Fixing the Gender Pay Gap: Ending Pay Gag Clauses

blog
31 Jul 2015 | Larissa Waters
Women

What is the gender pay gap?

Australia’s gender pay gap is 17.9% - the highest for two decades. In 2015, we should be well on the way to gender equality.  We must fix this disgrace.

The gender pay gap widens to 24.7% when perks and bonuses are included. The gap is even worse for women in leadership positions, where it rises to 28.9% for senior executives.

Pay gag clauses

Many workers, especially those who receive a salary and those in the private sector, are not allowed to talk about their pay with colleagues.  Many employment contracts include a “gag clause”, which means that workers can be disciplined or even sacked for discussing their pay. 

Women will sometimes only discover they are being paid less than their male colleagues after talking to a co-worker.

Pay secrecy can help hide discrimination, unconscious bias and bad decision making, such as where two people are paid differently for doing the same job.  Pay transparency makes sure employers have to justify pay decisions. 

When pay is secret, women lose 

When pay is set in secret by individual negotiation, women are at a disadvantage. While there is no evidence to suggest that women’s abilities to negotiate are any different from men’s, research shows women’s negotiations are often less successful.

Research suggests that women are less likely to ask for a raise or negotiate aggressively, and are more likely to be judged unfairly by managers.  

Data collected by the Workplace Gender Equality Agency (WGEA) shows that were pay is set in secret, the gender pay gap is worse. 

For instance, the gender pay gap is much smaller in the public sector (12.3%) where workers are allowed to talk about their pay compared to the private sector (22.4%) where discussion is often prohibited.   

Our plan to end pay gag clauses

The Greens will introduce a Bill to ban pay gag clauses, and make sure that existing gag clauses are unenforceable.

The Bill would make sure that workers are allowed to tell their colleagues what they are paid if they wish to, without fear of retaliation from their boss. 

The proposed new law would not force anyone to discuss their pay, but it would make sure that bosses could not pressure their employees to stay quiet.

Your pay, your choice

It should always be your choice whether to discuss your pay.  Your employer should never be able to threaten you with sanctions for doing so. 

Sometimes people don’t feel comfortable talking about their pay, but making sure that bosses can’t impose secrecy clauses is the first step towards cultural change. 

When workers cannot discuss their pay, they are in a weaker bargaining position.  Salary negotiations are partly about telling your boss what you think your labour is worth.  If it is impossible to know what your boss is paying others, the negotiation can never be fair. 

Sometimes employers prefer to keep pay secret to avoid ‘dissatisfaction’, but the best solution is almost always a mature discussion between workers, bosses and unions, rather than enforced secrecy. 

Read our full plan here:

equal_pay_--_ending_pay_gag_clauses_explainer.pdf