Chapter 1Introduction and background
Referral
1.1On 8 February 2023, the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 (the bill) was introduced into the Senate by the Minister for Finance, the Minister for the Public Service, and the Minister for Women, The Hon Katy Gallagher, and read a first time.
1.2On 9 February 2023, pursuant to the recommendations of Report No. 1 of 2023 of the Senate Selection of Bills Committee, the Senate referred the provisions of the bill to the Finance and Public Administration Legislation Committee (the committee) for inquiry and report by 16 March 2023.
Conduct of the inquiry
1.3The committee agreed to open submissions on 9 February 2023 and set 3 March 2023 as the closing date. The committee wrote to a range of key stakeholder groups, organisations and individuals drawing their attention to the inquiry and inviting them to make a written submission.
1.4The committee received 24 submissions, which are available on the committee’s webpage and listed at Appendix 1. The committee thanks all those who contributed to the inquiry by making submissions.
1.5Details of the inquiry, including links to the bill and associated documents, were published on the committee’s website.
Report structure
1.6This chapter begins with a brief description of the problem and provides an overview of Australia’s current approach to workplace gender equality. It then summarises relevant aspects of a recent review of the Workplace Gender Equality Act 2012 (the Act). The chapter finishes by setting out the purpose, structure, and key provisions of the bill.
1.7The second and concluding chapter outlines the key issues put forward in evidence and presents the committee’s views and recommendation.
The problem—Australia’s gender pay gap
1.8The gender pay gap is a measurement of the difference between women’s and men’s overall earnings in the paid workforce. In this way, it differs from equal pay which is a reflection of whether two individuals are paid the same for performing the same role.
1.9According to the Australian Gender Equality Council (AGEC), the gender pay gap is the result of several factors including:
Gendered Industry Segmentation—the low wage rates in female-dominated industries (primarily caring industries, such as childcare, aged care, disability care and healthcare) in contrast to male-dominated industries (such as mining, construction and trades)
Level within Leadership Hierarchy—the low levels of women's representation in executive leadership roles which attract higher rates of pay
Position within Salary Bands—differential positioning of women and men within seniority bands due to women’s service being interrupted more often than men’s, resulting in men reaching the top of salary bands more quickly than equivalent women
Discrimination or bias in the evaluation of women’s performance and capability or the value of their roles, including like-for-like role pay differentials.
1.10Australia’s national gender pay gap is calculated from two different datasets:
data collected by the Workplace Gender Equality Agency (WGEA) from its annual employer census released in November; and
Australian Bureau of Statistics (ABS) data that is taken from a sample of employers selected from the Australian Business Register and is released in February and August.
1.11This report will exclusively consider the metric calculated from WGEA’s annual employer census data. However, it is important to note that calculations based on both datasets have consistently shown that the gender pay gap favours men.
1.12Over the last 7 years the gender pay gap has significantly declined. As of November 2022, the national gender pay gap is 22.8 per cent, with women earning on average $26 596 less than men per year. Whilst this is down from a high of 28.6 per cent in January 2015, the gender pay gap in 2021 was also calculated at 22.8 per cent.
Australia’s current legislative approach to workplace gender equality
1.13Since 1986, successive governments have used affirmative action to address economic equality in Australia. The legislation that currently enables and monitors national attempts to promote and improve gender equality in the workplace is the Workplace Gender Equality Act 2012. It superseded the Equal Opportunity for Women in the Workplace Act 1999.
1.14The Act established several mechanisms to improve gender equality outcomes in Australian workplaces, including:
the establishment of WGEA;
the requirement that relevant employers prepare public reports relating to gender equality indicators; and
noncompliance procedures should a relevant employer fail to comply with the Act.
Employers to whom the Act applies
1.15A ‘relevant employer’ is defined in section 4 of the Act as:
a registered higher education institution that is an employer;
a natural person, or a body or association (whether incorporated or not), being the employer of 100 or more employees in Australia; or
a Commonwealth company or entity that is an employer of 100 or more employees in Australia.
Reporting requirements of relevant employers
1.16Under section 13(1) of the Act, relevant employers are required to produce an annual report containing information relating to the employer against six gender equality indicators (GEI’s):
(a)gender composition of the workforce;
(b)gender composition of governing bodies of relevant employers;
(c)equal remuneration between women and men;
(d)availability and utility of employment terms, conditions and practices relating to flexible working arrangements for employees and to working arrangements supporting employees with family or caring responsibilities;
(e)consultation with employees on issues concerning gender equality in the workplace; and
(f)any other matters specified in an instrument under subsection 1A.
