Pay secrecy clauses, which prohibit employees from discussing their salaries, have been quite common in employment contracts in Australia throughout the years. However, at the end of 2022, Australia passed a fair work amendment bill banning pay secrecy clauses in employment contracts moving forward in an attempt to encourage more transparency and equity among employees. This follows a general trend in favor of pay transparency within the workplace.
“The idea behind it is enabling employees to be more open, to have a discussion with each other about what they’re getting paid and what their terms of employment are, because that will enable them to determine whether there is an inequality in the workplace [that] needs to be addressed further,” said Angela Backhouse, legal director at Chamberlains Law Firm in Canberra, Australia. “Up until now, with the pay secrecy clauses in place, the employees haven’t been able to have those conversations with each other, and there’s no real way of knowing whether the person sitting next to you doing the exact same job is getting paid the same as you or not.”
How the Ban Will Work
The implementation will be a staged process. Pay secrecy clauses were banned for all contracts that were entered into or changed after Dec. 7, 2022. “That would include a variation such as a change to your remuneration or a change to your position description,” Backhouse said.
Starting June 7, all pay secrecy clauses are null and void. Financial penalties will apply to any employer that issues a contract that still has a pay secrecy clause in it after June 7, Backhouse said.
Employers Need to Prepare, Be Aware
It’s important for employers to take this time to prepare for the June deadline, and adjust contracts ahead of time. “Employers should affirmatively get ahead of the ball and revise their language, because it’s really a step in good faith to show employees that, while we’re not required to do this just yet, we want to promote equity in the workplace, we want to promote transparency in the workplace, and we’ll adopt these regulations ahead of the curve,” said Thelma Akpan, an attorney at Littler in New York City.
Employers should also proactively review their employment templates to make sure that the pay secrecy clauses are removed, so future contracts won’t have them. In addition, companies should prepare for a potential cultural shift in the workplace. “This is going to create a more open environment about the terms of people’s employment, and you should expect employees to start talking about these things more freely and openly,” Backhouse said. “Because of that, employers should also be making sure they’re doing a full review of salaries to make sure that they are equitable.”
Employees should pay attention to their own contracts and stay aware of whether they have pay secrecy clauses that might remain in effect through June.
Katie Nadworny is a freelance writer in Istanbul.
