30 November 2022
As part of our examination and guide to the changes flowing from the Secure Jobs, Better Pay Act, we continue our series with this next instalment on the provisions relating to pay secrecy and job advertisements. Our first article looked at fixed term contracts and flexible work.
Policy rationale: The Government considers that workers who want to discuss pay equity at work should not be prohibited by their employment contracts from doing so. The Hon Tony Burke MP, Minister for Employment and Workplace Relations, Minister for the Arts said that the legislation will bring transparency to workplaces and would protect workers by saying “if you want to tell someone how much you are paid, that's up to you.” The recent changes are seen as a means to promoting gender-based pay equity by assisting women to confirm they are not being paid less than male employees for doing the same job.
Operative provisions: The Amending Act protects employees who disclose (or not disclose) their own remuneration and any related terms and conditions of their employment to any other person, or who ask other employees (whether or not they work for the same employer) about their remuneration and other related terms and conditions of their employment. An employer cannot take adverse action against an employee for exercising their workplace right to ask these questions or make these disclosures.
It is important to note that the new provisions will not compel an employee to disclose to another employee who asks about this information.
The protection created by new section 333B applies to all employees except those who entered into a contract of employment containing a pay secrecy clause before 7 December 2022. In the case of those exempted employees, the protection will apply from the time that their contract is amended by mutual agreement (such as for example, when their pay is increased).
The right to disclose or ask about remuneration extends to discussing about any terms or conditions of employment that would be reasonably necessary to determine remuneration outcomes. For example, the number of hours that the employee works. This is because two employees working in the same role could earn the same amount, but one employee works full-time and the other employee works part-time, meaning that in fact their remuneration is not fair and comparable.
The Amending Act will also invalidate provisions in employment contracts that would be inconsistent with the above positive rights. New section 333C renders pay secrecy clauses in enterprise agreements invalid on and from 7 December 2022. Pay secrecy clauses in employment contracts made after 7 December 2022 will also be invalid. Pay secrecy clauses in contracts made before 7 December 2022 remain enforceable until the contract is varied.
New section 333D will also make it a civil offence to include in a contract of employment a term that encroaches on an employee’s protected right to discuss remuneration. This prohibition will apply on and from 7 June 2023.
Key issues: What type of information is covered by the prohibition on pay secrecy? The legislation will apply to the amount of an employee’s remuneration and any terms and conditions that would be reasonably necessary to determine remuneration. For example, it would include the hourly pay rate, the number of hours the employee works and any bonuses or commissions. It will not include any information that isn’t reasonably necessary to determine remuneration outcomes, such as any confidential information about projects the employee is working on.
An example of a pay secrecy term is a confidentiality clause that requires employees not to disclose to any third party any information designated to be confidential, and the contract identifies the terms of the contract itself or employee remuneration as a category of confidential information.
A pay secrecy term may arise in an employment contract because the contract requires the employee to observe provisions in an employee handbook or suite of policies, and the latter makes employee remuneration or employment conditions confidential.
Potential implications for an organisation: As a matter of legal compliance, it will be necessary to remove any terms in standard employment contracts which require pay confidentiality. Broadly drafted confidentiality clauses will still have effect generally (for example, protecting customer information), however they will have no effect to the extent that they would be inconsistent with the employee’s right to disclose or enquire about remuneration. Any specific reference to keeping information about their pay secret should be removed, including any reference to confidentiality in letters concerning periodic salary/pay reviews or promotions where new remuneration details are included.
As set out above, the right to disclose (or keep confidential) one’s remuneration, or ask about another’s remuneration, is a workplace right protected by section 340 of the Fair Work Act (FW Act). Therefore, it will be essential to entrench a culture of respecting employees’ rights to speak freely about their remuneration and conditions of employment into human resource practices. Any action (such as dismissal or prejudicial treatment) taken against an employee in circumstances involving a disclosure of, or enquiry about, remuneration may be presumed to be adverse action taken against the employee for exercising their workplace rights. Where decisions are being made about an employee who has exercised this workplace right, for reasons that are separate and unrelated to the exercise of the workplace right, it is essential that all decisions are clearly documented and accompanied by clear reasons for the decision. This will assist in ensuring that decisions are being made for the right reasons and in defending any claims of adverse action against the employer.
New section 536AA will apply to any job advertisements on and after 7 January 2023 where the employer has chosen to specify a pay rate in the job advertisement. It prohibits an employer from advertising that it was offering employment at a pay rate that would contravene the FW Act or a fair work instrument (i.e. a modern award, enterprise agreement, workplace determination or FWC order).
A job advertisement that specifies a pay rate below, for example, the applicable modern award rate, would contravene the new requirement.
The new section only applies to advertising mediums (e.g. print, broadcast, outdoor, digital, etc.), rather than informal communications such as word of mouth.
The rationale behind the prohibition on misleading job advertisements is to protect migrant workers who are unaware that they are covered by workplace laws and conditions. (See pages 84-85 in the Report of the Migrant Workers taskforce March 2019.)
The provision also introduces a requirement for an employer who advertises a role for a pieceworker (a worker who is paid a fixed piece rate for each unit produced or action performed) to include any periodic rate of pay to which the pieceworker would be entitled to in the advertisement. The provision would apply to employees who are referred to as pieceworkers in modern awards (for example, the Building and Construction General On-site Award 2020, the Real Estate Industry Award 2020 and Pastoral Award 2020) or enterprise agreements.
A defence of “reasonable excuse” for non-compliance with the advertisement requirements will apply and an employer is protected from being penalised multiple times for the same breach. The Fair Work Inspectors will also have the power to issue compliance notices.
If an employer intends to advertise any pay rate or salary in a job advertisement, it will be necessary to ensure that the advertised pay rate accurately reflects the employee’s entitlements.
In adapting for these changes to the FW Act, human resource teams should be considering the following activities:
If you have any questions about how these changes may impact your existing human resource practices, please contact Partner Charles Power, Senior Associate Keisha Currie, or a member of our national Workplace Relations & Safety team in the Key Contacts section below.
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.