'Difficult conversations' for employers if staff chat about pay, lawyers say

RNZ News

12 hours ago

Camilla Belich's bill would prevent employers prosecuting employees for discussing their salaries.
Photo:
VNP / Phil Smith
Employers may need to be ready to face up to some uncomfortable discussions about employee pay, employment experts say.
On Wednesday night, Labour MP Camilla Belich's Employment Relations (Employee Remuneration Disclosure) Amendment Bill passed its second reading, with National voting alongside the three opposition parties.
The bill would ensure that pay secrecy clauses, which prevent employees from discussing their salaries with colleagues, would no longer be enforceable, meaning employers could not take legal action, if an employee talked about pay.
Simon Schofield, a professional teaching fellow in University of Auckland law school, said it would be a positive move.
"The underlying reason for the bill is to ensure that people who are discriminated against have the ability to see where they sit relative to other employees doing the same work and allows them to discuss that."
He said some employers may have to deal with challenging situations, justifying why certain people were paid a certain rate compared to others.
"Those questions may be uncomfortable for an employer to answer, but I don't think that means an employee should be dismissed for having those discussions.
"If someone isn't feeling that they're getting paid well compared to their peers, they'll often just leave the employment relationship, but by ensuring that people can have these discussions, it puts the onus on employers to justify some of their decisions around pay, which sometimes… can have elements of unconscious bias involved and that feeds into the gender pay gap."
Hesketh Henry partner Alison Maelzer said remuneration was slightly taboo, so people might be reluctant to talk about it anyway.
"It's awkward both ways," she said. "If you find out you're being paid less than the person you're talking to or if you're being paid more than the person you're talking to, either way, it opens up all kinds of a can of worms."
She said, if the bill passed, salaries could become a water cooler conversation for a while.
"It might be prompting people to ask their colleagues a question they might not have done otherwise."
Duncan Cotterill partner Alastair Espie said he saw people getting into trouble over pay disclosure "very infrequently".
"It's an issue that is often difficult for employers to prove, so concerns about employees talking about their salary will often go unaddressed or be dealt with through more informal channels."
Maelzer said she had been an employment lawyer for more than 20 years and had not been on either side of such a matter.
"Perhaps employers are reluctant to take disciplinary action, because it could open up a can of worms related to the reasons why the employee is sharing salary details."
She said agreements often contained a clause that made the terms of employment confidential.
"The way it would be in there is not a specific clause, but when you're defining confidential information, client information, marketing strategy or whatever, you'd also include the terms of your employment in that list."
She said the bill would not prevent employers doing that, but would prevent them taking action against an employee for remuneration disclosure.
Schofield said action had been taken against employees who disclosed their pay.
"Employers are entitled to treat pay as confidential information, therefore - because there's been a breach of that confidential information - employers may think they're entitled to dismiss an employee for that disclosure."
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