The 20% bonus cap has applied (with few exceptions) to all financial sector employees in the Netherlands since 2015. Both chambers of parliament have now approved its removal for non-Identified Staff. Entry into force is expected in 2027. This means that going forward, the 20% cap will only apply to a smaller number of employees, Identified Staff.
How we got here
- 2015: 20% cap enacted for all (Identified Staff and non-Identified Staff) financial sector staff, strictest in the EU.
- 2018 / 2025: Two statutory reviews flag competitiveness concerns; reform gains momentum.
- January 2026: Tweede Kamer approves proposition to restrict cap to Identified Staff only.
- March 2026: Ministry clarifies Identified Staff definition across institution types.
- May 2026: Eerste Kamer approves. Parliamentary process complete.
- Pending: Staatsblad publication. Entry into force expected 2027.
What will change going forward
- For non-Identified Staff, the 20% bonus cap is removed, along with four ancillary rules: the 50% non-financial criteria requirement, annual variable pay disclosure, retention bonus restrictions, and the five-year share holding period.
- For Identified Staff, existing rules, including the 20% cap remain in force.
What to do now
Four areas require active attention. Identified Staff selection and the structural paradox carry the greatest strategic and people risk.
1. Pay philosophy and strategy: Is your reward philosophy fit for a two-tier world?
- Revisit your pay philosophy and competitive positioning: The cap is now a choice for most staff, not a legal constraint.
- Update your pay principles: the split between Identified Staff and non-Identified Staff needs attention.
- Decide on pace: Staged rollout or immediate restructure?
- Prepare clear messaging for the RemCo, Works Council, and employees.
2. Identified Staff selection: Do you know who is in scope and can you defend that list?
This is the most important thing to get right. Every employee’s classification now has legal weight. Getting the boundary wrong in either direction can create regulatory and business problems.
- Identify your institution type: Category A (banks and large investment firms), Category B (insurers and fund managers with EU sectoral law), or Category C (all others without an EU framework).
- Apply the correct framework: banks use the CRD and EBA Delegated Regulation; insurers use Solvency II; Category C institutions must build their own risk-based methodology. DNB and AFM guidance is expected to be published.
- Start building your Identified Staff selection process. Watch out for quantitative and qualitative triggers.
- Document inclusion and exclusion decision with clear rationale. This is the legal basis for who is still subject to the 20% cap and who is not.
3. Policy and compliance updates: What needs to be rewritten, and what can you stop doing?
- Revise the remuneration policy with the Identified Staff and non-Identified Staff framework. Get Supervisory Board or RemCo approval.
- Review employment contracts.
4. The structural paradox: What does the split mean for your internal equity and career progression model? Does promotion problem: does moving up into a senior role still make financial sense for your best people?
The reform creates a structure where accepting promotion into a senior Identified Staff role can mean accepting tighter pay constraints than the role left behind. If this is not addressed, senior leadership positions may become harder to fill from within.
- Map the promotion cliff: identify which roles trigger Identified Staff classification and which sit just below the boundary.
- Review salary bands for Identified Staff roles. With bonus capped at 20%, the base salary is the primary lever.
- Build non-monetary leadership incentives into senior role propositions: mandate, visibility, and development.
- Have honest pay conversations with people close to the Identified Staff line, before they are promoted, not after.
As variable pay expands for non-Identified Staff, gender pay gaps in bonus decisions will become more visible and will need to stand up to scrutiny. Audit variable pay by gender before expanding bonus opportunity and check your performance assessment process for areas where subjectivity could affect outcomes.
Deciding who counts as Identified Staff, and managing the promotion pay gap, are the two issues that will determine whether this reform delivers real value for your organisation. Entry into force is expected in 2027. Both workstreams should start now.
