A new law has been passed which provides for pay transparency – but only if you squint.
Pay transparency is the practice of openly sharing information about remuneration.
This is meant to create a fairer, more equitable workplace, as it helps to identify and remedy pay-based discrimination, such as gender and ethnic pay gaps.
The amendment to the Employment Relations Act now provides employees with grounds for a personal grievance where an employer engages in adverse conduct against them for a ‘remuneration disclosure reason’.
The stated intention is to “ensure that employees can discuss and disclose their own pay rate to others without detrimental repercussions to their employment”.
Essentially, the change enables employees to disclose how much they are paid, or seek this disclosure from others, without the risk of their employers taking disciplinary action in response.
There are no constraints on why an employee may disclose or seek the disclosure from others of remuneration information, or what they might do with it.
But the new law does not require employees to disclose their remuneration information when asked for it by a colleague.
Currently, employment agreements can contain provisions that prevent employees from discussing or disclosing their salary, wages or other conditions to third parties. These provisions are known as pay secrecy clauses.
Whilst this amendment does not make pay secrecy clauses unlawful or require employers to remove or amend such clauses, pay secrecy clauses will now be unenforceable.
This law reform brings New Zealand into line with other jurisdictions such as Australia, Canada and the United Kingdom.
But, these countries, and many others, have bolstered pay transparency laws with other comprehensive measures to tackle gender and ethnic pay discrimination. These include legal, individual-focused and also structural strategies, such as mandatory organisational reporting on gender pay gaps.
Countries such as Finland, Iceland, and Norway have adopted further measures including providing employees with the ability to request information about the pay of colleagues in the same or equivalent roles.
In these jurisdictions, there appears to be a recognition that true pay transparency requires a combination of measures to address the root cause - a societal underappreciation of the importance and effect of pay transparency.
The additional measures adopted by these countries indicate a societal understanding that pay transparency is a crucial tool in the effort to eliminate persistent gender and ethnic pay gaps.
New Zealand’s approach, in comparison, is lacking ambition. It provides only for an individual approach to increasing pay transparency, without supporting the legislation through additional structural mechanisms.
In this regard, enforcement of the provision relies on an employee raising a personal grievance if they believe they are subject to adverse conduct. Bringing a grievance against an employer is not straightforward and can result in blow back, including potential reputational damage and significant cost.
Therefore, placing the burden on individuals, predominantly women, to pursue such claims at their own expense, when their goal is to remedy pay disparities, is sadly, ironic.
Instead, New Zealand could look to other jurisdictions that are years ahead of us in this space to see evidence that compulsory and structural measures are far more effective at addressing the root cause of the issue.
Why? Because the result is a shift from the issue being framed as an individual concern to a collective societal one.
So, whilst the amendment signals an acceptance of the movement towards greater openness in remuneration practices, it is unlikely to be enough on its own.
In short, this legislation provides the building block to create a more comprehensive pay transparency regime but needs to be supported by further broader measures.
Otherwise, the amendment will fall short of its intended goal and will be just window dressing.
Originally published in The Post.
