Workplace law commentator outlines three key actions that employers can take
Employers across New Zealand have been advised to take proactive steps to prepare for the potential passing of a new bill seeking to ban pay secrecy clauses.
The Employment Relations (Employee Remuneration Disclosure) Amendment Bill passed its second reading last week after getting support from National MPs.
The bill seeks to ensure that pay secrecy clauses in workplaces will not be enforceable, preventing employers from taking adverse action against their workers who discuss pay.
Sanam Ahmadzadeh Salmani, Employment Counsel at Employment Hero, said the bill will help identify and address unjustified pay disparities at work.
"While it's a welcome change that will bring New Zealand in line with countries that have implemented similar measures, such as Australia and the UK, employers should take proactive steps now to prepare for if the Bill passes," Ahmadzadeh Salmani said in a statement.
According to the workplace law commentator, preparing and making any changes will prevent employers from being caught out later down the track.
Steps that employers can take
One of the steps that Ahmadzadeh Salmani suggested is reviewing pay structures, such as looking for any discrepancies and understanding the reasons behind them.
"Being proactive here will help you not only stay compliant, but to spot payroll red flags early," she said.
Employers should also be prepared to have explanations on how pay is determined in their organisation.
"Transparency doesn't stop at removing secrecy clauses," Ahmadzadeh Salmani said. "Employers need to be ready to explain how pay is determined and what data or criteria is used, how performance factors in, and how employees can progress. This builds trust and reduces confusion or resentment."
Meanwhile, employment agreements should also be reviewed to identify any clauses that restrict pay discussion, according to the workplace law commentator.
"These might not be labelled as 'pay secrecy' and they could be buried under general confidentiality or remuneration clauses," Ahmadzadeh Salmani pointed out. "Having a clear plan of what needs updating now puts you in a better legal position once the Bill is passed."
Ahmadzadeh Salmani said the bill is an opportunity for employers to drive better pay transparency in workplaces.
"Aligning with the legislation will not only ensure compliance if and when required but can also improve employee satisfaction and retention," she said. "Employees want to know they're being treated fairly and businesses that embrace this change will likely see stronger engagement and loyalty."
