A member’s bill currently before Parliament seeks to stop employers enforcing gag orders on workers talking about their salaries.
Pay equity experts said New Zealand was woefully behind developed countries in terms of pay transparency, while critics of the bill said it could lead to tension between employees.
Employers could put pay secrecy clauses in workers’ contracts, preventing them from discussing their salaries with colleagues.
Employment relations expert and the director of Work Ethics, Amy Ross, had a confidentiality clause baked into her individual employment agreement when she was working in the public sector last year.
“It really silences people. It stops people talking to each other; it stops people asking even legitimate questions around [I’m] not even really sure about how this matrix system works; and how I might progress in pay — if ever.”
Labour MP Camilla Belich’s member’s bill — called the Employment Relations (Employee Remuneration Disclosure) Amendment Bill — targeted the clauses.
The bill, which has passed its first reading and was now at select committee stage, sought to make pay gag clauses unenforceable, meaning employers could not take legal action if an employee did talk about pay.
“That’s a big concern, is when people do talk about their pay sometimes they can be legally disciplined by their employers from sharing that information.”
Bellich said Australia, the UK, Canada, Sweden, Finland and Denmark had laws against pay secrecy clauses.
She said allowing workers to talk about their pay might help in closing the gender and ethnic pay gaps. The gender pay gap was currently 8.2% for women — for Māori women compared to all men it was 15%, and for Pacific women compared to all men it was 17%.
The European Union was implementing a suite of pay transparency measures, including making it compulsory for employers to inform job seekers about salary and pay range ahead of interviews, and preventing employers from asking candidates about their pay history in interviews.
Workers would be entitled to ask employers about average pay levels in their organisation while companies with over 250 employees would be required to report annually on the gender pay gap.
New Zealand’s pay secrecy bill in its current form did not include any such provisions.
Belich said she saw this bill as one part of a range of pay transparency measures which should come into effect here.
The bill passed its first reading in November 2024 with Labour, National, the Greens and the Māori Party voting for it, and with New Zealand First and ACT voting against.
The Education and Workforce select committee was due to report back on the bill in the coming weeks and the bill was likely to have a second reading in Parliament in May.
Workplace Relations Minister Brooke van Velden said the ACT Party had decided not to support the bill.
She said it might create discord between workers who might be paid differently based on merit.
“There is a concern about creating tension within the workplace, with people who may be doing the same job, but the employer may determine that they actually have different skill levels or have a different rate of output.”
New Zealand First MP Mark Patterson said the party originally voted against the bill due to concerns around confidentiality and privacy.
“Pay is something between employer and employee,” he said.
“We are concerned that it might have unintended consequences in persuading employees against merit based wage rises, where the drama of the office politics might put a chilling effect on employers, and they don’t want to pit employees against each other.”
Patterson said the party would wait to see the bill after the select committee process.
“I think we have shown a pragmatism around employment decisions and we are not ideologically wedged to a position there, but we do support flexibility in the labour market.”
Retail NZ’s Carolyn Young said many retail businesses agreed with the intention of the bill. However, they didn’t want pay information in one business to be used against other businesses to give them a competitive advantage.
“Retailers agree with providing equality across gender and ethnicity and so the key purpose of the bill is supported.
“And it’s about making sure that when the legislation is drafted, that there’s no hooks in there that enable people to do things that are not intended.”
By Ellen O’Dwyer for rnz.co.nz