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Commercial Law, News

Do you know that it is now illegal for employers to prohibit employees from sharing their salaries?

02
Jun

Effective from 7 December 2022, employers are prohibited from including Pay Secrecy clauses in employment contracts. A Pay Secrecy clause refers to a clause in an employment contract that restricts employees from disclosing their pay or employment terms and conditions to their colleagues.

Under this Act, employers cannot: 

  • prohibit employees from sharing information about their pay or employment terms and conditions with other employees, including their pay and employment terms and conditions that would be needed to work out their pay; and
  • take adverse action against an employee or prospective employee after they disclose their pay.

To comply with the new regulations, employers must remove any Pay Secrecy clauses from employment contracts by the deadline of 7 June 2023.

From this date, employers who include Pay Secrecy clauses in employment contracts could face penalties of up to $165,000 for a serious contravention, or otherwise up to $16,500. The Fair Work Ombudsman has the power to start court proceedings for alleged breaches of these rights.

What should the employer do?

To ensure compliance with the law, an employer should:

  • (For employment contracts that are entered into on or after 7 June 2023): Review and remove all Pay Secrecy clauses in employment contracts and confidentiality agreements.
  • (For employment contracts that are entered into from 7 December 2022 to 7 June 2023): Require a Letter of Variation and a Memorandum to comply with the new Pay Secrecy Act. 
  • (For employment contracts that are entered before 7 December 2022): Pay Secrecy remains lawful, and will be void if contracts are varied in any way. 

We are here to help you to comply with the new Pay Secrecy laws.

We understand that navigating significant policy changes can be challenging. That’s why we offer our support to guide you through these changes.

Here’s how we can assist:

  • Prepare a Letter of Variation for you to send to all employees, explaining that the Pay Secrecy clause is being removed.
  • Prepare a Memorandum to outline the company’s new policy on Pay Secrecy and provide guidance on appropriate expectations.

We offer the above service at a fixed fee of only $1,300 plus GST. 

Contact us now to ensure compliance with the new Pay Secrecy laws.