Pay transparency reform survives Chris Hipkins' policy cull, but timing uncertain

Tuesday, 28 March 2023

Time appears to have run out to get a pay-transparency bill passed before the election.

Equal pay campaigners are pressing the Government to introduce a bill before the election that will force employers to be more transparent about differences in the salaries they pay their staff, after the initiative survived the Prime Minister’s policy bonfire.

A law change is expected to require larger businesses to report on the gaps between the pay they offer men and women, and between people of different ethnicities.

It is also expected to outlaw clauses in employment contracts that can prevent staff revealing their pay to one another, and may require employers publish expected starting pay or pay bands in their job adverts.

Parliament’s Education and Workforce select committee recommended pay transparency reforms a year ago and Minister for Women Jan Tinetti instructed the National Advisory Council on the Employment of Women (Nacew) in October to provide advice on what they could look like.

While a pay increase was announced for many registered nurses, many health care professionals believe more is needed.

* Employers may be forced to reveal starting salaries in job adverts

* Labour MP Camilla Belich says ending pay secrecy would empower employees

The pay transparency initiative has survived Prime Minister Chris Hipkins’ policy review, which saw the deferment of other key workplace reforms including a proposed compulsory unemployment-insurance scheme and a review of the law surrounding contractors’ rights.

That is despite BusinessNZ opposing the proposed measures, stating that it would prefer a voluntary regime.

However, the timing of any legislation remains uncertain.

Tinetti said on Tuesday that the Government was committed to ensuring all women were paid fairly and a pay transparency system was “one lever that may help in closing the gender pay gap”.

But she wouldn’t say whether she expected to introduce a law change in the current parliamentary term, explaining that the work being conducted by Nacew was still underway.

“We are unable to provide a definitive timeline at this stage,” she said.

Jo Cribb, co-founder of pay-transparency lobby group Mind The Gap, said the priority the Government attached to the reforms would send a very clear signal about what it thought about workers and their incomes.

She agreed the window was closing for the Government to enact a law change before the election, but noted it controlled Parliament and could use its time as it wished.

It would at least be important to see a bill introduced before the election, Cribb said.

“This would be about following up on their own commitments that they've made.”

While mandatory pay reporting would have “the biggest impact”, other reforms were also important, she said.

“We are often asked to apply for jobs and go quite a way through the process before we get the chance to see what the salary is.

“Having the salary on a job advert means people start on a level playing field, and then being able to remove those ‘gag clauses’ means there is an opportunity to ‘share and tell’. They are all parts of the jigsaw puzzle.”

The Australian government introduced legislation in February that would require companies with more than 100 employees to publish information on their gender pay gaps, from 2024.

It also passed legislation in December that prevents pay-secrecy clauses being included in new employment contracts.

The Financial Times reported on Monday that a growing proportion of job adverts in the United States were carrying salary information after several states, including California, Washington state and Colorado, legislated to require that over the past three years.

BusinessNZ advocacy director Catherine Beard said it believed pay transparency was desirable, but did not believe it should be “a matter for legislation”, citing the difficulties involved in accounting for the fact that different people would be in different roles.

“Pay transparency is best achieved by businesses voluntarily disclosing their pay practices – those businesses will benefit from the practice, as their potential employees and customers will value that transparency, and it will influence other businesses to do the same,” she said.

“BusinessNZ also believes it’s vital for the ‘qualifications gap’ to be addressed when addressing any pay gap,” she said.

“We would love to see a wider group of people – whatever their gender or ethnicity – getting the skills and qualifications that are in demand in higher-paying occupations, for example those based on engineering, maths, science, technical, computing and applied skills.”