Navigating Pay Secrecy changes to the Fair Work Act

In early December 2022, the federal government passed the Secure Jobs Better Pay Bill. This bill amends the Fair Work Act 2009 (Cth) (Act) in a number of areas and in particular introduced pay secrecy provisions. Pay secrecy has up to this point been a fairly standard inclusion in most employment agreements. These clauses are aimed at preventing employees talking about or revealing their pay and conditions, which ultimately prevents wage comparisons with others. The Act has introduced the following changes which are aimed at reducing discrimination and narrowing the gender pay gap.

All changes came into effect on 7 December 2022, and allow employees to discuss remuneration or terms and conditions of their employment that are reasonably necessary to determine remuneration, with other employees. The effect of the new provisions is outlined below in respect of existing and new contracts.

New contracts

Pay secrecy clauses included in new employment contracts from 7 December 2022 will have no effect, and from 7 June 2023 will attract penalties. Therefore any new contracts created post 7 December 2022 with pay secrecy provisions should be amended by 7 June 2023 to avoid penalty.

Existing contracts

Pay secrecy clauses in current employment contracts will continue to operate, until those contracts are varied (for any reason), after which any pay secrecy clause will no longer have an effect. Current agreements which do not contain pay secrecy clauses naturally, will not be impacted.

Importantly, the right to discuss remuneration is now a protected 'workplace right' which means that any adverse action taken by an employer against an employee for discussing remuneration e.g. terminating their employment, could attract a general protections claim under the Act. Compensation is uncapped for these types of claims, and penalties may be applied on top of any compensation payable.

If you have pay secrecy clauses or would like to discuss the impact of these new provisions on your workforce, please get in touch.