Late last year, a bill to protect employees who discuss or disclose their remuneration passed its first reading in parliament and now sits with a select committee after submissions closed in late January.
We’re keeping a close watch over the passage of the Employment Relations (Employee Remuneration Disclosure) Amendment Bill, as it seeks to enhance pay transparency by prohibiting confidentiality clauses that restrict employees from discussing their salaries or wages.
Currently, under the Employment Relations Act 2000, employment agreements can contain provisions that prevent employees from discussing or disclosing their salary, wages or other conditions to third parties. Employees who breach these terms can face disciplinary action and potentially, dismissal.
The change will bring New Zealand into line with other countries (such as Australia, the UK, and Canada) that have prohibited such contractual terms because they can lead to pay secrecy and discriminatory outcomes.
Why is this bill important?
The gender pay gap in New Zealand is currently 8.2 percent - meaning women earn on average 8.2 percent less than men for similar work (the gaps are even larger for Māori and Pasifika women).
While there has been no indication New Zealand will follow other countries, such as Australia, in introducing mandatory remuneration reporting, the Employee Remuneration Disclosure Bill aims to make it easier to identify and remedy pay discrimination on an individual employee level, by protecting employees who choose to discuss or disclose their earnings to others.
New personal grievance
The Bill proposes adding a personal grievance to the Employment Relations Act - if an employer (or a representative of the employer) takes “adverse conduct for a remuneration disclosure reason”.
So, in the case an employer dismisses or disadvantages an employee because they disclosed or discussed their remuneration with any other person (this will include inquiring about another employee’s remuneration), the employee would have grounds to take a grievance against their employer.
This means any existing pay confidentiality in employment agreements will not be enforceable, and using such clauses could expose employers to legal liability.
What happens next?
The Members Bill was introduced by Labour MP Camilla Belich, and was supported in the first reading by Labour, National, the Greens, and Te Pāti Māori.
ACT and New Zealand First were the only parties not to support it, so we assume the Bill will pass subsequent readings and be made into law sometime this year.
There could be changes to the Bill as a result of the select committee’s findings. For example, the NZ Law Society’s submission pointed out that the current wording makes no reference to the reason why a pay disclosure is made, meaning that employers would have no recourse when an employee discloses their remuneration in bad faith (the society also recommended the scope of the term ‘remuneration’ be clarified).
We’ll be sure to keep you updated - but in the meantime, if your employment agreements contain pay confidentiality clauses, it would be worth reviewing these (and any processes around them). The MyHR team are experts at drafting clear, legally-robust employment agreements, so reach out if you need any assistance.
You can follow the Bill’s progress at Parliament.nz.
You can also identify pay disparities in your organisation using the government’s new gender pay gap calculator. It includes tools for creating action plans to address any pay gaps.
