New Zealand businesses urged to prepare for pay secrecy law
The bill seeks to prohibit employers from including pay secrecy clauses in employment contracts, which currently prevent staff from discussing their remuneration. Should it pass into law, employees would be free to speak openly about their pay without risk of adverse consequences from their employer. The National Party has indicated ongoing support for the legislation, increasing expectations that it will be enacted.
Pay transparency push
According to Sanam Ahmadzadeh Salmani, Employment Counsel at Employment Hero and workplace law commentator, the proposed law focuses on greater pay transparency and addressing wage gaps. "The legislation is designed to promote greater pay transparency and equality, helping to identify and address unjustified pay disparities. 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," said Sanam Ahmadzadeh Salmani.
The objective of the bill is to create an environment where employees can more readily compare pay, understand the criteria used to set remuneration, and highlight unexplained pay differences.
Advice for employers
Employment Hero has advised that employers can benefit from acting ahead of the legislative changes by revising their internal practices. Ahmadzadeh Salmani elaborated on the potential benefits and necessity of pre-emptive measures. "This is an opportunity for employers to drive better pay transparency and better outcomes for both businesses and employees. Aligning with the legislation will not only ensure compliance if and when required but can also improve employee satisfaction and retention. Employees want to know they're being treated fairly and businesses that embrace this change will likely see stronger engagement and loyalty. "By preparing and making any changes before the Bill passes, employers will be on the front foot and can avoid being caught out later down the track," added Ahmadzadeh Salmani.
Ahmadzadeh Salmani outlined three key steps that employers should take now: conduct a pay review, review employment contracts, and draft clear explanations of pay determination.
Pay review
Addressing the first recommendation, Ahmadzadeh Salmani said: "Start by reviewing your current pay structures – look for any discrepancies and understand the reasons behind them – whether it's due to role differences, experience or something else. Being proactive here will help you not only stay compliant, but to spot payroll red flags early," advises Ahmadzadeh Salmani.
Contract reviews
The second step involves revisiting the language used in existing employment agreements: "Employers should also review employment agreements for any clauses that restrict pay discussions. These might not be labelled as 'pay secrecy' and they could be buried under general confidentiality or remuneration clauses. Having a clear plan of what needs updating now puts you in a better legal position once the Bill is passed," adds Ahmadzadeh Salmani.
Clear communications
The third recommendation is to improve pay-related communications with staff: "Transparency doesn't stop at removing secrecy clauses. 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," she adds.
The Employment Relations (Employee Remuneration Disclosure) Amendment Bill, if enacted, would bring New Zealand into greater alignment with jurisdictions such as Australia and the United Kingdom, both of which have implemented measures relating to salary transparency in employment contracts.
Employment Hero has made free resources available to businesses in New Zealand to assist in understanding employment law updates related to pay transparency and compliance requirements.
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Environmental lobby group Greenpeace Aotearoa accused the Government of stripping freshwater protections to bolster corporate profits, while Federated Farmers suggested the Government had to pause freshwater rules. What are farmer groups saying now, particularly about their influence on political parties, and accusations of undue influence over that of the public interest? Hurst, of Federated Farmers, says it's 'entirely appropriate' for the Government to engage regularly with farmers and the wider primary sector, 'particularly when you consider the potential impact and cost of these rules'. Farming rules should be practical, affordable and fair, he says. 'We also want to make sure any regulation will actually be effective and achieve better environmental outcomes. 'It's important we get these rules right, particularly when you consider the huge economic contribution of agriculture for the country.' DairyNZ's David Burger, the general manager of farm solutions and policy, says it engages constructively with the government of the day on matters affecting dairy farmers 'and appreciates that other groups do the same'. Kate Acland, the chair of Beef + Lamb NZ, says farming impacts on freshwater need to be managed but there were significant issues 'and massive implications' under the previous government's approach. 'It's critical that ministers and officials first understand the issues, but also critical that they spend time with the sector to ensure rules are practical and workable.' Acland notes anyone can make a submission on the consultation, which will go through parliamentary processes, including a select committee. Ministers respond Newsroom asks ministers McClay, Hoggard, Bishop, Simmonds, and Associate Agriculture Minister Nicola Grigg for comment. Bishop responds, but he's silent on ministerial meetings and the influence of agriculture. We'll quote his comments in full – the reason for which will soon be apparent. 'The current public consultation on freshwater national direction, which runs for eight weeks closing on 27 July, has been shaped by feedback received from a wide range of groups during the targeted engagement phase.' (Prickett points out this selected group didn't include non-polluting commercial interests like the tourism industry.) Bishop continues: 'During targeted engagement, some groups sought to discuss specific matters of interest or asked to continue discussions at additional meetings. 'Officials from the Ministry for the Environment accommodated these requests wherever possible, and the number and duration of meetings varied as a result. 'All submissions received during the public consultation period will be considered, along with feedback from the ongoing engagement, before progressing any freshwater national direction changes. 'Note that there will also be a second phase of public submissions later this year, when exposure drafts will be released for further consultation.' (Exposure drafts are the raw wording of legislation, released to identify potential problems before it's introduced to Parliament. This seems like a concession by the Government to environmental groups.) A day after Bishop's comments were sent, the Ministry for the Environment provided Newsroom with this statement, attributed to Nik Andic, the manager of freshwater natural environment policy: 'The current public consultation on freshwater national direction, which runs for 8 weeks and closes on 27 July, has been shaped by the feedback we received from a wide range of groups during targeted engagement. 'During targeted engagement, some groups sought to discuss specific matters of interest or asked to continue discussions at additional meetings. Officials from the Ministry for the Environment accommodated these requests wherever possible, and the number and duration of meetings varied as a result. 'We will consider all submissions received during the public consultation period, along with feedback from ongoing engagement, before providing advice to ministers on any freshwater national direction changes. 'Note that there will also be a second phase of public consultation on freshwater national direction changes later this year, when exposure drafts are released.' Farming groups' influence on Government policy might be a concern but at least the public can be assured the minister and ministry are singing from the same hymn sheet.
