The new ban on pay secrecy – what does it mean for employers?

The new ban on pay secrecy – what does it mean for employers?

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.

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.

So many people ask 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.

If you need further clarity or would like a certain question answered, please contact sarah@sjpersonnel.com.au or call 0352 808050 for a confidential discission.