5 minute read
Pay secrecy in Aotearoa
Sianatu Lotoaso, Associate at Dundas Street Employment Lawyers, looks to Australia and beyond for lessons that can be applied to New Zealand’s gender pay gap.
Across the ditch, the Australian Labour Government recently legislated the end of pay secrecy clauses in employment agreements, to reduce the gender pay gap. This means Australian employees can now freely and openly talk to each other about how much they earn, and terms and conditions of employment relevant to pay, without fear of disciplinary action being taken by their employers.
Essentially, Australia is catching up on pay transparency regimes already introduced in other countries, including certain American states, the United Kingdom and Europe. For example, in New York City, employers must disclose minimum and maximum salary ranges in job advertisements, regardless of the job. Failure to do so could result in penalties ranging from US$125,000 to US$250,000.
Keeping it secret – for now
Despite these global legislative changes on pay transparency, New Zealand does not have parallel pay transparency schemes. Currently, New Zealand employers can require employees to keep their salary a secret if they have agreed to do so in their employment agreements. However, this could all be set to change. Given the global changes in pay transparency, a government committee’s recommendations for New Zealand to adopt a pay transparency regime, and increasing momentum, it could simply be a matter of when.
In June 2022, the government’s Education and Workforce Committee (set up to inquire into pay transparency in New Zealand) recommended that the government adopt a pay transparency regime. This would include a similar ban on pay secrecy clauses in New Zealand employment agreements and compulsory publishing of starting salaries for an advertised job, to combat the gender pay gap. This was recommended as part of the government’s range of potential measures to combat the gender pay gap and equity issues in the workplace, including the introduction of Fair Pay Agreements. The recent legislative changes in Australia (by another Labour government) could mean New Zealand will follow suit.
Mind the Gap and Human Rights Commission lead the charge
Momentum is growing for improved pay transparency in New Zealand. Mind the Gap launched a voluntary pay gap registry where organisations can report on their pay gaps, including gender and ethnic pay gaps for Māori and Pacific employees. Late last year, Mind the Gap also handed over 8,559 signatures calling for the government to bring in legislation requiring gender and ethnic pay gap reporting.
The Human Rights Commission launched a petition demanding a pay transparency regime to be adopted in New Zealand, which received 4,000 signatures and was accepted by the government. The Commission also conducted the Pacific Pay Gap Inquiry, to understand why the Pacific pay gap (that is, the largest pay gap in New Zealand) exists and how it can be closed. More organisations in New Zealand are reporting on their pay gaps, and pay gap reporting is a requirement in the public sector, including most recently Auckland Council, which reported Pacific workers at Auckland Council are earning 27.6 per cent less than the organisation’s average, and the overall gender pay gap is 22.6 per cent. While pay transparency has survived the Prime Minister’s, Chris Hipkins, prioritisation of Labour Government policies following Jacinda Arden’s departure, given the current climate for more transparency around pay, the timing of any legislation in this area remains uncertain.
Fair and reasonable still in the frame
Generally, pay is a matter of negotiation and agreement between employer and employee or union. As such, if an employee desires an increase in their pay, it must also be negotiated and agreed upon by their employer. What if an employee breached their pay secrecy clause in their signed employment agreement? At law, while an employer may seek to rely on a pay secrecy clause in an employment agreement to start disciplinary proceedings, it is likely an employee will claim that they disclosed their pay to genuinely understand whether they were actually being paid in parity comparable to others in the same or similar role to them.
At that point, serious questions about whether an employer may reach a view that disciplinary action is fair and reasonable in all the circumstances would arise. However, employers would be wise to start considering how they will navigate potential (and likely uncomfortable) discussions on pay transparency and parity in their workplaces, if Australia is anything to go by.
Sianatu Lotoaso is an Associate at Dundas Street Employment Lawyers. Sianatu provides advice on all aspects of employment law and the employment relationship. Sianatu regularly provides advice to a range of clients in the public and private sectors.
