Following the recent passing of the Employment Relations (Employee Remuneration Disclosure) Amendment Bill into law, employers are no longer able to enforce pay secrecy clauses in employment contracts.
Old Law
Previously, employers were permitted to include a clause in an employment agreement which prevented employees from discussing or disclosing their salary or remuneration to others. Such clauses were perfectly lawful, and employers were able to enforce these pay secrecy clauses. Where an employee was in breach, they could have been liable for disciplinary action.
New Law
The new law now lets employees discuss their salaries, remuneration, and conditions of employment without fear of reprisal no matter what their Employment Agreement says. This change applies to both existing and new employment agreements.
While this new law does not prevent pay secrecy clauses from being agreed to, they will effectively be ‘null and void’ as an employer will not be able to take action if the clause is breached.
Employers who are found to be in breach of the new legislation could be liable for penalties of up to $20,000.
New Ground for Personal Grievance
These changes also introduced a new ground for a personal grievance: ‘adverse conduct for a remuneration disclosure reason’.
This means if an employer disciplines or treats an employee adversely for discussing their salary or remuneration, the employer could not only be liable for a penalty, but could also have a personal grievance brought against them by the adversely affected employee.
Going Forward
The Amendment Act only applies to an employer’s conduct on or after the commencement date (27 August 2025).
Employers are encouraged to be proactive. We suggest employers:
- Review their employment agreement templates and check for any clauses that restrict pay discussions. Agreements for any new employees from the commencement date should not contain these clauses. Existing employment agreements from prior to the commencement date do not need to be varied, but if an agreement contains a pay secrecy clause, it will now be of no effect.
- Review any confidentiality clauses to ensure they do not cover pay.
- Review their pay structures and be prepared to explain how pay is determined in the event pay discrepancies are challenged by employees. For example: experience levels, performance, and responsibilities.
It’s important to keep your Employment Agreements up to date – call us if you would like us to check your Employment Agreement templates and make sure they are fit for purpose.