1.17Section 19(1) of the Act allows the Minister to, by legislative instrument, set minimum standards of performance in relation to the GEI’s specified relevant employers, and specified reporting periods.
1.18The minimum standards apply to specified relevant employers, that is, employers with 500 or more employees. Specified relevant employers are bound to an extra compliance requirement whereby they are required to have a policy or strategy in place to support one or more of the following indicators:
(a)gender composition of the workforce;
(b)equal remuneration between women and men;
(c)flexible working arrangements; and
(d)sex-based harassment and discrimination.
1.19A relevant employer is deemed to have failed to comply with the Act if they fail to meet the minimum standards in two subsequent reporting periods.
Role of the Workplace Gender Equality Agency
1.20The Act established the Workplace Gender Equality Agency, the statutory agency charged with administering the Act. In doing so, WGEA aims to promote and improve workplace gender equality in Australian workplaces through collaborative work with employers to help them meet their reporting requirements.
1.21WGEA uses the collected information from relevant employers to publish annual aggregated datasets to showcase national workplace gender equity results including the gender pay gap, workforce participation, gender representation in leadership, and employer actions to improve gender equality.
Legislative instruments
1.22Two instruments have been made under the authority of the Act:
the Workplace Gender Equality (Matters in relation to Gender Equality Indicators) Instrument 2013 (No. 1)(the 2013 Instrument) which sets out the GEI’s and the specific requirements for employer reporting, including the data that must be collected, the timeframe for reporting, and the format of the reports; and
theWorkplace Gender Equality (Minimum Standards) Instrument 2014 (the 2014 Instrument) which allows the Minister to set minimum standards of performance in relation to the GEI’s, specified relevant employers, and specified reporting periods.
Workplace Gender Equality Act 2012 Review
1.23Subsection 12(2A) of the Act requires the WGEA to submit to the Minister for Women a report on the progress achieved in relation to the gender equality indicators in a relevant two-year period. WGEA’s third progress report, the 2019–20 Progress Report, recommended that the government undertake a comprehensive review of the Act and the related legislative instruments. The previous government committed to undertake this review in the 2021–22 Women’s Budget Statement.
1.24In October 2021, the Review of the Workplace Gender Equality Act 2012 (the Review) was established, led by the Department of Prime Minister and Cabinet. The terms of reference directed the Review to consider targeted matters including the current application of the Act and the effectiveness of the practices utilized by WEGA to promote and improve gender equality.
1.25The final report was published in March 2022, with one of its key findings stating that:
The rate of change on gender equality in workplaces is not happening fast enough. Gender gaps in pay, leadership, and representation continue to exist. Australia is also falling behind in international gender equality rankings. More action from employers and support from WGEA is required to drive real and meaningful change for diverse groups of women and men in the workforce.
1.26The Review made ten recommendations to reform the Act and its related instruments to accelerate progress on gender equality in workplaces and streamline reporting for employers. The previous government committed to implement all ten of the review’s recommendations, the status of which are publicly available. The new government has continued with that commitment.
Remade legislative instruments
1.27On 3 February 2023, the 2013 and 2014 Instruments were repealed and replaced by the Workplace Gender Equality (Matters in relation to Gender Equality Indicators) Instrument 2023 (GEI Instrument) and the Workplace Gender Equality (Gender Equality Standards) Instrument 2023 (GES Instrument) respectively.
1.28The remade GEI Instrument implemented Review recommendations 3.2(a), 4.1(b) and (c), and 7.1. The remade GES Instrument implemented recommendation 3.1(b) of the Review.
Purpose of the bill
1.29The purpose of the bill is to amend the Workplace Gender Equality Act 2012 to improve gender equality in employment and in the workplace by tasking employers with greater accountability towards gender equality in their workforces and driving the actions required in the workplace to bring about higher levels of gender equality in Australia.
1.30In summary, the bill will amend the Act to:
require WGEA to publish gender pay gap information of relevant employers for each reporting period;
rename the current ‘minimum standards’ as ‘gender equality standards’;
require relevant employers to provide executive summary and industry benchmark reports to all members of their governing body;
include 'sexual harassment', 'harassment on the ground of sex' or 'discrimination' as a gender equality indicator;
change the title of the ‘Director’ of the WGEA to 'Chief Executive Officer'; and
make a technical amendment to the definition of 'reporting period'.
