Recent changes to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 will remove the secrecy of employee salaries and allow for more transparent conversations surrounding remuneration. The act amends the Fair Work Act 2009, giving employees the right to disclose their rate of pay and ask other employees about their rate of pay. The changes will also prohibit the inclusion of pay secrecy clauses in employment contracts.

What is a pay secrecy clause?

A pay secrecy clause is a common inclusion in most employment contracts. The clause will generally provide that an employee’s remuneration is confidential and prohibits employees from disclosing, discussing and comparing salaries with one another.

What do the changes mean for employers?

Initially, the biggest impact from the legislative changes will be on employers making sure that employment contracts do not include any pay secrecy clauses. The Act allows employers a grace period of 6 months and any inclusion after 7 June 2023 can result in penalties up to $66,600.

Pay discussions

Employers need to be prepared for employees to start pay discussions amongst peers. Where discrepancies are identified, this may lead to disgruntled employees, requests for pay increases and potential resignations. The onus is now on employers to be open and transparent around pay as this change in legislation may lead to in-house discussion amongst employees working in similar roles. Now that the prohibition on these discussions is gone, employers need to be aware that these discussions will happen and the potential impact.

Pay reviews

To prepare for potential questions or claims based on information obtained from other employees, employers should conduct a review of all pay rates and particularly consider pay rates given to employees performing similar work or with similar years of experience. Where employees are not being paid the same, employers need to be ready with clear reasoning to support their decision-making.

It can be helpful for employers to conduct a pay review in order to identify instances of underpaying or overpaying workers. Perhaps there is an employee who is really good at putting a business case forward and another who doesn’t ask for more. Maybe there is a case of unconscious bias or identified gender inequity. Uncovering these things in a review may lead to employers reconsidering pay agreements.

Ensure you are meeting your obligations, complying with the new legislative amendments, and are protected from potential liability by getting in touch with our team.

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