Australian employers will soon be forced to publish their gender pay gap

Australian employers will soon be forced to publish their gender pay gap

By Phoebe Armstrong

The Albanese government has introduced a Bill that will mandate the publication of gender pay gap information for companies with 100 employees or more. Here’s what HR needs to know.

Anthony Albanese has unveiled a plan to tackle Australia’s gender pay gap head-on, with the announcement of a new bill that will leave businesses with no choice but to publicly share the extent of pay disparity within their workforces.

The Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023, which was introduced into Parliament on 8 February, will set out to publish the gender pay gap of organisations with 100 or more employees. Reporting will commence in 2024, and gender pay gap information will be published on the Workplace Gender Equality Agency (WGEA) website.

Prior to the introduction of the Bill, businesses were required to submit their gender pay gap data to the WGEA, but there has never before been any obligation for employers to make that data publicly available.

Minister for Women, Finance and the Public Sector, Senator Katy Gallagher said that the transparency afforded by the Bill will mark a significant step forward in Australia’s journey to pay equity.

“On average, women working full-time can expect to earn 14.1 per cent less than men per week in their pay packets. The gender pay gap is also holding our economy back with $51.8 billion a year lost when it comes to women’s pay,” she said. 

“On current projections, it will take another 26 years to close the gender pay gap. Women have waited long enough for the pay gap to close – let’s not wait another quarter of a century.”

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A fight for transparency 

The timing of the Bill’s announcement is noteworthy, given that it comes at the heels of recent changes to pay secrecy laws. 

Pay secrecy was among the most significant issues addressed in the Secure Jobs, Better Pay Bill, which mandated that secrecy clauses in existing contracts would no longer be binding, and prohibited their use in new employment contracts. This was effective immediately, in line with the Bill passing in December 2022.

The subsequent introduction of the Closing the Gender Pay Gap Bill suggests that the government’s strategy to address issues of pay equity has transparency at its core. 

The last few years have also seen a push for transparency from workers themselves, who have increasingly been calling out brands who profess their commitment to gender equity but fail to put their money where their mouths are.

A memorable example of this came on International Women’s Day in 2021, when a Twitter bot began responding automatically to posts by UK brands celebrating the landmark with a breakdown of the gender pay gap at their organisation.

The message struck a chord in the online community, and since the bot’s creation it has amassed over 250,000 followers.

With the state of pay equity in most Australian businesses soon to be made public, brands will hopefully be encouraged to make sure that their support for pay equity is more than skin-deep.

Could this Bill really eliminate the gender pay gap?

On the same day the new amendment was announced, the WGEA released a statement welcoming the changes and affirming its commitment to ensuring the new policies are executed effectively. 

“The Review’s recommendations provided a roadmap to accelerating employer action on gender equality and driving meaningful improvements in experiences at work for many Australians,” said WGEA Director Mary Wooldridge.

“We look forward to working with the government, employers and others to implement these important reforms.”

However, others have called into question the validity of the data that will be published. 

For instance, in an opinion piece published by UNSW, Mark Humphery-Jenner, Associate Professor of Finance, pointed out that the new rules require employers to publish only simple aggregates of their pay data, which might not be telling the whole story.

“Aggregate numbers – which in practice translates into reporting summary statistics – do not help us to either identify or understand the pay gap. Those aggregates also don’t help us come up with the right fixes,” he said.

Humphery-Jenner gives the example of a company with 101 employees, one being the male CEO. The other 100 employees, split 50/50 between men and women, are all paid the same salary. But, if the CEO pays himself ten times as much as the other employees, this would translate to a 17.6 per cent gender pay gap based on the data they would need to provide to the WGEA. 

On the flip side, if there were a similar-sized company run by a man who did not take a salary, but deliberately paid women two per cent less than men, the aggregate numbers would show no gender pay gap at the company. 

“This is progress of a kind, but not the progress needed to address the complex causes of gender pay inequality for ordinary people,” he said.

Instead, he suggests it would be more effective to report on median statistics.

“This would enable the Workplace Gender Equality Agency to provide more sophisticated analysis, breaking down the factors contributing to the figures that get the headlines.

“The agency defines equal pay as “men and women performing the same work are paid the same amount”. To achieve this, it is essential to ensure apples are being compared with apples. This is only possible if we control for the factors that can influence pay, and don’t lose the necessary nuance.”

It remains to be seen whether the government will introduce reform to data collection processes to complement the legislation in the Bill. However, with the full force of the law, the Fair Work Commission and the WGEA behind the campaign to implement the changes, it’s fair to say that most employers will be keeping a closer eye on their payroll in the coming years.

*This article first appeared on the website.

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