Chapter 2Key issues and committee views
2.1This chapter considers the views of stakeholders on the provisions of the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 (the bill).
2.2The chapter first sets out the general support for the bill. It then considers matters raised by stakeholders. The stakeholder views are summarised under each of the key divisions that make up Part 1 of the bill:
publishing gender pay gap information;
gender equality standards;
providing reports to governing bodies;
gender equality indicators; and
CEO of the WGEA.
2.3The chapter concludes with the committee view and recommendation.
General support for the bill
2.4There was unanimous support from submitters for both the government’s commitment to implement the ten recommendations presented in the Review of the Workplace Gender Equality Act 2012 (the Review), and the consultation undertaken by the Workplace Gender Equality Agency (WGEA) and the Office for Women (a division of the Department of Prime Minister and Cabinet).
2.5There was broad support among stakeholders for the bill and its aim of reinvigorating Australian employers’ progress on workplace gender equality, and by extension, close the gender pay gap.
2.6The Australian Human Rights Commission (AHRC) submission, authored by Ms Kate Jenkins, Sex Discrimination Commissioner, welcomed the amendments in the bill, stating that they would ‘contribut[e] to the significant progress underway to address gender inequality in Australia’.
2.7The Australian Council of Trade Unions (ACTU) and its affiliates (many of whom submitted to the inquiry in support of the ACTU’s submission) expressed their full support for the bill, identifying it as a ‘significant and crucial step to strengthen the role WGEA and the Workplace Gender Equality Act 2012 (the Act) play in improving gender equality in the workplace’.
2.8A broad spectrum of peak bodies representing employers across industries including finance, education, childcare services, and retail, recognised the value and utility of the bill as a promoter of gender equality in the workplace. For example, the Australian Childcare Alliance (ACA) viewed the bill as a ‘positive step forward to begin changing existing workplace culture, to move towards greater inclusive, supportive, and gender equality environments’.
Publishing gender pay gap information
2.9There was also broad support from submitters for the provisions contained in Division 1 of the bill, which will allow WGEA to publish gender pay gap information at an organisational level and by quartile. However, some submitters expressed concern about the possible negative impacts of such reporting including quartile reporting, and retrospective reporting. The following section outlines these issues successively.
Support for publishing organisational pay gap information
2.10WGEA’s current reporting mechanism involves the publication of aggregate gender pay gaps at an industry level only. This approach was widely criticised in the Review, with stakeholders calling for the inclusion of organisational data.
2.11WGEA submitted that the absence of employer specific gender pay gap data reduces the value of the agency’s dataset, and therefore its inclusion is vital to promoting and improving gender equality outcomes in the workplace.
2.12The Australian Council of Trade Unions (ACTU) and its affiliates expressed their strong support for this amendment, submitting that it will enable organisations to be held to account and allow workers to scrutinise the performance record of different employers.
2.13Similarly, the Finance Sector Union of Australia (FSU) supported the publication of organizational level data, noting there is limited capacity for the examination of the data under the current reporting mechanisms.
2.14To illustrate the current lack of transparency, the FSU drew upon an example from the finance industry, where a large employer accounting for 10per cent of the industry was self-reporting a gender pay gap significantly less than the industry average as reported by WGEA.
2.15The FSU concluded that:
It is unclear how company as large as the CBA, that employs over 10% of the total workforce in an industry with a gender pay gap of 20.1% full time base salary can be self reporting a gender pay gap up to 20% below that of the WGEA. It is clear from this discrepancy that there is a need for the WGEA to be reporting gender pay data across organisations. The publication of this data will increase accountability and transparency and will encourage organisations to drive down the gender pay gap.
2.16WGEA submitted that the impacts of publishing organisational level gender pay gap data are not yet well understood.It cited research emerging from the UK that demonstrated how the public release of organizational gender pay gaps can be introduced successfully and induce a reduction in the gender pay gap.
2.17In the United Kingdom (UK), employers with 250 employees or more have been required to report their organisational gender pay gap since 2017. Research developed by the UK Government Equalities Office based on this data has indicated that public reporting has elicited a positive reaction from employer, employee, and the public alike. Once presented with their gender pay gap metrics, results from that study found that:
over three-quarters of organisations tried to identify the cause of their gender pay gaps;
most employers reported greater engagement on the issue within their organisations, including increased awareness by the board;
one-third of employers had used the data to reform or revise HR policy and practice; and
some employers had developed a plan or strategy to address the issues identified.
2.18WGEA summed up its support for the amendment, submitting that:
Publishing gender pay gap data can enhance understanding of the causes and consequences of the gender pay gap. At minimum, it can increase awareness and initiate conversations among employers, employees, and the public about the gender pay gap and gender equality in the workplace. It can also motivate action to address and close the gender pay gap.
Quartile reporting
2.19The Review noted that:
Reporting across quartiles shows the spread of female and male earners across an organisation. It also shows if one gender is over or under-represented in a particular quartile. This helps employers assess what is happening and take action as needed.
