Changes to pay secrecy explained

Now that the penalties for pay secrecy clauses have kicked in, let’s take a look at what people can and can’t do when it comes to pay secrecy:

The rights that employees have

➡ An employee can disclose their remuneration to any person they like (including people outside their organisation).

➡ An employee can disclose any terms of their employment that are reasonably necessary to determine remuneration outcomes (eg the number of hours they work).

➡ An employee can ask another employee about their remuneration (this includes employees of other companies).

➡ An employee can ask another employee about any terms of their employment that are reasonably necessary to determine remuneration outcomes.

What employers can’t do

🚫 An employer can’t take adverse action against someone because they have one of these rights, exercise one of these rights, propose to exercise one of these rights or to prevent them from exercising one of these rights. This applies to prospective, current and past employees.

🚫 An employer can’t enforce pay secrecy terms in an award or enterprise agreement.

🚫 An employer can’t enter into a contract of employment or other written agreement with an employee that contains a pay secrecy term. There are penalties if you do this: up to $16,500 for an individual and $82,500 for a corporation (and more for serious contraventions).

✅ If you had a pay secrecy term in a contract of employment before 7 December 2022, you can use it to prevent people disclosing details of their remuneration. However, when the contract is varied you can no longer do so. This would include where an employee receives a salary increase or is promoted to a new role.

A few points of clarification

⏺ An employee doesn’t have to disclose details of their remuneration if they don’t want to.

⏺ Employees only have a right to disclose details of their own remuneration and not anybody else’s.

⏺ Employers don’t have to disclose details of the remuneration of their employees (and are often under obligations not to).

Since these laws were enacted in December 2022 many employers have been reviewing their employment contracts to remove pay secrecy terms. If you haven’t done this yet it is a good time to do it to ensure you don’t become subject to civil penalties.