1.31The Minister for Women, the Hon Katy Gallagher, stated in the bill’s second reading speech that the bill will fulfil both the government’s 2022 election commitment to close the gender pay gap at work, and its commitment to implement the recommendations of the Review. The bill will implement recommendations 2, 3, 5 and 9 of the Review, in part or in full.
1.32The Minister stated that, in doing so, the bill would be ‘a key driver for employer action, transparency and accountability and will help speed up progress towards gender equality in the workplace’.
1.33The bill was developed by the Office for Women in the Department of the Prime Minister and Cabinet. It was informed by the extensive consultation that was conducted as part of the Review with targeted stakeholders, including: the business and not-for-profit sectors, employee organisations, the women's sector, the Australian government and state and territory governments.
1.34If passed, the amendments will be reviewed every five years to ensure that the government is able to consider how effective they have been in achieving their objective of accelerating progress toward gender equality in the workplace.
The bill and the Review recommendations
1.35The measures contained in the bill implement, in part or in full, the following recommendations of the Review:
Recommendation 2—Publish organisation gender pay gaps to accelerate action to close them;
Recommendation 3—Bridge the ‘action gap’ with new gender equality standards;
Recommendation 5—Support Respect@Work implementation to prevent and address workplace sex-based harassment and discrimination; and
Recommendation 9—set WGEA up for future success to support employers to drive gender equality in Australian workplaces.
1.36While the bill focuses on the above four recommendations, the government is working toward implementation of all recommendations made in the Review. Some of these recommendations require further legislative response from the government. The relevant recommendations are discussed below.
Recommendation 2
1.37Recommendation 2 of the Review reads:
Amend the Workplace Gender Equality Act 2012 to allow WGEA to publish gender pay gap information at an employer level as an overall figure and by quartile to encourage change within organisations. Individual employee pay information is not to be published. Conduct further stakeholder consultation to identify the best way to implement this recommendation and conduct a regulatory impact assessment ahead of implementation.
1.38Currently, WGEA uses employers’ renumeration data to publish aggregate gender pay gaps by industry. Minister Gallagher explained that this approach is not facilitating the ‘transparency, accountability and insights we need in order to close the gender pay gap fast enough’.
1.39The bill introduces provisions that will allow WGEA to report gender pay gaps at an organisational level. If implemented, the new measures will allow WGEA to publish the first set of private sector data in early 2024. The published employer gender pay gap data will include:
The employer’s mean and median gender pay gap, expressed as a percentage and the average dollar difference between men and women; and
A quartile analysis of the employer’s gender pay gap and workforce composition. Data will be provided on the full-time equivalent gender pay gap for the organisation’s highest paid quarter, upper middle quarter, lower middle quarter, and lowest paid quarter, along with the gender composition of each pay quartile. The gender composition will state the proportion of women and men in each quartile along with their average remuneration.
1.40In line with the Review’s aim to reduce the regulatory reporting burden, the amendments do not impose any additional reporting requirements on relevant employers. However, employers will have the option to provide a statement to provide context related to their gender pay gap and what actions are being undertaken to address it.
1.41The proposed amendments do enforce a new reporting requirement on WGEA. However, the Explanatory Memorandum (EM) states that ‘the Agency itself recommended this change’.
Recommendation 3
1.42Recommendation 3 intends to ‘bridge the ‘action gap’ with new gender equality standards’, and has 2 sections:
Recommendation 3.1, which has 3 subparts, aims to strengthen the existing minimum standards by amending the Workplace Gender Equality (Minimum Standards) Instrument 2014’; and
Recommendation 3.2, which has 2 subparts, aims to strengthen accountability of relevant employers to take action to improve gender equality in workplaces by amending the Workplace Gender Equality (Matters in relation to Gender Equality Indicators) Instrument 2013 (No. 1).
1.43Recommendation 3.1(c), to rename the minimum standards to be ‘gender equality standards’, is enacted by the bill. The EM notes that further amendments to the instrument are required following the passage of the bill for the recommendation subpart to be fully implemented.
