Introduction
Discussing salary is a controversial topic. Finances is usually something we are quite secret about so discussing them in the workplace just doesn’t seem right. However, it is not illegal. Often, open policies around employees’ salary allows for a transparent and equal workplace. On the other hand, confidentiality around pay minimises hostility and competition, facilitating a more productive and collaborative workplace. Now, let’s get into the legal breakdown and its positives/negatives.
So, is it legal for employees to discuss salary?
Simply put, it is legal in Australia. Whilst discussing your salary might not be the most workplace friendly topic, it is legal. However, pay secrecy clauses restrict this. These employment contract clauses restrict employees from discussing their salary and remuneration packages. Within the public sector, this is more ambiguous as the FairWork commission prohibits the unequal treatment of employees – including pay.
Cons of pay secrecy clauses for employees
There are various cons to a pay secrecy clause. These include:
Motivation
Motivation will decrease dramatically without the certainty that employees are being paid the same as their counterparts. A equal workplace, means a productive workplace. As a result, perhaps secrecy in terms of pay means transparency in other areas.
Facilitates employee bias – allowing for unequal pay for equal work
Differing pay for the same job is disguised through a pay secrecy clause. This can either be due to legitimate reasons like differing experience or better salary negotiation skills between employees. However, it can also be used as a guise for unfair discrimination in the workplace.
Workplace culture
Without a transparent workplace, employees may feel under-valued or not respected by their management team. There, it is important to find a balance between too transparent and too secretive – neither is good.
Contact the FairWork Commission for more information on workplace discrimination here.
If you believe you may have been discriminated against in your workplace, please contact one of our lawyers here.
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Pros of a pay secrecy clauses for employees
Pay secrecy clauses play a role in maintaining a friendly and productive work environment. Here are some reasons why pay secrecy clauses are a good thing:
Less hostility
Hostile relationships and a toxic work environment will be the result of open salary discussions. This can then interfere with collaboration, and general workplace culture.
Allows for personalised growth
With individual salary negotiations and agreements, there is more opportunity for individual KPI’s, rewards and growth in the company. If all employees were on the same salary, would all employees need to get a pay rise at the same time? The ambiguity provides for some flexibility in rewarding and encouraging further growth from hard-working employees.
Privacy
Money is a sensitive topic and pay secrecy clauses allow it to stay that way. Not all employees want to discuss their earning – a pay secrecy clause avoids that awkward conversation all together. This protects both the employee and companies privacy.
Hiring process
These clauses provide for greater bargaining power during the recruitment process for new hires. Without a static wage offering, recruiters can choose the right person for the job, adjusting the salary for what they can bring to the table. Ultimately, flexibility means good hiring.
Overall
Pay secrecy clauses avoid workplace conflict through disallowing discussion around pay. However, unfair discrimination in the workplace may be disguised through them. Pay secrecy clauses protect individuals privacy, workplace culture, the recruitment process and growth strategy. As a result, it’s important to have checks and balances in place to ensure they are not being used for ulterior motives.
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