Over the next few weeks, we’ll be breaking down the changes to employment law that came from the new “Secure Jobs, Better Pays” Bill into bite-sized chunks.
First up, is the ban on pay secrecy clause in employment contracts and the new “workplace right” for employees to choose to discuss (or not to discuss) their pay with other colleagues
Ban on pay secrecy clauses
As of 7 December 2022 it is now against the law to include a pay secrecy clause (i.e. one forbidding an employee from discussing their pay) in a new employment contract.
Existing contracts containing pay secrecy clauses will continue to be effective, but the next time the contract is varied (including through wage increases, etc.), any pay secrecy clause will not have any effect.
Furthermore, from 7 June 2023 (six months after the Bill was passed), it will also become an offence for an employer to enter into a new employment contract with an employee that contains a pay secrecy clause (this applies to both existing employees, ie contract variations, and new employees). The penalty is up to $63,000.
In our view, it would be best practice to agree with employees to remove any existing pay secrecy clauses as soon as possible to avoid any confusion going forward.
The right to discuss (or not to discuss!) pay with other colleagues
All employees now have a right to ask employees about their pay, and to choose to discuss (or not discuss) their own pay with colleagues.
The definition of pay includes all aspects of remuneration and is very broad.
This is a new “workplace right” which means that employees cannot be adversely treated (e.g. dismissed, subject to disciplinary action, etc.) for exercising these rights.
If you have existing policies which forbid employees from discussing their pay, these should therefore be amended.
Why did the Government make these changes?
The idea behind the changes was to promote greater equality in pay between men and women. By encouraging transparency and open discussion about pay rates it is hoped that employers will be prompted to ensure employees are paid fairly, regardless of their gender.
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The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact HR Connect for advice.