In the third of our updates on the changes to the Fair Work Act 2009  (FW Act) arising from the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Secure Jobs, Better Pay Act), we take a look at the new provisions prohibiting pay secrecy.

The Secure Jobs, Better Pay Act was passed by both Houses of Parliament on 2 December 2023, and the changes in relation to pay secrecy came into effect on 7 December 2022.

Pay secrecy prohibited 

The Secure Jobs, Better Pay Act amends Chapter 2 of the FW Act (Terms and Conditions of Employment) to insert new provisions about the disclosure of remuneration and prohibiting pay secrecy.

In effect, the amendments create a new workplace right which allows employees to ask one another about and disclose their remuneration and other terms and conditions of employment that are reasonably necessary to determine remuneration outcomes. However, employees are not compelled to disclose information if they are requested to do so.

The Explanatory Memorandum states that the purpose of the amendments is to allow employees “to use this information to assess whether their remuneration is fair and comparable to those of other employees in the same workplace or industry”.

Because the changes constitute new workplace rights under the FW Act, the protections against adverse action provided under section 340 of that Act extend to those rights. So, for example, an employer cannot take adverse action (including disciplinary action) against an employee because they have disclosed their remuneration or other relevant terms to another person or have asked another employee to disclose their remuneration.

In addition, under the changes introduced by the Secure Jobs, Better Pay Act:

  • terms or conditions in an existing employment contract or industrial instrument that are inconsistent with the prohibition on pay secrecy will have no effect; and
  • the inclusion of pay secrecy clauses in new employment contracts and other written agreements is prohibited.

Inclusion of pay secrecy clauses in new employment contracts and other written agreements is a contravention of the FW Act and exposes the employer to the risk of prosecution and the imposition of pecuniary penalties.

Key issues for employers

The pay secrecy provisions in the Secure Jobs, Better Pay Act are directed to ensuring greater transparency and equity in remuneration outcomes amongst employees in the same workplace or industry.

These changes can affect businesses in numerous ways, including highlighting any pay inequities that may exist within that workplace or within the industry more generally. This could also have a significant impact on employee engagement and culture, and lead to disputes in the workplace.

Employers are encouraged to:

  • review their remuneration structures to assess the risks associated with employees disclosing their remuneration and other related terms and conditions of employment to each other and to others external to the business;
  • where necessary, address any inequities for which there is not a reasonable explanation.

Employers will also need to ensure that they review their employment contracts and policies and procedures to ensure that they don’t fall foul of the new provisions.

How we can help

Our experienced Employment Lawyers can help you and your business to navigate the changes in relation to the prohibition on pay secrecy.

Our EIRS team is also available to discuss how the changes under the Secure Jobs, Better Pay Act may impact on your business more generally, and what you may need to do in order to prepare your business for the changes. Please contact us on our website or simply call (02) 6279 4444.

Our next update will look at changes in relation to enterprise bargaining under the Secure Jobs, Better Pay Act