The Netherlands' Approach to the Pay Transparency Directive: absence of worker representatives

This article looks at the ways in which the Netherlands draft differs from the Directive, particularly in respect of the potential deviation from the anticipated role of worker representatives.

Worker representatives under the Pay Transparency Directive

The Pay Transparency Directive envisages that worker representatives will play a crucial role in ensuring fair pay practices. The Directive gives employees the right to receive information on their pay and average pay levels, either directly or through representatives. Employers who are required to publish gender pay gap statistics will have to involve worker representatives in agreeing the data's accuracy.  If pay gaps exceed 5%, cannot be justified and then are not remedied, a Joint Pay Assessment must be conducted with worker representatives.  Employers must also establish gender-neutral pay structures agreed upon with worker representatives. 

While worker representatives and trade unions are well-established throughout Europe, the Directive is subject to transposition in individual member states, each with a different landscape for worker representation.  We are therefore seeing variations in how, and whether, the role of worker representatives is reflected in transparency legislation in different member states. 

Proposal from the Netherlands

In the Netherlands, new draft legislation proposes direct access rights for employees instead of using representatives. There is no mention of worker representatives.  The draft sets out the following:

• Employees can request pay gap information directly.  There is not the express statutory right to do that through a representative.  The information must then be provided to employees within two months.
• For those employers who are required to report their pay gap to a specified authority, some (but not all) of that information must also be provided to employees, who each have the right to request that the employer clarifies, specifies, and, if applicable, explains the wage gap within a "reasonable period".  If the gap is not objectively justifiable, the employer must remedy it within 6 months. 
• If an unjustified pay gap is not remedied within six months, the employer must carry out a wage evaluation and report the results to a designated Authority and to the employees.  There is no requirement for this evaluation to be jointly carried out with worker representatives. 

Works councils are common in the Netherlands and have significant rights.  All employers with 50 or more employees must establish a works council.  If there are between 10 and 49 employees, employers can set up a works council voluntarily or employees can request formation of an employee representative body, which has less rights than a works council. In the absence of an employee representative body, the company must meet with the employees twice a year to discuss the general affairs of the company.  In practice, therefore, it is likely that works councils or employee representative bodies will assume rights and make representations on behalf of employees, but the draft legislation does not provide any separate rights of, or obligations to, these representatives. 

A European approach?

Perhaps because worker representation is embedded in work culture in the Netherlands, legislation does not need to explicitly address it. 

In Sweden, where the level of trade union membership is relatively high (about 70 %), the Swedish Government has indicated that employers will need to co-operate with trade unions in relation to pay assessments, regardless of whether or not the employer is bound by a collective bargaining agreement.  However, there is no mention of the election of employee representatives in the absence of trade union membership.

Other Directives that require engagement with worker representatives (such as the Acquired Rights Directive) have been implemented in various member states by reference to works councils or trade unions, but not to the election of employee representatives where none exists. 

It remains to be seen whether the same patterns will be followed in implementing this Directive compared to the Acquired Rights Directive or the Collective Redundancies Directive. However, since there is no minimum number of employees required for worker representatives' rights under the Pay Transparency Directive, perhaps some member states might introduce an election process where none currently exists.

If you would like to discuss the requirements in different Member States, how to meet and achieve your business aims within those requirements or any other aspect of pay transparency, please contact your usual Fieldfisher contact or transparencypays@fieldfisher.com.