Fifteen years after it happened, I still vividly recall a board meeting where I was the minute taker, sitting quietly with my little notebook and trying not to be seen, while a board made up of six men discussed bringing a new sales employee on board.
I was infuriated to hear them say, “Yes, but for fifteen thousand dollars less, we could get a really good girl to fill the role.”
Being a lowly scribe at the meeting and understanding that my opinion was worth less than nothing to them, I clamped my lips shut and just took notes. But I was fuming and made sure to write what they had said into the meeting minutes.
And in the end they brought on a woman, who was offered $15,000 less than they would have offered a man.
It is situations such as these that pay parity laws seek to address. The Workplace Gender Equality Amendment Bill 2023 makes it mandatory for organisations with more than 100 employees to report publicly on gender pay gaps. And the recent Secure Jobs, Better Pay amendment to the Fair Work Act bans pay secrecy clauses in employment contracts.
So, what does that mean to employers?
Contracts can no longer state that matters about pay are confidential.
From 7 December 2022 pay secrecy terms in new contracts had no effect and could no longer be enforced. However, from 7 June 2023, employers will face penalties if they continue to include pay secrecy clauses in their contracts, up to $66,600 per contravention. It’s a pretty sizeable penalty, and one that shows how committed to this course of action the government is.
Interestingly though, if a contract was entered into between an employer and employee prior to 7 December 2022, the pay secrecy clauses included in those contracts can be enforced, until the contract is varied.
Employees cannot be disciplined for making their pay details public or for querying their wage rates.
Employees hired after 7 December 2022 cannot be penalised for discussing their wages with anyone else. This includes other employees, on social media, to the press, and in general conversation.
However, employees on a contract that commenced prior to 7 December 2022 can be disciplined for this, understanding that an employee who is disciplined is likely to ask for a review of their contract and you are legally obliged to consider it and grant it if there are no good grounds not to.
Employees who question their pay rates after discussion with others also cannot be penalised – this falls under the General Protections of the Fair Work Act.
Employers should remove all gender bias from their pay rate decisions.
If you are employing a male and a female in the same role with the same responsibilities, they should receive the same pay. There will be situations where one gender will be more likely to perform a specific job – for example, heavy work is traditionally done by males because they are physiologically more suited to it. What you want to do is make sure there is no bias in your decisions. While 95 percent of your rock breakers might be men, if a person presenting as a woman has the skills and ability to take on that type of work, they should be permitted and furthermore, should receive a rate of pay equivalent to their counterparts.
Now is the time to work out pay scales.
If you don’t already have pay scales, it would be appropriate for you to think about them now.
This is accomplished by documenting the lowest and highest rate of pay you are prepared to pay for each position in your workplace, then working out a few steps between, and documenting what an employee needs to be able to do to achieve the next step. The levels need to be based on skill rather that length of tenure or gender.
For example, if you employ installers, their skill level may fall between someone who knows nothing whatsoever about installing, through to someone who can problem solve a complex on-site installation and produce high quality outcomes. In between, you may have one step where the employee has moved on to being a competent installer who does not need constant supervision, and another where they consistently produce high quality outputs, with the highest being the ability to problem-solve complex installations:
- Level 1 – Unskilled Installer
- Level 2 – Competent Installer
- Level 3 – Consistently provides high quality outcomes
- Level 4 – Consistent high-quality outcomes plus the ability to problem solve complex issues
You already know the wages of the lowest and the highest levels. Then make the steps in between a consistent increase. For example, if you pay $30 per hour to an unskilled installer, and $42 to a high achiever, you might have the following levels:
| Level 1 | Unskilled installer | $30 |
| Level 2 | Competent installer | $34 |
| Level 3 | Consistently provides high quality outcomes | $38 |
| Level 4 | Consistent high-quality outcomes plus complex problem-solving | $42 |
If you utilise competencies, or Key Performance Indicators, these can also be linked to the various levels.
Once you have worked out your pay scales, place all your employees on them. You cannot reduce an employee’s wage, but if someone is receiving a rate of pay at a higher level than they are working, you can use that to implement a performance improvement plan for that employee, to bring them up to the required skill and performance level.
Benefits of a pay scale system.
The benefits of implementing a system like this is that your employees know exactly what they need to be able to do to progress to the next level, you can use the levels in your annual performance assessment, and wage secrecy will no longer be an issue.
What if my way of working doesn’t lend itself to a scaled system?
Not every workplace will lend itself to this type of scaled system. You might have a very small workforce, lots of people doing individual jobs, or very specialised jobs. The rule of thumb will be: equivalent pay for equivalent value.
That means that if two employees doing different work bring a similar value to your workplace, they should be compensated similarly.
It becomes an interesting question when you consider positions that have traditionally been held by women.
Administration roles are generally paid at the lowest rate in an organisation. Why is that? There are several reasons; administration is thought of as a low skill occupation, you don’t need a university degree to be a receptionist, admin is there to serve the other functions of the business, and these roles are traditionally filled with women.
But consider this: What if you did not have those roles? How would your business perform then? While a degree isn’t necessary, an administrator needs knowledge of many different factors of business, law and multiple computer programs to keep your inventory, sales, payroll and creditors in hand. A good receptionist will be a godsend for your business while a poor one will create problems. A good admin team will be the engine that keeps your business going, while your sales and customer service teams will be the lifeblood that lubricates the engine.
Think about the best administrator you can. What do they bring of value to the table? How many skills do they have that nobody else in your business possesses?
Following the thought through to the end, if this administrator brings all these skills, the ability to keep your business running, the ability to charm potential customers at the reception stage, the knowledge of the raft of programs they need in a modern office, how is it that they are worth less than someone on your sales team? Or your production team?
So, consider each of your employee’s value to the business against the value of all the others, and pay accordingly. Make sure you document your reasoning for a specific rate of pay so you can justify it, should your employee question it.
That applies to all of your employees. Make sure you have reasons for placing individuals on specific wages – and be prepared to justify your decisions to your employees with fact.
Conclusion
The days of autocratic oversight of a business are over. Collaborative culture coupled with leaps forward in gender equality mean that today’s bosses must be open and honest about their pay rate decisions with their employees. Hiding behind a mantra of, “That information is private,” is no longer appropriate.
What is appropriate is equal pay for equal work. So long as you are doing that, there’s no way you can come undone when it comes to pay parity.
Need help with working out how your pay scales might work? Give us a call on 1300 318 459 for expert HR advice.
