From 7 December 2022, contracts entered into can no longer have clauses that seek to restrict staff members from discussing their pay rates and related terms and conditions of employment with others.
Pay secrecy clauses in contracts and agreements made from 7 December 2022 will have no effect, giving workers a “positive right to disclose, or not disclose” their pay.
If a contract entered into before 7 December 2022 contains a pay secrecy clause, the clause will be enforceable until the contract is varied or replaced (and there is no obligation on employers to vary or replace existing contracts). However, even a minor variation to a contract may be sufficient for the new laws to apply.
Otherwise, employees now have a workplace right to:
- disclose details about their remuneration, or any terms and conditions that are “reasonably necessary to determine their remuneration” (e.g. hours worked, shift-work requirements, sales numbers etc.) to any person including, but not limited to, their co-workers; and
- ask others about their remuneration or relevant terms and conditions.
It is important to note, however, that nobody can be forced to divulge such information if they choose not to do so.
From 7 June 2023, an employer who offers a prospective employee a contract containing a pay secrecy/confidentiality clause could subject themselves to significant financial penalties, so it is important for employers to ensure they update their contract templates during this transitional period.
Employers will not be penalised if new employment contracts entered into before 7 June 2023 contain pay secrecy clauses, rather, those clauses will simply be unenforceable.
There is also a new prohibition on advertising a job from 7 January 2023 with a pay rate lower than the relevant Award rate.
So much that is new. Not sure? Ask us.
