Last week I spoke to someone who is on a pay grade lower than his two colleagues, even though he does exactly the same work. He told me it really bothers him and that he finds it demotivating. He doesn’t actually know why things turned out this way.
That conversation came to mind while I was working with a client on the new Dutch pay transparency act. The act transposes a European directive into Dutch law. The government is aiming for 1 January 2027, although it is not yet certain that this will happen. Employers will soon need to be able to demonstrate that equal work, or work of equal value, is paid equally, based on objective criteria. Job applicants will be entitled to information about pay, and employees will be able to ask what colleagues doing comparable work earn on average. The reporting obligation only applies to organisations with 100 or more employees, but the rules on job evaluation and pay information apply, in principle, to all employers.
For many organisations, this probably feels like an obligation they would rather do without. Yet another rule, yet more hassle. I can understand that.
What vagueness does to people
Fairness matters enormously to every one of us. Even very young children seem to notice whether something is being shared out fairly. People who feel they are being treated unfairly start to brood, and often start to give less, too. Adams described this as far back as the 1960s: people try to restore the balance, and they often do so by adjusting their effort. Research links perceived injustice to health complaints, burnout symptoms and people leaving.
What’s more, there are strong indications that the process weighs more heavily than the outcome. Not knowing how a difference came about, and not being able to have an honest conversation about it, may well rankle even more than the difference itself. Vagueness quickly comes across as: you matter less.
How do you make it worthwhile?
A few things that I think help:
Start with the why. Why do you pay people the way you do? What matters to you as an organisation? If you can’t explain that clearly yourself, it will be difficult for an employee to understand it too.
Make sure roles are comparable. A sound job framework with clear criteria is the foundation. It allows you to show what work of equal value is, rather than relying on gut feeling.
Take an honest look at the differences that exist today. Put salaries side by side and ask yourself, for each difference: can I explain this? Sometimes there is a good reason, such as experience or additional responsibility. Sometimes it has simply grown that way, for instance because someone negotiated well when they joined. That last one is exactly what the law sets out to tackle.
Help your managers with the conversation. The question ‘why do I earn less than my colleague?’ is likely to come up more often. How that question is received makes a big difference. An open and honest answer, even if that answer is that something isn’t right, often achieves more than you might think.
Don’t wait until you have to. Being open about pay scales and criteria now shows that this is about more than ticking regulatory boxes. That builds trust, and you will very likely see the benefits in engagement and staff turnover.
So yes, this law means work. But if you approach it well, what you get in return is employees who understand why they earn what they earn, fairer conversations about pay, and less energy draining away into guesswork and quiet resentment. Could you explain every pay difference in your organisation to the employee concerned? And if not, where does the problem lie?