Strong case to outlaw pay secrecy
Enforced secrecy around rates of pay may soon be unlawful.
A members bill aimed at increasing pay transparency has been drawn from the ballot.
If enacted the bill would make it unlawful for employers to include clauses in employment agreements preventing employees from discussing or disclosing their remuneration with other employees or third parties.
It would also be unlawful for an employer to subject an employee to adverse treatment or repercussions as a result of disclosing or discussing their pay. This would give rise to a personal grievance for which the employee could seek compensation.
When introducing the bill, Labour Party workplace relations and safety spokesperson Camilla Belich said “being secretive about pay fuels gender and ethnic pay gaps and can lead to discrimination. It is often said sunlight is the best disinfectant and this bill will help to promote transparency and fairness in pay”.
Belich called on all parties to support the change as a step in the right direction towards the ultimate goal of closing pay gaps.
It is unclear whether the bill will in fact get cross party support, but it is difficult to dispute the rationale and the need for it.
Currently there is significant confusion about whether employees are allowed to discuss their pay.
Some employers seek to argue that this is commercially sensitive information which falls within the general confidentiality obligations that employees have. This would be a stretch in most instances given the information relates to the employee rather than customer, product or pricing information that might otherwise be regarded as sensitive.
I would suggest that any employer who sought to punish an employee for disclosing details about their own pay would be at significant risk of a successful personal grievance claim, even without this bill being passed. The problem, however, is that people don’t know or are not confident about this and so generally stay silent.
From an employer’s perspective, there appears to be little good reason to stop an employee discussing their pay if they want to. The only reason in most cases would be to prevent one employee finding out that their colleagues, performing the same work, are paid more. This is clearly not a good reason and, as Belich notes, reinforces and perpetrates discriminatory practices.
The existing situation also tends to prejudice employees on individual employment agreements, who may already have less bargaining power. In this respect collective agreements negotiated by unions typically include pay ranges, and many also set out how an employee can progress through those ranges.
It makes little sense, therefore, in a workplace with a mix of individual and collective agreements to suggest that employees on individual agreements should not disclose their pay when the collective rates are plainly stated.
It is arguable that the bill does not go far enough. In the United States, eight states have enacted pay transparency legislation and nine have introduced laws requiring employers to set out pay ranges in job advertisements.
While this has become more common in New Zealand, not least of all because job site Seek requires it in postings, often it does not occur. Again, this allows an employer to take a flexible approach to what they might offer depending on the candidate, as opposed to the requirements of the job.
There is a strong case for outlawing pay secrecy – it should not be a political issue.