Addressing gender pay discrepancies

Introduction

In a recent case handled by the Amsterdam Court of Appeal (ECLI:NL:GHAMS:2024:2943) an (ex-)employee claimed that the offer to extent her employment agreement was revoked after she had addressed a difference in pay that, in her view, was based on possible gender discrimination. In this contribution, we discuss the key points of the case while also looking ahead to the nearing implementation of the EU Pay Transparency Directive (the "Directive"). Specifically, we discuss what implications the Directive might have on the manner in which employers discuss the topic of pay (and pay discrepancies) with their (prospective) employees.

Short on time? Here are the three key take-aways:

• The decision to withdraw an offer for a contract renewal after the employee has made claims about unequal pay (in comparison with a male colleague) is in violation with the prohibition of detriment ex Article 7:646 section 14 DCC. This is also true if it turns out that the claim for unequal pay does not have merit;

• Even if a claim for unequal pay appears unfounded, the employer is still obligated to clearly explain the objective factors that justify the pay difference (if any);

• With the upcoming implementation of the EU Pay Transparency Directive, Dutch employers will need to improve their ability to engage in more open dialogues about remuneration and pay disparities.

Recent case law on (possible) gender discrimination

In a case that was published mid-November of this year, an employer was ordered to pay an additional severance amount (billijke vergoeding) of one year's salary (roughly EUR 47,000) to a female (ex-)employee. The reason? The employer had violated the prohibition of detriment (benadelingsverbod), laid down in Article 7:646 section 14 DCC, by withdrawing an offer to extend the employee's employment agreement after she had raised questions about her salary level (and how this compared to one of her male colleagues who earnt significantly more). During a meeting that was intended to discuss the contract renewal, the employee had claimed unequal treatment based on gender. The employer, in turn, had stated that the difference in pay could be explained by other factors and that the employee's claim was unfounded. In subsequent (heated) discussions on the topic, the relationship between the employer and the employee deteriorated to a point where the employer decided to withdraw the offer for contract renewal.

The employee did not take kindly to this move and initiated proceedings. She claimed that the withdrawal was a direct consequence of her addressing possible gender discrimination. While the Court ruled that the employer had sufficiently explained to the employee why the pay gap was justified (namely due to the difference in work experience and responsibilities of the role), it also came to the conclusion that the relationship between the parties had become severely impaired as a direct consequence of the raised discrimination claim. Put differently, the renewal offer would not have been withdrawn, if the employee had not raised the topic of pay discrimination. Thus, the Court concluded that by withdrawing the offer, the employer had violated the prohibition of detriment and, consequently, had acted seriously culpable (ernstig verwijtbaar). As a result, the employer was obligated to pay the employee a significant additional severance amount equal to one year's salary.

What lessons may be learned from this case?

An interesting factor of the case is that solely raising a claim of unequal treatment already triggers the prohibition of detriment, regardless of whether or not the claim actually has merit. This underlines the importance for employers to handle any equal-pay related conversations with care. The circumstance that a claim is unfounded, does not discharge the employer from the obligation to take the time to clearly explain the objective factors that justify the pay difference (if any). Even if the conversation were to lead to friction, then, a good employer, may be expected to make reasonable efforts to better the situation.

In the case at hand, an alternative approach could have been to leave the extension offer unchanged (i.e., with the same level as pay as originally offered and with a clear explanation on why the work of the employee was not equal (or of equal value) to the work of her male colleague) and to leave the choice - whether or not to accept the offer, with the employee.

How might the implementation of the Directive change the manner in which employers discuss the topic of pay (and pay discrepancies) with their (prospective) employees?

The Dutch government has to implement the Directive into Dutch law by ultimately 7 June 2026. As per the current legislative schedule, the proposed implementation legislation is expected to be presented to the House of Representatives in Q3 2025.

We expect that the implementation of the Directive will have a significant impact on the manner in which the topic of pay will be discussed. Among other things, once the Directive is implemented, employers will be required to establish solid pay structures that safeguard equal pay for equal work (or work of equal value) and to (pro-actively) provide more information about pay (both during the recruitment process and during employment).

Also, after the Directive's implementation, employees will have the right to request information regarding their individual pay level and the average pay levels during employment, broken down by gender, for categories of employees doing the same work or work of equal value. As the Directive prescribes that employees must be provided with insight on their individual remuneration and the average salary ranges of men and women during the recruitment process and during employment, some disputes, like the one presented before the Amsterdam Court of Appeal, might be avoided.

The Directive also includes an obligation for employers to pro-actively inform employees on their right to information once per year and to share any salary information shortly after an employee submitted a request thereto. By complying with these obligations and acting properly on any questions from employees in this respect, some discussions, born out of a lack of transparency, may be prevented.

We expect that, in preparation for the Directive's implementation, employers will have to adopt a more open dialogue about remuneration and pay disparities. The Directive not only aims to bridge the gender pay gap, but also to foster a culture of transparency and trust within organisations. Moving towards implementation, it thus becomes increasingly clear that Dutch employers must enhance their ability to discuss pay openly and constructively.