Employers may soon be prevented from taking disciplinary action against employees who talk about their remuneration in a new Bill that aims to promote pay transparency.
The Bill
The Employment Relations (Employer Remuneration Disclosure) Amendment Bill would enable employees to discuss and disclose their own pay rate to others without detrimental effects on their employment.
Currently, employers can include clauses in individual and collective employment agreements that prohibit employees from discussing or disclosing their remuneration to third parties, including colleagues.
Overseas jurisdictions
Various overseas jurisdictions, including the United Kingdom, Canada, Sweden, Finland, and Denmark, have laws against pay secrecy clauses. The European Union is also introducing various pay transparency measures aimed at closing the gender pay gap, which include making it compulsory for employers to inform job seekers about starting salaries or the pay range of advertised positions.
New Zealand’s proposed law does not go as far as this, although the Explanatory Note to the Bill states it is hoped the Bill leads to “greater transparency in pay and allow any pay discrimination to be more easily identified and remedied.”
Will the Bill become law?
The Bill passed its first reading in November 2024 with Labour, National, the Greens, and the Māori Party voting for it, and with New Zealand First and Act voting against it.
Minister for Workplace Relations, Brooke van Velden, has stated that Act does not support the Bill because there is a risk it might create “tension” within the workplace.
The Bill is currently sitting with the Education and Workforce select committee which is due to report back on it in the near future, with a second Parliamentary reading likely to occur in May.
Our thoughts
If the Bill becomes law, there may certainly be some interesting consequences. We wonder whether it might result in an increased number of discrimination claims, with pay disparity providing an evidential basis to support such claims. In addition, some critics have raised concerns about pay information being used amongst businesses to gain a competitive advantage.
If you have any questions about the new Bill, or on any other employment law issues, please contact Lane Neave’s Employment team.