2.20The Law Council noted that the provisions in the bill do not expressly permit the data to be published ‘as an overall figure and by quartile’. It recommended that consideration be given to amending the bill so that it explicitly fulfils the Review recommendation.
2.21Some submitters, while supportive of the amendments to allow quartile reporting, considered that such reporting needs to be calculated to include both base salary and total remuneration packages (including cash and non-salary benefits).
2.22The FSU argued that publishing the gender pay gap based on full-time base salary only is insufficient because data on industries that commonly feature large incentives and bonuses, like the finance industry, can become obscured.
2.23Drawing upon the health, aged care and disability sectors, the Australian Nursing and Midwifery Foundation (ANMF) had similar concerns about the use of remuneration data. The ANMF stated that it did not properly take into account the circumstances of part-time roles which are common in such sectors, and predominantly occupied by women:
Failure to capture overtime payments will distort and inaccurately demonstrate the extent and drivers of the gender pay gap for professions like nursing and midwifery, whose part-time workforce encounter barriers to accessing those entitlements.
Retrospective reporting
2.24As noted in chapter 1, item 34 of the bill amends the act to apply to retrospective reporting periods, beginning 1 April 2022 for non-Commonwealth entities and 1 January 2023 for Commonwealth companies.
2.25The Australian Industry Group (AiGroup) argued that reporting employers are entitled to know in advance of a reporting period how remuneration data will be collected and publicly reported. Further, it argued that such retrospective reporting is at odds with the bill’s stated aim of using public scrutiny as a motivator to review employment practices:
…the publication of pay gaps by WGEA for relevant employers is to occur prior to employers being afforded the opportunity to review their remuneration structures in line with how WGEA may decide to publish organisational pay gaps that may differ from the reporting matrix.
2.26The Australian Retailers Association (ARA) agreed with the AiGroup, arguing that providing advanced notice to employers of the way their data is going to be published is essential. The ARA argued that failure to do so would be a missed opportunity to promote change in workplace practices over time.
Gender equality standards
2.27The bill introduces provisions to rename the ‘minimum standards’ to ‘gender equality standards’, implementing recommendation 3.1(c) of the review. The bill does not address the other parts of recommendation 3. However, the Office for Women clarified that recommendations 3.1(a) and 3.1(b) will be addressed by changes to the remade instruments and further consultative work respectively.
2.28Submitters to the inquiry welcomed the amendments, agreeing that the change better reflects the emphasis on gender equality. For example, the Victorian Public Sector Gender Equality Commissioner, Dr Niki Vincent, endorsed the renaming, stating that ‘language in messaging is vital for shifting standards’.
2.29While supporting the bill’s provisions to rename the minimum standards, many submitters provided commentary on other subparts of recommendation 3, specifically the adequacy of the minimum standards.
Adequacy of the minimum standards
2.30As outlined in chapter 1, the current minimum standards require organisations with 500 or more employers to simply have a policy in place to support gender equality, but not to show workplace outcomes because of that policy. There are no minimum requirements for smaller organisations covered by the Act.
2.31WGEA data shows that relevant employers easily meet the current minimum standards, with 99.2 per cent of relevant employers doing so in the last reporting period. The National Foundation for Australian Women (NFAW) commented that this is likely due to most employers already having a standing policy on sexual harassment to comply with other state and federal legislation, making the minimum standards ‘functionally meaningless’.
2.32The ACTU submitted that the current minimum standards set the bar too low and are ‘out of step with community expectations about what needs to be done to drive gender equality in the workplace’. Similarly, Maurice Blackburn identified the standards as ‘not ambitious enough’.
2.33In the context of such deficiencies, various submitters argued that the minimum standards need to be outcome based and time bound. This will ensure that year-on-year employer performance against the gender equality indicators can be assessed on more than presence of policy documents alone.
2.34For example, Dr Vincent urged the expansion of measurable reporting against the gender equality indicators, outlining the success of the Victorian gender pay gap reporting model, where such a reporting mechanism is already in operation. Dr Vincent considered that:
The status quo can simply not continue if the Australian Government is serious about driving progress toward gender equality in the workplace and closing the gender pay gap.
2.35The National Foundation for Australian Women (NFAW) provided a comprehensive analysis on the implementation method considered in the Appendix D of the Impact Statement incorporated into the bill’s Explanatory Memorandum.Appendix D outlines a process to implement recommendations 3.1(a) and 3.1(b) of the review, which considered the operational role of the minimum standards. The NFAW emphasised that WGEA must be able to identify poor performing organizations to raise the standard of performance and make a meaningful contribution to closing the gender pay gap.
2.36Under the process set out in Appendix D, organisations can set their own minimum targets. The NFAW considered that ‘a range of distinct organisation-specific DIY targets cannot be called a national standard or even an industry standard’ because organisations will have different ‘standards’. The NFAW recommended that:
If the WGE Instrument included a floor of minimum outcomes as well as targets for better performers, these could be used to provide the Sex Discrimination Commissioner and courts with clear, objective minimum performance standards for establishing liability in individual cases of sexual harassment and discrimination, on the model of WHS standards.
