While companies have reported on gender differences in remuneration to the Workplace Gender Equality Agency (WGEA) for some time, the Government’s Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 will require public disclosure. The potential for adverse public attention may spur organisations to close the gap faster.
Organisations who are on the front foot with these changes (like those who currently voluntarily disclose) can take the lead by having a clear ambition and strategy for achieving career and pay equity – one that builds trust with employees, investors, and community stakeholders.
What changes are proposed?
The Bill amends the Workplace Gender Equality Act to strengthen reporting provisions, including:
- a new requirement for WGEA to publish gender pay gaps of employers with 100 or more workers. Currently, this is reported at industry level and will be extended to the individual employer level. The WGEA reporting is expected to commence in 2024, using data from the end of the current reporting period
- employers with more than 500 employees are currently required to have a dedicated gender equality strategy, but it only needs to cover one or more of the six gender equality indicators. Now, WGEA is likely to provide a list of options for targets against the indicators from which employers will be able to choose
- employers will need to provide their gender equality reports to their governing bodies (e.g., boards)
The Bill follows the recent ban on pay secrecy introduced under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022. This legislation created a new workplace right allowing employees to ask one another about and to disclose their remuneration. In addition, employers are now prevented from enforcing pay secrecy clauses in employment contracts and fair work instruments, and from including pay secrecy clauses in new employment contracts and other written agreements.
This means that employees are now free to discuss a range of pay related topics with their colleagues including remuneration increases, performance bonuses, retention payments, benefits and share allocations – conversations which were previously either subject to disciplinary action or culturally discouraged in many organisations.
The boost to pay transparency is expected to generate more data-informed conversations about pay and benefits as additional information becomes available in workplaces and the public arena. If overseas experience is a guide, we anticipate transparency will evolve to include further measures such as availability of salary ranges and other pay data at hiring and during employment.
Employees will expect more information about remuneration strategy and how remuneration decisions are made within organisations and related governance. There is expected to be increased interest by corporate stakeholders and investors on how companies are addressing gender pay equity as an important part of the “S” in their ESG platform, adding further pressure to close the gap faster.
Based on WTW’s extensive global experience advising clients in the US, the UK and Europe, where pay transparency laws have been in place for several years, we recommend three actions for employers to take now, to prepare for the new laws.
Where to from here?
Pay transparency will step up the focus on fair pay. New laws will require an extra layer of care in defining and communicating remuneration policies and practices. Those organisations that have confidence in their career and pay equity strategy will soon be on their way to complying and leading in this space.
By acting now to review your people processes, calculation methodology and communications you can be equipped to meet the requirements and show your people you care. Don’t underestimate the enhanced engagement required with your current and potential employees, the media, customers and investors. Be ready to extend and lead the fair pay conversation and seize the opportunity to strengthen trust with employees through deeper engagement on career and pay equity as part of your ESG platform.