1.44The bill also includes provisions that address recommendation 3.2. It will amend the Act to require CEOs of relevant employers to provide the Executive Summary Report and Industry Benchmark Report to all members of a governing body (for example, a board).
1.45The bill addresses 3.1(c) and 3.2(b) only. According to the EM, and to a document tabled by the Director of WGEA, Ms Mary Wooldridge, during Supplementary Budget Estimates 2022–23, the remaining aspects of recommendation 3 will be addressed by further consultation, and amendments to the associated legislative instruments.
Recommendation 5
1.46Recommendation 5 reads:
To align the Workplace Gender Equality Act and its associated legislative instrument, include ‘sex-based harassment and discrimination’ as a gender equality indicator in the Workplace Gender Equality Act.
1.47In the Act, GEI (f) is specified as ‘any other matters specified in an instrument under subsection (1A)’. This has been specified in the 2013 instrument as ‘sex-based harassment’ and ‘discrimination’. The bill amends the Act to align it with the language used in the 2013 instrument. This change coincides with other legislative reform emerging from the Respect@Work Report.
Recommendation 9
1.48Recommendation 9—to set WGEA up for future success to support employers to drive gender equality in Australian workplaces—has four parts. The bill addresses recommendation 9.2 which changes the title of the ‘Director of WGEA’ to the ‘Chief Executive Officer (CEO)’. The EM explains that the amendments do not make any further changes to the role, and that it is in effect a continuation of the terms and conditions of the office of the Director.
Structure of the bill
1.49The bill is comprised of one schedule with two parts:
Part 1—Substantive amendments to the Act; and
Part 2—Application and transitional provisions.
1.50The bill commences the day after Royal Assent.
1.51A summary of the provisions under each division in the bill is given below.
Part 1
Division 1—items 1 to 5 amend the Act to allow WGEA to publish gender pay gaps for each relevant employer for each reporting period, using the information, including remuneration information, contained in the relevant employer’s public report for that reporting period. These amendments retain the personal information protections articulated elsewhere in the Act, including at section 13C and section 14.
Division 2—items 6 and 7 amend subsection 3 of the Act, which provides definitions for terms used throughout the Act. A new definition of ‘gender equality standards’ as defined by the amended subsection 19(1) is inserted and the current ‘minimum standards’ definition is repealed. Items 8, 9 and, 11 to 15 make amendments to references throughout the Act to reflect the ‘new definition at subsection 3(1), and the Minister’s obligations with regard to gender equality standards at subsection 19(1)’.
Division 3—items 16 to 18 amend the Act to require relevant employers to provide executive summary and industry benchmark reports to the relevant employer’s governing body. Relevant employers that fail to do so, without reasonable excuse, will be considered noncompliant with the Act. Item 19 makes amendments to empower WGEA to name noncompliant employers in a report provided to the Minister for Women.
Division 4—items 20 to 22 amend subsection 3(1) of the Act to align its conception of sexual harassment, or harassment on the grounds of sex, with those that are set out in the 2013 Instrument and the Sex Discrimination Act 1984.
Division 5—includes provisions to rename the ‘Director’ of WGEA as the ‘CEO’, meaning Chief Executive Officer, and includes consequential amendments throughout the Act to reflect this change.
Division 6—item 33 repeals the definition of ‘reporting period’ at subsection 3(1) and replaces it with a definition that reflects the reporting periods of both private and Commonwealth companies or entities.
Part 2
1.52Part 2, items 34 to 37, contains transitional and application provisions clarifying that:
the amendments made to the publication of gender pay gap information apply for the current reporting period, that is, the period beginning 1 April 2022 for private companies or entities, and 1 January 2023 for Commonwealth companies or entities;
any instruments already in force prior to the commencement of amendments at subsection 19(1) continue to operate in force and may be dealt with as if they had been made under the amended subsection 19(1);
the Director of Workplace Gender Equality will continue to hold office as the CEO of the Agency; and
the renaming of ‘Director’ to ‘CEO’ does not exempt current or former Directors from the non-disclosure requirements outlined at section 32.
Compatibility with human rights
1.53As stated in the EM, the bill is considered to be compatible with the human rights and freedoms recognised in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Consideration by the Scrutiny of Bills Committee
1.54The bill was not reported on by the Senate Standing Committee on the Scrutiny of Bills (Scrutiny of Bills Committee).
Financial impact statement
1.55The EM states that the bill would not have any financial impact.