Pay equity experts say New Zealand is woefully behind developed countries in terms of pay transparency, while critics of the bill say it could lead to tension between employees.
Employers can 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.”
The bill, which has passed its first reading and is now at select committee stage, seeks to make pay gag clauses unenforceable, meaning employers could not take legal action if an employee does 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, Britain, Canada, Sweden, Finland, and Denmark have 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 is currently 8.2% for women – for Māori women compared to all men it’s 15%, and for Pacific women compared to all men it is 17%.
The European Union is 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 will be entitled to ask employers about average pay levels in their organisation while companies with more than 250 employees will be required to report annually on the gender pay gap.
New Zealand’s pay secrecy bill in its current form does not include any such provisions.
Bellich 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 is due to report back on the bill in the coming weeks and it is likely to have a second reading in Parliament in May.
Minister Brooke van Velden. Photo / Mark Mitchell
Workplace Relations Minister Brooke van Velden said the Act Party has 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 has been approached for comment.
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.”
