Pay Secrecy – How to Manage Conversations

What should employers do to comply with the new pay secrecy laws?

How to make the most of the new pay secrecy laws?

The recent changes to pay secrecy laws in Australia provide an opportunity for us as employers to make the most of increased transparency regarding pay. One way to do this is by setting clear key performance indicators (KPIs) for your employees. Engaging with employees in the process of setting KPIs can go a long way towards appropriately rewarding that employee’s contribution to achieving the organisation’s goals and objectives.

Clear KPIs are also an effective way to communicate how each employee how their performance will be measured and rewarded. This is a positive step towards transparency and ensures employees are aware of what they need to do to be rewarded appropriately. This motivates employees and helps to ensure employees feel valued and respected for their contributions to the company.

It is important to remember employees have the right to choose whether they want to share information about their pay. While setting clear KPIs is an effective way to engage employees in the process, it is equally important to respect their right to privacy. As employers, we should avoid singling out specific employees when communicating KPIs, as this may be perceived as a violation of privacy. Instead, it is best to communicate that KPIs will be set as a matter of company policy and will be individualised to each employee  without using a specific employee’s KPIs as an example.

The good that may come from these changes

While this increased transparency may seem daunting for employers, it could also bring about significant benefits.

One of the primary benefits is that pay transparency has been shown to increase employee engagement and motivation at work. When employees have a clear understanding of what their colleagues are earning, they are more likely to feel valued and respected if the wage/salary is somewhat the same for a role with similar skills, responsibilities and experience. 

This can lead to greater job satisfaction, which, in turn, can lead to improved employee retention rates. Additionally, when employees understand how their pay is determined, they are more likely to view their compensation as fair and appropriate, which can lead to higher levels of motivation and productivity.

Another significant benefit of pay transparency is that it can help close the gender pay gap. Studies have shown that countries that have implemented similar reforms to pay transparency laws have seen a decrease in the gender pay gap – e.g. in states of the United States where similar legislation applies, there has been a faster decline in the gender wage gap than states that still maintain pay secrecy. By embracing pay transparency, you can help ensure all employees are paid fairly, regardless of their gender.

Akyra’s Key Takeaways

The new parental leave legislation in Australia introduces several changes that will affect business and it is crucial for organisations to be aware of the changes and prepare accordingly. Here are Akyra’s key takeaways:

1. Employers should ensure their employment agreements / contracts do not feature pay secrecy clauses to ensure compliance with the new Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022.
2. It is important for employers to anticipate discussions regarding pay transparency and be prepared with evidence-based information to proactively engage with employees.
3. Setting clear KPIs for employees is an effective way to communicate how each employee’s performance will be measured, rewarded and contribute to business success.
4. Increased pay transparency may lead to benefits such as increased employee engagement and motivation, improved job satisfaction and closing the gender pay gap.

By implementing these key takeaways, employers can support working parents and create a more productive and engaged workforce.