2.37With regard to the bill’s provisions to amend the name of the current minimum standards, the NFAW therefore considered that the minimum standards instead be renamed to ‘gender equality measures’.
Providing reports to governing bodies
2.38The bill gives effect to recommendation 3.2, by requiring CEO’s of relevant employers to provide certain reports to members of their governing body. WGEA presented the rationale for the change, advising that:
Leadership commitment and ownership is integral and important to the success of a workplace gender equality strategy. This is well established and is a consistent feature of best practices in workplace gender equality.
2.39Submitters unanimously supported this recommendation and added little commentary. Dr Vincent however expressed support for the new requirement but suggested that the compliance and enforcement mechanisms affecting CEO’s who do not provide the specified reports to governing bodies are insufficient and in need of future review.
Gender equality indicators
2.40Submitters were supportive of the bill’s intent to include ‘sexual harassment’, ‘harassment on the grounds of sex’, and ‘discrimination’ as gender equality indicators. In doing so, the Act will become consistent with its associated legislative instruments, the Sex Discrimination Act 1984 (Cth), and the Anti-Discrimination and Human Rights Legislation (Respect@Work) Act 2022 (Cth).
2.41The AHRC particularly commended this provision, observing that WGEA will now be able to ‘capture more meaningful information on what employers are doing to prevent and respond to workplace sexual harassment’.
2.42The ACTU and its affiliates supported the governments intentions to include the additional gender equality indicators but argued that this amendment should also include hostile work environments. Under the Anti-Discrimination and Human Rights Legislation (Respect@Work) Act 2022, workplace environments that are hostile on the grounds of sex are unlawful. Under new positive duty, employers are required to take reasonable steps to eliminate hostile workplace environments.
CEO of WGEA
2.43Submitters welcomed, but made little comment on, the proposed amendments designed to avoid confusion with company director roles and change the title of the ‘Director of WGEA’ to the ‘Chief Executive Officer (CEO)’.
2.44The Law Council commented that it was a ‘straightforward’ and ‘practical’ change.
2.45The Office for Women noted that these amendments would better align the language of the Act and WGEA with the language of business and with that of other government bodies such as Safe Work Australia.
Review recommendations not addressed by the bill
2.46Stakeholders noted that the bill is part of a suite of measures designed to reform the operation of the Act. Many submitters took the opportunity to provide commentary around recommendations of the Review that the bill does not address. For example, the Law Council of Australia queried the omission of provisions in the bill to implemented recommendations 7.2 and 8, which also require amendments to the Act.
2.47In its submission, the Office for Women affirmed that the bill is a first step toward implementing recommendations of the Review that require legislative change, and that it is working closely with WGEA to process outstanding recommendations. A comprehensive outline was provided at Appendix B of its submission on the potential timeline for future recommendations.
Committee view
2.48Data collected by the Workplace Gender Equality Agency since 2013 indicates the gender pay gap is real, persistent, and complex. Failure to further address gender equality in Australian workplaces will burden employers, employees, and the broader Australian economy. The current regulatory framework has provided valuable insights into the status of gender pay equality in Australia. However, it is outdated, and is not promoting closure of the gender pay gap fast enough.
2.49The committee welcomes the provisions in the bill that boost pay gap transparency and encourage action to close gender pay gaps within organisations.
2.50Evidence from experience in the United Kingdom indicates that publishing employer gender pay gaps led to companies prioritising gender equality and a lowering of the gender pay gap. Like many submitters, the committee therefore welcomes provisions that would allow the Workplace Gender Equality Agency to publish gender pay gap data at an organisational level.
2.51The committee recognises that the bill responds to a comprehensive review undertaken by the Office for Women Division of the Department of Prime Minister and Cabinet. Further, the bill was developed in consultation with key stakeholders, who submitted that their input was reflected in the bill, and they support its key provisions with minor amendments only.
2.52In response to concerns raised that the bill does not go far enough, and that it does not address all the recommendations of the Review of the Workplace Gender Equality Act 2012, the committee is satisfied by assurances from the Office for Women that further progress will be made by the government. Such progress will reflect the long-term nature of key recommendations of the Review, and the fact that aligning the timing of future recommendation implementations would reduce the consultation burden on the stakeholders.
2.53The committee recognises that the bill is a first step, forming only part of the architecture supporting gender equality, and should be viewed in conjunction with the remade instruments and future consultative measures.
2.54Overall, the committee considers the bill’s amendments are necessary to enhance the capacity of the Workplace Gender Equality Agency. This bill would support and enable the Workplace Gender Equality Agency to achieve its goal of promoting gender equality in the workplace and ultimately, of closing the gender pay gap.
2.55The committee recommends that the bill be passed.
Senator Louise Pratt
Chair