Pay confidentiality clauses prohibit employees from discussing their remuneration with work colleagues. Such clauses were included in employment contracts, awards and enterprise agreements to minimise conflict and reduce the risk of employees banding together to request pay increases. These clauses have been criticised for contributing to the gender pay gap and restricting wages growth by limiting individual and collective pay negotiations.

As part of the Federal Government’s reforms to the Fair Work Act 2009 (Cth) (FW Act), a ban on pay confidentiality clauses has now been enacted.

From 7 December 2022, pay confidentiality clauses cannot be included in employment contracts, modern awards or enterprise agreements entered into or varied on or after 7 December 2022. If such clauses have been included in awards, enterprise agreements or contracts of employment since 7 December 2022, they are not enforceable.

If an employee’s contract of employment is varied on or after 7 December 2022, an existing pay confidentiality clause or a pay secrecy clause added to the contract of employment as part of such variations, will also not be enforceable. However, unamended contracts of employment containing pay confidentiality clauses entered into before 7 December 2022 can remain.

From 7 December 2022, any pay confidentiality clauses in any existing enterprise agreements or awards are unenforceable irrespective of whether the instrument was made on, after or before 7 December 2022.

The amendments to the FW Act also now provide employees with workplace rights to:

• enquire about other employees’ pay (with the same or a different employer) or other employees’ employment terms, such as hours of work, which may be needed to work out pay rates; and
• share or not share information about their own pay or employment terms, such as hours of work, which may be needed to work out pay rates.

Such workplace rights can be enforced under the general protection provisions, which makes it unlawful for adverse action to be taken against an employee for exercising their workplace rights.

In addition, employers breaching the new requirements can face civil penalties or prosecution by the Fair Work Ombudsman.