Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 - Pay secrecy

In the second reading speech for the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill), the Honourable Tony Burke, Minister for Employment and Workplace Relations (and Minister for the Arts and Leader of the House), stated that workers who want to have a discussion about pay equity at work should not be prohibited by their employment contracts from doing so.  To achieve this goal, the Bill will prohibit pay secrecy clauses, bringing transparency to workplaces, and protecting workers by giving them the option to tell someone how much they are paid without fear of retribution.

This aligns with a key focus of the Bill: to act to close the gender pay gap and take steps to put gender equity at the heart of Australia’s workplace laws, as discussed in the fifth article in our series. 

In support of this focus, the Bill includes provisions to make gender equity an overarching object of the Fair Work Act 2009 (Cth) (FW Act) in the modern awards and minimum wages objectives. 

In particular, the goal of gender equity is actioned by a number of key elements. 

The first element is the creation of certain legal rights for employees to disclose, or not disclose, and ask questions about their remuneration, and any terms and conditions of their employment that are reasonably necessary to determine remuneration outcomes. 

In particular, an employee will be entitled to ask any other employee (whether employed by the same employer or a different employer) about any of the following information:

• the other employee’s remuneration, and
• any terms and conditions of the other employee’s employment that are reasonably necessary to determine remuneration outcomes.

An example of a condition of an employee’s employment that may be reasonably necessary to determine remuneration outcomes is identified in the Bill (as an example) as the number of hours that the employee works.

Employees would be able to use this information to assess whether their remuneration is fair and comparable to that of other employees in the same workplace or industry.

The second element is the protection of these rights by designating them as a ‘workplace right’ in relation to the general protections provisions in the FW Act. 

In particular, each of the new rights will be a ‘workplace right’, and a person is not prevented from exercising any of these workplace rights because the person, or another person, is no longer an employee of an employer.

The general protections laws protect most people from harmful (adverse) action, coercion, undue influence or pressure, misrepresentation, discrimination etc. where they affect workplace rights.  A general protections application can be made by a range of persons including prospective employees.  An application can be made during employment or after it has ended. 

By making these provisions part of the general protections laws, an affected person will have a mechanism to seek an independent review by the Fair Work Commission, the Federal Circuit and Family Court of Australia or the Federal Court of Australia.  This will assist the goal of pay equity by:

• advancing the rights of women not to be discriminated against based on gender by providing a legal right, and effective legal mechanism, for them to confirm they are not being paid less than male employees for doing the same job, and
• creating greater transparency and accountability for employers to eliminate discrimination against women from their workplaces relating to their remuneration and human resources practices. 

The third element is including provisions that prevent employers from enforcing pay secrecy clauses in employment contracts and fair work instruments, and including pay secrecy clauses in new employment contracts and other written agreements.

In practical terms, an employer who enters into a contract of employment or other written agreement with an employee, and the contract or agreement includes a term that is inconsistent with the provisions above, can be subject to legal proceedings by a prospective employee, an employee, a union or the FWO. Any breach may attract the imposition of a civil penalty.

If a contract of employment that is entered into before commencement of the Bill includes pay secrecy provisions, then these provisions will continue to have effect until the contract is varied.  Interestingly, if a current contract of employment that contains pay secrecy provisions is varied after commencement of the Bill, the pay secrecy provisions would cease to have effect even if the pay secrecy provisions are not varied.

Any pay secrecy provisions included in a contract of employment entered into after commencement of the Bill will have no effect. 

The new provisions will apply to employees in the following circumstances:

• from commencement (of the Bill): to all employees with new contracts of employment entered into on or after commencement, and to employees with existing contracts, where those contracts do not contain a pay secrecy term, and
• from the time of variation of the contract: to employees with existing contracts containing terms related to pay secrecy, where those contracts are varied by mutual agreement of the parties after commencement.

The pay secrecy provisions would apply in relation to:

• a fair work instrument made before, on or after commencement of the Bill.  This will mean that any pay secrecy terms in fair work instruments (whether new or existing) would have no effect after that date, and
• to contracts in the following circumstances:

1. from commencement (of the Bill): to all new contracts of employment entered into on or after commencement, and to existing contracts, where those contracts do not contain a pay secrecy clause, and
2. from the time of variation of the contract: to existing contracts containing a clause related to pay secrecy, where those contracts are varied by mutual agreement of the parties after commencement.

The penalties for breaches of the civil remedy provisions will apply in relation to a contract of employment entered into on or after six months after commencement of the Bill.  This delay is intended to provide employers with sufficient time to arrange compliance with the new prohibition on pay secrecy terms.