Pay secrecy clauses to go: Employees can soon discuss salaries with each other, without getting punished by their boss

Camilla Belich's bill would prevent employers prosecuting employees for discussing their salaries. Photo / RNZ, Phil Smith

Very soon, employers will no longer be able to take action against staff who discuss how much they are paid.

Currently, employers can include pay secrecy clauses in employment contracts, which allow them to take action against an employer if they talk about their pay.

A Member’s Bill in the name of Labour MP Camilla Belich, which passed its final reading in Parliament on Wednesday night, will effectively mean employers cannot enforce those clauses against employees, allowing them to discuss their pay with their colleagues and others.

The bill is currently awaiting the royal assent to become law. It will take effect the next day.

The bill does not remove those clauses where they already exist in people’s contracts, but it makes them effectively redundant.

If an employer takes action to disadvantage an employee for disclosing their pay, then the employee may take a personal grievance against them.

It would be up to the Employment Relations Authority to determine the outcomes of that.

Belich said there were some cases where employers sought to enforce pay secrecy against employees who had not signed a contract with a pay secrecy clause, or who were working without a contract, which was itself illegal.

The new law would allow employees to raise a personal grievance against an employer in cases where they did not have a pay secrecy clause in their contract, but where their employer nonetheless put them at a disadvantage because they had disclosed their pay.

“We’ve seen examples in New Zealand where people haven’t had a clause in their contract or it hasn’t been relevant to the facts, but it has been asserted from the employer that they are not able to talk about their pay and it has been taken up as a disciplinary matter,” Belich said.

“We also have people who are employed who don’t have a written contract – it’s technically not legal, but we know it occurs in New Zealand.

“If you are disciplined, or sacked or put at a disadvantage because you have talked about your pay, then this bill should protect you from that.”

The bill was passed with National support. National’s coalition partners NZ First and Act were opposed to the law.

NZ First’s Mark Patterson said the bill was “torching contract law” by invalidating sections of contracts that had been agreed between employers and employees.

Act’s Parmjeet Parmar agreed.

“What goes in that agreement should be about what employers and employees agree between them. Once they have agreed, then this bill says that this clause should not be enforceable, even when this clause is in the agreement,” Parmar said.

“How could we pass legislation in this House where we are telling people to breach their agreements?”

She said the bill would create strife between employers and employees and would not address the gender pay gap, which was one of its aims.

Act proposed an amendment to mean the bill only applied to those earning less than $180,000, because those earning over $180,000 probably had “some specific skills that are required by that employer” that were not directly comparable to other employees’ and their salaries.

The idea for the bill came out the Education and Workforce Committee inquiry into pay transparency in the 53rd Parliament.