Have you ever wondered how much your colleagues, managers, or bosses make? This is a question most of us want to ask but have been unable to due to legislation. These burning questions can now be asked under the new Australian pay secrecy clause laws, and others can now also ask you the same question.
If you want to learn what a pay secrecy clause is, find out the changes that are being made to pay secrecy clause laws, what the purpose of the change to the legislation is and answers to other frequently asked questions regarding pay secrecy clauses.
Read along!
What is a Pay Secrecy clause?
Pay secrecy clauses refer to clauses contained in an employee’s employment contract that prevent employees from discussing their pay with other employees. Employers generally include pay secrecy clauses in their employee’s employment contracts to prevent co-workers from discussing and comparing their pay salaries with each other. This is to prevent employees from asking for increases in their pay and salary.
Pay secrecy clauses are commonly used in employment contracts in industries where bonuses and incentives are offered to employees. Prior to the introduction of these recent pay secrecy clause law changes, employers were legally allowed to include pay secrecy clauses in the employment contracts of their employees. Furthermore, if an employee’s employment contract contained a pay secrecy clause and they breached the clause, they could face termination of employment or receive a warning due to breaching a clause of the contract.
Want more?
Sign up for our newsletter and be the first to find hand-picked articles on topics that we believe are crucial to successfully scale your unique small business.
By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions
What are the changes to Pay Secrecy clause laws?
The new law changes that have been created in regard to pay secrecy clauses eliminate the secrecy regarding the pay and salaries of employees. These changes to legislation consist of two primary changes. These include the following:
Change 1 to Pay Secrecy clause laws: Ability to choose to share information or not share information
Employees are now provided with the right to share or not share information about their pay. Similarly, employees are now allowed to choose to share or not share information regarding the conditions and terms of their employment that would be required to calculate their pay, such as their working hours.
Furthermore, employees are now provided with the right to ask their co-workers or employees who work for a different employer regarding their salary or pay and regarding the conditions and terms of their employment that would be required to calculate their pay, such as their working hours.
In regard to these changes, you should be aware that you can’t force another employee to provide you with information regarding their pay against their will. Even after leaving an employer, these rights remain available to employees.
Change 2 to Pay Secrecy clause laws: Elimination of pay secrecy clauses in contracts of employment and other workplace agreements
The second significant change that comes from the recent changes to pay secrecy clause laws is that employers are now prohibited from including pay secrecy clauses in their employees’ employment contracts.
Furthermore, they’re also prevented from including pay secrecy clauses in other workplace instruments.
What is the purpose of the legislative changes to pay secrecy clauses?
The primary reason pay secrecy clauses are now prohibited is so that there is a reduction in the pay gap between individuals on the basis of their gender. These new pay secrecy clause laws are part of a broader set of reforms aimed at promoting gender equity as an integral part of Australia’s Fair Work Act 2009( Cth). These changes to legislation were contained in the Secure Jobs, Better Pay Bill 2022.
The purpose of the bill was to introduce methods that can be used to address workplace inequality. Through the elimination of pay secrecy clauses, employees will be able to determine whether the pay they’re receiving is reasonable and fair in comparison to the pay their co-workers are receiving.
Tony Burke, Federal Employment and Workplace Relations Minister, stated that pay secrecy clauses were used to hide pay differences between genders.
As a result, the prohibition of pay secrecy clauses will result in a greater level of transparency, thereby reducing gender pay inequality and discrimination since women will have the opportunity to compare their pay and salaries with their co-workers. This is crucial as these discussions will be allowed to take place between employees in an unrestricted manner.
This change will also allow employees to bargain for higher pay as they will know the pay employees in the same business or industry are receiving.
As a result, employees will be able to evaluate employment opportunities and arrive at more educated decisions. Furthermore, employers and business owners will be more encouraged to pay their employees fairly.
Frequently Asked Questions (FAQs)
When do the laws regarding pay secrecy clauses begin to apply?
The rights provided to employees under the new pay secrecy clause laws began to apply on and after the 7th of December in 2022. These rights automatically apply to all employment contracts between an employer and their employer on and after the 7th of December 2022.
Similarly, these laws automatically apply to current contracts of employment that don’t contain pay secrecy clauses that are in conflict with the new laws and their associated rights.
If an employee’s current contract contains pay secrecy terms contrary to the new terms, the new workplace rights will automatically apply to the employee’s contract if there are any changes made to the contract after the 7th of December 2022. Although most of these changes took place on 7 December 2022, transitional arrangements were made as well. Therefore, certain elements of the new laws take effect earlier than others.
Employers should be aware that pay secrecy terms that are not in line with the new workplace rights outlined in the legislation are not permitted in employment contracts or other written instruments due to take effect on or after 7 December 2022 from the 7th of June 2023. Furthermore, if an employment contract or a fair work instrument is entered into on or after the 7th of December 2022, pay secrecy terms that are contained within won’t be enforceable.
Similarly, pay secrecy terms that are contained in awards, fair work instruments or enterprise agreements will no longer have effect after 7 December 2022 and will be unenforceable despite when they were created on or following this date.
What happens if there is a breach of the new pay secrecy clause laws?
If there is an alleged breach of the new laws, a court action can be initiated by the Fair Work Ombudsman. There could be penalties for employers who include pay secrecy terms in their employees’ employment contracts that are in violation of the new pay secrecy law.
Who do the new laws regarding pay secrecy clauses apply to?
These new rules apply to almost everyone. The new laws apply to almost all Australian employers and employees in the private sector.
Is my employer able to take action against me if I share information about my pay with others?
Employers aren’t able to take adverse action against existing or future employees due to these rights provided by the new legislation, and they can’t stop current or future employees from exercising them.
Conclusion
Ultimately, as an employee, you now have the freedom to share and ask questions about the pay of your fellow employees and employees from other businesses to see if you’re being paid fairly. Employers should carefully consider the current contracts and particularly the future employment contracts of employees to avoid including pay secrecy terms.
As an employer, if you’re still feeling unsure about the new pay secrecy laws, you should hire a lawyer to avoid legal consequences and potential breaches of the pay secrecy clauses in Australia.
Get a fixed-fee quote from Australia's largest lawyer marketplace.
