Wage Confidentiality

Wage confidentiality laws in Australia: can you legally talk about your pay?

Talking about pay used to be off limits in many workplaces. In fact, until December 2022, employers in Australia could legally direct employees not to disclose their salary with their co-workers. Many employment contracts used to include a ‘pay secrecy’ clause prohibiting employees from discussing their salary packages. 

That’s no longer the case.

Due to laws passed in 2022, pay secrecy or wage confidentiality clauses, or any other of this type, are no longer permitted in employment contracts, and by even trying to implement them companies could be in breach. This gives employees more control over what they share and protecting them when they do.

Here’s what you need to know.

What is a wage confidentiality clause?

A ‘wage confidentiality clause’, often called a ‘pay-secrecy clause’, is a term in an employment contract that directs an employee not to discuss their pay with co-workers. These clauses were designed to keep a worker’s pay a secret between the employer and employee, and were particularly common in industries where bonuses, commissions or discretionary payments were part of the employees’ packages.

Changes to the law on wage confidentiality

In 2022, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 came into effect and introduced new rules around wage confidentiality. The key change is simple: employers can no longer include wage confidentiality clauses in employment contracts. 

The government abolished wage confidentiality clauses in the hope this measure would help to address the gender pay gap.

Alongside this, employees now have clear workplace rights. Now you can:

• Share or not share information about their pay, and about the terms and conditions necessary to work out their pay (such as hours of work) 
• Ask other employees (even with different employers) about their pay and those related terms and conditions; and
• Not to disclose their pay or related information if asked.

In addition, employers cannot take adverse action, coerce, apply undue influence or pressure or misrepresent your rights because you have (or have not) exercised your pay-secrecy related workplace rights, or prevent you from doing so. And even including a wage confidentiality clause in your workplace agreement is a breach of the Act.

What if your contract was signed before 7 December 2022?

This is a very clear exception to the Act. If you’re still working under a contract signed before 7 December 2022 that includes a wage confidentiality clause, that clause still applies. So you will be bound by that confidentiality requirement unless and until the contract is varied, such as if you’ve been promoted. If you are still bound by a confidentiality requirement, you are still restricted from sharing your pay.

If your pre-7 December 2022 contract does not include a wage confidentiality clause, the position is different. You can rely on the new laws. This means that you have the right to share, or choose not to share, information about your, and you are protected for doing so.

And if your contract has been updated since them (for example, if you’ve had a promotion or there was a written variation), then any pay secrecy term in it has no effect and cannot be enforced. So, in this case, the employee can fully rely on the new workplace rights. 

What if your contract was signed after 7 June 2023?

When the changes were introduced, a six-month grace period was legislated from the 7 December 2022 to the 7 June 2023. Wage confidentiality clauses during that period were still wholly unenforceable, and the employee had all the rights currently allowed under the Act. But for that six-month period they did not expose the employer to penalties. 

Penalties if there’s a breach

If an employer tries to enforce wage confidentiality in a way that breaches the law, there are a few options available. 

General protections claims

First, employees can bring a ‘general protections’ claim to the Fair Work Commission, if they experience adverse action, such as unfair dismissal or negative treatment, because they exercised their workplace rights. 

an apology, depending on the situation.

Complaints to Fair Work Ombudsman

Second, employees can also make a complaint to the Fair Work Ombudsman (the Ombudsman). The Ombudsman does not investigate every complaint it receives, but it does investigate matters that are serious, systemic or in the public interest.

If the Ombudsman finds that the Act has been breached it may require the employer to take specific action. In some cases, it may also issue an Infringement Notice, with penalties applying. An Infringement Notice can be issued up to 12 months after the breach occurred.

The Ombudsman states there can be ‘heavy fines’ for employers who breach the pay secrecy laws. Penalty unit values and caps change periodically (you can access the most recent amounts here), but recent matters have shown ordinary penalties for including pay secrecy clauses can be in the tens of thousands to over $90,000 per contravention for corporations. How the number is assigned depends on whether the higher ‘serious contravention’ regime applies and on current penalty-unit values. 

The Ombudsman may also investigate, require rectification and commence court proceedings for alleged breaches of pay secrecy laws, if it considers this to be appropriate. It uses a risk-based approach that balances the seriousness of the breach against the public interest to decide which matters to pursue. 

Why wage confidentiality still matters

Even though wage confidentiality clauses are now largely prohibited, the concept still matters in practice. Many employees are unsure what they can or can’t say about their pay, particularly if they’ve been with the same employer for some time or have older contracts in place. Others may still feel they can’t discuss their salary, even though they absolutely have the right to do so.

Understanding where you stand can make a real difference, especially if issues arise in the workplace.

If your employer has taken action against you for discussing your pay, or you’ve been asked to sign a contract with a wage confidentiality clause, Armstrong Legal can help. Our employment and corporate law team advises on general protections claims, Fair Work matters and employer compliance. Get advice today.