Pay Secrecy in the Workplace: Recent Changes to the Fair Work Act

18 JAN 2023

 

Following the introduction of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (the Legislative Amendment), there are a number of changes that have taken place and are on track to occur soon.

One of those changes is in relation to employment contracts and pay secrecy clauses.

 

Summary of the Recent Change

Prior to the introduction of the Legislative Amendment, employment contracts could contain a clause to prevent employees from discussing the details of their pay and the terms of their employment with other fellow employees.

Due to the Legislative Amendment, those type of clauses prohibiting employees from discussing their pay is now banned. Employees now have the option to disclose or not to disclose information concerning their remuneration. The reason for this change is to encourage transparency in the workplace.

Employees cannot be penalised for asking another employee about their pay. That being said, employees still have the right to choose whether or not they wish to disclose that information – they are not bound to disclose it if they do not wish to do so.

As of 7 December 2022, pay secrecy clauses contained in new and existing employment contracts will have no effect, meaning that employees will not be bound by them and employers cannot enforce them.

From 7 June 2023, if new employment contracts in your business contain pay secrecy clauses, your business may be subject to penalties for breaching the Fair Work Act.

 

Key Takeaways for Employers

It is important that employers update their employment contracts with employees, to reflect this new change (i.e. removing pay secrecy clauses in existing employment contracts) to avoid incurring any penalty. 

If you have any question regarding this Legislative Amendment, please contact Aaran Johnson or Simon Kumar to discuss how Marsdens can assist your business.

 

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice, Specific legal advice should always be sought separately before taking any action based on this publication.

 

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