Critical Workplace Law Update – Pay secrecy provisions in contracts of employment now outlawed

As you may be aware the Labor Government’s most recent IR Bill has now been made law. Various aspects of the new laws commence at different times.

Critically, one of the amendments that commenced today are the new laws prohibiting pay secrecy.

The new provisions provide the following Employee Pay Secrecy Rights:

• an employee may disclose, or not disclose to any other person the employee’s remuneration and/or any terms and conditions of the employee’s employment that are reasonably necessary to determine remuneration outcomes, for example the number of hours that the employee works; and
• an employee may ask any other employee (whether employed by the same employer or a different employer) about the other employee’s remuneration and/or any terms and conditions of the other employee’s employment that are reasonably necessary to determine remuneration outcomes.

Provisions in new or varied contracts of employment entered into from today that require an employee to, for example, keep remuneration details confidential, will offend the Employee Pay Secrecy Rights and accordingly will be null and void.

Moreover, where an employer includes such offending provisions in new or varied contracts of employment going forward, they will be exposed to prosecution and monetary penalties. That said, there is a six-month grace period on prosecutions such that employers can only be prosecuted in relation to offending provisions that are contained in new or varied contracts of employment entered into from 7 June 2023 onwards.      

For clarity, if an employee entered into a contract of employment before today that has provisions in it which are contrary to the Employee Pay Secrecy Rights, those provisions remain legally binding until such time as the employee enters into a new or varied contract of employment.

In summary, the above means that employers must avoid entering into new or varied contracts of employment which contain terms inconsistent with the Employee Pay Secrecy Rights outlined above, from 7 June 2023 onwards – otherwise the employer will be at risk of prosecution for breach of industrial laws.

If you would like more information about this amendment or any other aspect of the new IR laws, please contact our office on +61 2 9233 3989.

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.