone’s worth. Taking everyone’s different wages and situations into account in order to organise a fair amount of money all round requires a great deal of effort.

Employers may have good grounds to reward someone with less experience in some cases – even if they do the same work – but must be able to provide strong justification. This demands a level of labour transparency that might seem overwhelming and often employers do not know exactly where (or how) to start.

However, it is important both for employers and employees that these issues are and remain properly managed, as these kinds of divisions can create a tense working atmosphere. Pay transparency is the only way to prevent claims of discrimination and really start reducing inequality in an efficient way on the business floor.