1.1
Labor senators are concerned by the extent and persistence of the gender
pay gap across all industries in Australia.
1.2
In addition, Labor senators are disturbed by the culture of pay secrecy
that exists in many Australian workplaces. Evidence received during the inquiry
illustrated the prevalence of pay secrecy provisions in employment contracts.
Some research asserted that between 50 and 90 per cent of organisations have
pay secrecy provisions.[1]
1.3
Labor senators are of the opinion that it is not appropriate to prohibit
employees from sharing their personal remuneration information in any context,
or to punish employees who have chosen to share it. Conversely, employees who
prefer not to disclose their remuneration details should also be able to make
that choice.
1.4
On the evidence before the committee, Labor senators have concluded that
pay secrecy is an obstacle to achieving gender pay equity in Australian
workplaces.
1.5
Pay secrecy contributes to maintaining existing systematic discriminatory
pay practices by allowing conscious or unconscious bias and gender stereotyping
to persist in organisations.
1.6
As noted in the main committee report, the gender pay gap is lower in
the public sector than in the private sector, and lower under awards and
collective agreements than under individual arrangements. The main method of
setting pay in the private sector is by individual arrangement compared to the
public sector where the vast majority of pay is set by collective agreement
where details are made public.[2]
These figures suggest that the gender pay gap is lower when pay is set by
transparent standards.
1.7
Evidence received from the WGEA stated:
Pay is more likely to be unequally distributed between women
and men when it is set by individual arrangements with an employer... This
suggests the gender pay gap is lower when pay is set using methods which
involve increased external oversight or transparent standards, such as awards.[3]
1.8
As outlined in the main committee report, the gender pay gap is a multi‑faceted
problem that requires a number of different strategies to successfully address
all the contributing factors.[4]
1.9
Labor senators are under no illusion that a bill prohibiting pay secrecy
will singlehandedly solve the gender pay gap.
1.10
However, we do recognise that enhanced pay transparency is an important
tool to support improved outcomes for gender pay equity in Australian
workplaces and believe that targeted, well-drafted legislative change is an
appropriate mechanism for achieving this.
1.11
Legislated pay transparency would contribute to tackling gender
discrimination and assist in minimising the gender pay gap by:
-
fostering merit-based pay decisions;
-
increasing the accountability of managers and organisations for
their pay decisions; and
-
empowering women in pay negotiations.
1.12
Labor senators are also of the opinion that pay transparency will
promote pay equity on a broader level by ensuring discrimination and bias based
on factors other than gender (including race, age or disability) are not
perpetuated in remuneration decisions.
1.13
As Professor Michelle Brown, a University of Melbourne academic noted
for her research on the relationship between pay secrecy, performance
management and the gender pay gap stated in her evidence:
...transparency is going to be helpful in promoting gender pay
equity, but it is also going to be useful in promoting pay equity for
everybody, so that we do have pay related to the value of the job and the
performance of the person in it, rather than assumptions about that person.[5]
1.14
Labor senators do not agree with opinions put forward by employer and
industry groups stating that employees are not interested in pay matters.
Furthermore Labor senators are not convinced that pay transparency would lead
to workplace conflict as claimed by these organisations.[6]
1.15
Evidence from the inquiry suggested that remuneration is important to
employees and that far from maintaining workplace harmony, pay secrecy can lead
to discontent. As Professor Brown stated:
We know that pay really matters to people. The difference is
that it is either discontent with data or discontent in a sense without data.
We know that organisations seem to think that, if people have no information
about pay, they will not think about pay. That is simply not the way it
operates. If people do not have information about pay, they look to other
sources of information. They look at what we refer to as positional goods. You
will look at someone's lifestyle, the car they drive and the holidays they have
and make some assumptions about how much they get paid. All of the studies have
showed that we are really lousy at guessing what other people are paid. The
idea that, if you have pay secrecy there will be more conflict, is not really
consistent with the way employees think about pay. They want to know, and if
they do not have information from the employer, they get it from other sources.
Those sources are typically inaccurate.[7]
1.16
In addition, Labor senators found attitudes expressed by employer and
industry groups positing that employees lack the capacity to understand the
factors that determine individual pay and performance measurement systems to be
disingenuous and patronising.
1.17
Labor senators note that there is no requirement in the bill to force
employees to reveal their remuneration. In doing this, we emphasise that not
all employers are opposed to legislative changes prohibiting pay secrecy.
Evidence from the WGEA revealed that some employers supported the bill and
believed that such pay transparency measures were reasonable and appropriate for
tackling the gender pay gap.[8]
1.18
Labor senators recognise the numerous suggestions put forward by
submitters aimed at improving the drafting of the bill and are aware that as it
currently stands, the bill has problematic aspects that may limit its effectiveness
if not remedied.
1.19
Labor senators agree with the suggestion to improve the bill by
replacing the words 'pay or earnings' with the word 'remuneration'.[9]
1.20
However, consistent with our view that it is not appropriate to prohibit
employees from disclosing their personal remuneration information in any
context if they so choose, Labor senators do not support the suggestion to
restrict the operation of the provision to disclosures made for a particular
purpose (i.e. to check for gender discrimination) to particular parties (i.e.
other employees of the employer, an industrial association or professional
adviser).[10]
1.21
As the ACTU and Victorian Women Lawyers noted, such limited disclosure
could lead to confusion and discourage employees from making or seeking any disclosure
at all.[11]
Conclusion
1.22
In conclusion, Labor senators are of the opinion that the current gender
pay gap in Australian workplaces is unacceptable, and that discrimination is
particularly difficult to remedy when it is hidden from view.
1.23
While noting that broader cultural change is important, Labor senators
believe concrete actions must be taken to resolve the gender pay gap. Labor senators
assert that enhanced transparency in regard to personal remuneration would
support improved gender pay equality outcomes and represent a positive step for
workplace cultures more generally.
1.24
In taking into account the evidence received during the course of the
inquiry, Labor senators can see no valid reason for compelling employees to
abide by pay secrecy provisions or directions relating to their own personal
remuneration information, or for punishing employees for disclosing such
information.
Recommendation 1
1.25
Provided the drafting concerns raised in the main report are
adequately addressed, Labor senators recommend that the Senate pass the bill.
Senator Gavin Marshall
Deputy Chair
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