Reminder: Prohibiting Pay Secrecy

26 May 2023

As outlined in our 29 November 2022 and 9 December 2022 Legal Alerts, changes to the Fair Work Act 2009 (Cth) (FW Act) introduced prohibitions regarding pay secrecy clauses, and created new workplace rights to allow employees to disclose their remuneration and other conditions. Further significant changes concerning this right come into effect from 7 June 2023.

It is already the case that from 7 December 2022 the right to disclose remuneration and ask any other employee about their remuneration is a workplace right, applying to all contracts entered into from that date, For employment contracts entered into prior to that date with pay secrecy terms, these have no effect. Employers cannot take adverse action against an existing or future employee because of the exercise of these rights to disclose or ask about another employees remuneration in the same workplace, or industry. Pay secrecy terms in enterprise agreements or awards also have no effect, regardless of when the instrument was made.

Significantly, as from 7 June 2023, pay secrecy clauses cannot be included in any employment contracts or written agreements that were entered into on or after 7 December 2022. An employer who provides a contract with a pay secrecy clause after that date could be subject to penalties of up to $66,600 per contravention. This would include an offer in the form of a contract variations, many of which often ‘call up’ the terms and conditions of earlier contracts. This would breach the prohibition on pay secrecy terms.

Clauses of this kind in any employment contracts or other documents designed to prevent employees from disclosing their pay and comparing it with co-workers must be removed. While employees may disclose their remuneration and any terms and conditions of their employment that are reasonably necessary to determine remuneration outcomes, there is no obligation for an employee who is asked to disclose their remuneration.

What to do?

Employers should review their current template contracts, agreements, handbooks and policies including the terms of ‘bonus’ schemes confidential to employees, to ensure they are compliant.

EMA Legal can provide advice and assist employers with the review of these documents.

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This Newsletter is made available to our clients and interested parties to provide immediate access to information about important changes and developments relevant to employers. The information contained in this publication should not be relied on as legal advice and should not be treated as a substitute for detailed advice that takes into account particular situations and the particular circumstances of your business.