Background

Previously, employers were able to validly incorporate within their employment contracts terms which restricted their employees from discussing their pay information with fellow co-workers.

However, on 7 December 2022, the Fair Work Act 2009 (Cth) (the FW Act) was amended to insert the numerous provisions contained in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth). The Secure Jobs, Better Pay amendments were introduced with a view to better securing equal pay for employees by, among other things, prohibiting pay secrecy in the workplace with the objective of trying to eliminate the gender pay gap.

The amendments also introduce the promotion of job security and gender equity into the objects of the FW Act, which the Fair Work Commission must take into account when performing functions or exercising its powers under the FW Act.

What changes have been made?

Primarily the Secure Jobs, Better Pay amendments inserted Part 2-9, Division 4 into the FW Act. Sections 333B to 333D of the FW Act provide the following:

• Employees are no longer subject to pay secrecy and may disclose their remuneration as well as any terms and conditions of their employment that are reasonably necessary to determine remuneration outcome, including their working hours and pay rates;
• Employees may also ask other employees about their pay information;
• A term of a Fair Work instrument or a contract of employment has no effect to the extent that the term would be inconsistent with these provisions; and,
• An employer who enters into a contract of employment or other written agreement with an employee which includes a term inconsistent with these provisions contravenes the FW Act.

Importantly, the rights to both disclose and ask about pay information are ‘workplace rights’ under the FW Act providing greater security to employees. This means that an employer is not permitted to take adverse action against an employee who exercises a workplace right by discussing their pay information and may be liable for penalties under the general protections provisions of the FW Act. Such adverse action may include dismissing an employee, refusing to promote an employee, or altering the position of an employee to the employee’s prejudice.

Since 7 June 2023, pay secrecy terms inconsistent with the Secure Jobs, Better Pay amendments have been prohibited in employment contracts or other written agreements entered into on or after the amendments were made on 7 December 2022. For awards, enterprise agreements, or other Fair Work instruments, such terms ceased to have effect since 7 December 2022, irrespective of whether the instrument was created before, on or after 7 December 2022.

Recent rulings

Given the relative infancy of the Secure Jobs, Better Pay amendments to the FW Act, case law in which the Fair Work Commission and Courts have extensively considered these changes is presently limited.

In Claudia McLeod v Project 88 TPF Pty Ltd (t/a Pink Flamingo Spiegelclub) [2023] FWC 2630, two employees were summarily dismissed following a private social media conversation during which one employee disclosed the pay of a fellow employee to the other employee. While this matter primarily concerned whether the dismissal itself was unfair, the Commission relevantly drew attention to the Secure Jobs, Better Pay amendments to the FW Act in determining that the dismissal was invalid. Although it was noted that each employee party to the conversation “seemingly accepted [that] the pay secrecy provisions recently inserted into the FW Act were not technically triggered by [their] disclosure”, the Commission considered these provisions as “a relevant background matter when assessing whether [the] disclosure constitutes a valid reason for dismissal.”

In Equans Electrical And Communications Pty Ltd [2023] FWCA 1705, the applicant employer requested that all client names be redacted from a schedule contained within an enterprise agreement. The Fair Work Commission found that redacting the names would constitute a breach of s 333B of the FW Act as, for employees seeking to have their entitlements checked by a third party, it would prevent such third parties from viewing an employee’s terms and conditions of employment. Accordingly, the FWC declined to issue to redaction sought by the applicant.

What does this mean for employers and employees?

Employers should be cognisant of the Secure Jobs, Better Pay amendments in all their with employees and prospective employees, including reflecting upon any terms inconsistent with the amendments within existing employment arrangements and cautious when drafting new or updating employment terms and conditions. Should employers fail to adhere to the updated legislation, significant penalties may apply. Individual employers who enter into a contract or other written agreement in breach of the recent amendments may be fined up to $115,386, while companies may face fines up to $576,930.

Employees should be aware of their rights under the Secure Jobs, Better Pay amendments to disclose their remuneration to fellow employees, as well as ask other employees about their pay information, which apply both during and post-employment.

The team at Frenkel Partners can provide clear and up-to-date advice to employers in relation to the recent amendments to the FW Act to ensure your business is adopting compliant practices, as well as to employees who believe they may have experienced a contravention of the new pay secrecy laws.

Our employment law team is also able to provide comprehensive assistance across a full suite of employment-related matters. For more information, please head to our Workplace & Employment page.