Home' HR Monthly : February 2019 Contents 16
For employers not persuaded on the merits of
transparency, maintaining pay confidentiality
is legal, with employment law currently saying
nothing about the issue.
“The Fair Work Act is completely silent on
disclosure of pay rates. With employment
law effectively mute, the flow-on is that if an
employer wants to impose confidentiality, it’s
up to them to include a clause in the contract or
workplace policy,” says David Bates, executive
counsel and team leader at Harmers Workplace
“ If there is no prohibition, there is nothing
to stop employees discussing pay rates.
A prohibition would be seen as perfectly
reasonable, as it goes to the relationship
between the employer and employee.”
Including a clause also avoids the possibility
of disciplinary activities being viewed as an
adverse action. “ It gives a trigger for employers
to do something about it if employees discuss
their pay, as it is a breach of their contract
terms,” he says.
If the prohibition only appears in the
workplace policy, employees need to be
regularly reminded about the requirement.
Possible repercussions for ignoring an
employer’s prohibition on discussing salaries
should be spelt out and can vary from a first
formal warning through to dismissal.
“ It totally depends on the workplace and
the issue the employer is trying to address
with the stipulation. You would expect to see
more severe repercussions if the business was
operating in an area where pay rates are a very
sensitive issue. It’s likely the more senior the
person, the more serious the consequences,”
The Danish law shows how pay transparency
can mean different things. Sometimes it refers
to complete transparency, where everyone
knows what their colleagues earn. In other cases
it refers to an audit system where individual
salaries are kept confidential, but organisational
pay equity is evaluated.
The audit approach has proved controversial,
and its ability to close the gender pay gap has
been questioned. For example, some US firms in
the financial sector have been accused of playing
fast and loose with data by not listing their pay
gap (the difference of pay between genders), and
instead listing an adjusted pay gap (which looks
at gender pay equity between similar roles).
Compared to an audit and tidy data
comparison, many businesses find the idea of
full pay transparency a lot scarier, although it’s
the norm in Australia’s public service.
“In the public sector, everyone is on a pay
scale and you receive annual increments until
you get to the top of that band. Pay is often
not mentioned at all in the public service, as
everyone knows everyone else’s banding,” says
Molineu x, who spent over a decade as HR
director with the ATO’s Compliance Division.
Which isn’t to say it can’t be everyday life for
private sector businesses. Digital consultancy
Cogent has a completely open salary model
coupled with full financial transparency. Cogent
sees the approach as a ref lection of its core
values of transparency, creativity, learning,
personal wellbeing, diversity and usefulness.
Over its 11-year history, Cogent has always
had pay transparency, with the system slowly
being refined as its workforce grew to the
cu rrent 60 people.
“In the early days, the company was a
community of people working together who
were friends and peers. From that it was a
natural flow-on to pay transparency,” says
James Ferne, the ‘People Guy’ at Cogent.
Matt Connell, AHRI Victorian state
councillor and executive workplace consultant
at Workplace Conf lict Resolution, has seen both
sides of the pay transparency fence and argues
that an open model makes it easier to talk to
staff about their pay.
“This means you can explain it to people and
easily justify where they sit within their band.
It leads to less difficult conversations,” he says.
“When it’s not transparent, you leave open to
debate whether you are doing it fairly.”
Transparency can also help in the battle to
attract and retain talent. Cogent promotes
pay transparency in its recruiting and believes
it gives the organisation an advantage over
employers with more opaque systems.
“People self-select. Those who are not
interested in our values, or who value money
above all else and tend to jump from job to
job, don’t tend to apply,” says Ferne. “Pay
transparency attracts and retains people. Being
a values-driven business and hiring based on
value alignment means people tend to stay
Connell believes organisations with opaque
pay models are making life difficult for
themselves. “When you define a pay structure, it
takes the mystery out of it. We find in workplace
conflict situations, if there is not a structure, it’s
hard to justify pay to employees.”
A Cogent team: everybody here
knows each other’s salary.
24/1/19 3:44 pm
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