Receiving Royal Assent on the 6th of December 2022, the ‘Secure Jobs Better Pay' Bill has resulted in several amendments to the Fair Work Act 2009, including prohibiting pay secrecy – but what does this mean?

The prohibited pay secrecy amendment to the Fair Work Act introduces a new workplace right, providing all employees with the right to choose to share and ask other employees (even those with a different employer) information about their pay and employment terms and conditions. Employees will have the right to discuss these matters even after they leave their employment.

As this is now a workplace right, employers can no longer prohibit pay secrecy and undertake disciplinary processes for employees sharing this information, as it would be considered adverse action in breach of the Fair Work Act 2009.

Does this impact all employees, or only new employees?

The new workplace right has been effective since the 7th of December 2022 for all employees.

All inconsistent pay secrecy terms in employment contracts and other workplace documents will be rendered invalid and unenforceable.

Likewise, enterprise agreements, awards, or other fair work instruments that include pay secrecy terms will now have no effect and cannot be enforced after the 7th of December 2022. This applies regardless of whether the instrument was made before, on or after this date.

What do you need to do?

Any employment contracts written on or after the 7th of December 2022, whether this is for new employees or amendments for existing employees, are not to include pay secrecy terms inconsistent with the new workplace rights.

We also recommend employers review their existing employment contracts, employee handbooks, policies and procedures to remove any reference to pay secrecy terms that are now inconsistent with the new workplace right.

What are the potential implications of this change?

Pay secrecy has the potential for employees to perceive the compensation system as unfair whether it is or not. A potential impact of perceived unfairness is that an employee performing at a high level may reduce their performance to that of lower performers whom they believe to be receiving the same pay. So, in some respects, the prospect of employee remuneration becoming freely shared information may benefit those employers who provide equal and fair pay to their team.

However, employers who pay employees differently for performing the same job may face disgruntled employees feeling that they have been treated unfairly, are undervalued, and will rightfully demand a pay increase! If differences in employee performance and pay cannot be supported, you may find yourself in a difficult position needing to justify the reason behind the pay difference.

As employers work their way through this new minefield, I recommend being prepared before the questions start rolling in. Gather your supporting evidence in advance so that when the questions arise, you can provide feedback and reasoning for the current rate of pay and ensure the employee knows what level of performance/targets are required to be achieved so they can progress to a higher rate of pay.

A strong performance review practice and policy will be key to navigating this space moving forward.

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By Bianca Brattoli

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References

https://www.fairwork.gov.au/newsroom/news/secure-jobs-better-pay/pay-secrecy-job-ads-and-flexible-work