Pay secrecy prohibitions are now in effect which means employees have the positive right to disclose, or not disclose, their remuneration and related terms and conditions of employment to others.

For some time, many employers have imposed confidentiality requirements on employees not to disclose salary information, be it expressly through contract clauses or policy, or implicitly by discouraging disclosure as a result of organisational culture.

These pay secrecy changes are driven by the Federal Government’s commitment to help close the gender pay gap. The hope is that by improving pay transparency, it will lower gender pay discrepancies.

Employers need to be aware that the right to disclose remuneration details is now a workplace right. This means an employer cannot take adverse action against an employee who elects to disclose, or ask others about, remuneration details. The same protection applies to employees who elect not to share this information.

It is important to note these protections extend beyond just salary and include “any terms or conditions of the employee’s employment that are reasonably necessary to determine remuneration outcomes”, such as hours of work. It also extends beyond disclosure to employees within your organisation – employees can elect to share this information with others outside your business. Further, these protections extend to employees even after they leave your business.

The pay secrecy prohibitions took effect from 7 December 2022, however there are some transitional arrangements to consider:

  • for any new employment contract entered into on or after 7 December 2022, the new rights will apply to that employee on an ongoing basis;
  • the same applies for any existing contracts where the contract is silent regarding pay secrecy; and
  • where an existing contract has a pay secrecy clause, and that contract is varied on or after 7 December 2022, the new rights will apply to the employee from the date of variation.

If a pay secrecy clause has already been included in a new or varied contract per the above, the term will have no effect and cannot be enforced. It is important to note that even a minor contractual change, such as a pay increase, may invoke these protections.

However, from 7 June 2023, employers must not include pay secrecy clauses in contracts issued to employees. This is a civil remedy provision, which means employers can be liable for penalties of up to $82,500 per contravention.

Where a contract is entered into before 7 December 2022 and it contains a pay secrecy clause, the clause will continue to operate until the contract is varied. The protections do not apply and employers are under no obligation to issue updated contracts. However, once the contract is varied, the pay secrecy term will no longer have effect and cannot be enforced.

Decipher Workplace Law can assist employers by reviewing existing remuneration practices to ensure compliance. For more information, contact us.

This is general advice only and does not constitute legal advice. Please seek legal advice regarding your specific circumstances