Clos­ing The Gen­der Pay Gap

In 2021 the Work­place Gen­der Equal­i­ty Agency (Agency) con­duct­ed a review (Review) of the Work­place Gen­der Equal­i­ty Act 2012 (Act). The report result­ing from the Review was released in March 2022 and con­tained sev­er­al rec­om­men­da­tions with the objec­tive of reduc­ing the gen­der pay gap. The data from 2021 and 2022 showed that the rate at which the gap was clos­ing was the same for both years, stalling at 22.8%. In 2022, the gen­der pay gap in Aus­tralia was 14.1% and it is esti­mat­ed this alone rep­re­sents a dif­fer­en­tial of approx­i­mate­ly $51.8 bil­lion per annum.

What does gen­der pay gap’ mean and how is it dif­fer­ent to equal pay’? 

Clos­ing the gen­der pay gap is more than just ensur­ing that men and women receive equal pay. Unequal pay is only one of many social and eco­nom­ic con­trib­u­tors to the gap. The Agency defines equal pay’ to mean when men and women receive equal pay for work of equal or com­pa­ra­ble val­ue” which takes into con­sid­er­a­tion dis­cre­tionary pay, allowances, bonus pay­ments, super­an­nu­a­tion, and the like.

Where equal pay’ con­sid­ers like-for-like roles, the gen­der pay gap shows the dif­fer­ence between the aver­age pay of men and women across organ­i­sa­tions, indus­tries, and work­forces generally.

The Work­place Gen­der Equal­i­ty Amend­ment (Clos­ing the Gen­der Pay Gap) Bill 2023 (New Law) was passed on 30 March 2023. The New Law aims at achiev­ing trans­paren­cy with the inten­tion that men and women will receive equal pay in the com­ing decades.

Cur­rent Obligations 

At present, under the Act, employ­ers with at least 100 employ­ees are oblig­at­ed to pro­vide remu­ner­a­tion data to the Agency. How­ev­er, a num­ber of fac­tors impact­ing the gen­der pay gap are not cur­rent­ly being cap­tured in the data col­lect­ed by the Agency. Such fac­tors include:

  1. age of employees;
  2. loca­tion of pri­ma­ry workplace;
  3. super­an­nu­a­tion data;
  4. CEO remu­ner­a­tion; and
  5. man­ag­er data for enti­ties in cor­po­rate structures.

In spite of a high num­ber of employ­ers cur­rent­ly includ­ing the above­men­tioned fac­tors in their reports vol­un­tar­i­ly, the Agency is still unable to accu­rate­ly depict the breadth of gen­der inequal­i­ty in work­places. There­fore, report­ing of the six gen­der equal­i­ty indi­ca­tors (below) by employ­ers should give the Agency the over­all pic­ture that it needs to iden­ti­fy pre­dom­i­nant fac­tors impact­ing the gen­der pay gap, and sub­se­quent­ly take appro­pri­ate action towards reduc­ing that gap.

Frame­work of the New Law

Under the New Law, pri­vate sec­tor and Com­mon­wealth pub­lic sec­tor organ­i­sa­tions with 100 or more employ­ees will be required to annu­al­ly lodge a report with the Agency, which reports on the fol­low­ing six gen­der equal­i­ty indi­ca­tors with­in the employ­er’s workplace:

  1. gen­der com­po­si­tion of the workforce;
  2. gen­der com­po­si­tion of gov­ern­ing bod­ies of rel­e­vant employers;
  3. equal remu­ner­a­tion between women and men;
  4. avail­abil­i­ty and util­i­ty of employ­ment terms, con­di­tions and prac­tices relat­ing to:
    1. flex­i­ble work­ing arrange­ments for employ­ees; and
    2. work­ing arrange­ments sup­port­ing employ­ees with fam­i­ly or car­ing responsibilities.
  5. con­sul­ta­tion with employ­ees on issues con­cern­ing gen­der equal­i­ty in the work­place; and
  6. sex-based harass­ment and discrimination.

The report will then be made pub­licly avail­able, which is not cur­rent­ly the case, reveal­ing the names of employ­ers with large gaps in gen­der equal­i­ty with­in their organ­i­sa­tions (infor­ma­tion on indi­vid­u­als of the employ­er’s organ­i­sa­tion will remain con­fi­den­tial.) In addi­tion to report­ing, from 1 April 2023 (and 1 Jan­u­ary 2024 for Com­mon­wealth enti­ties), employ­ers with a min­i­mum of 500 employ­ees will be required to imple­ment a pol­i­cy or strat­e­gy in their work­place designed to achieve objec­tives in respect of all six indicators. 

The New Law will also set out spe­cif­ic report­ing require­ments and time­frames that employ­ers will be required to abide by. Fail­ure to com­ply with the pro­vi­sions of the New Law will result in the Agency hav­ing the author­i­ty to name employ­ers in both min­is­te­r­i­al and pub­lic reports (again with­out releas­ing per­son­al infor­ma­tion relat­ing to any spe­cif­ic indi­vid­ual includ­ing the remu­ner­a­tion that an indi­vid­ual receives). 

The Impe­tus for and Broad­er Aims of the New Law

The pro­posed amend­ments cap­tured by the New law seek to give effect to some of the rec­om­men­da­tions in the Review, particularly:

  • Rec­om­men­da­tion 2: which sug­gest­ed that employ­ers pub­lish their organ­i­sa­tion’s gen­der pay gaps, in order to accel­er­ate action to close the Gap;
  • Rec­om­men­da­tion 3: which assists in bridg­ing the action gap’ through the imple­men­ta­tion of new gen­der equal­i­ty standards;
  • Rec­om­men­da­tion 5: which was to sup­port the imple­men­ta­tion of Respect@Work to pre­vent and address work­place sex-based harass­ment and dis­crim­i­na­tion; and
  • Rec­om­men­da­tion 9: which was to increase the Agen­cy’s chances for suc­cess in sup­port­ing employ­ers to pro­mote and achieve gen­der equal­i­ty in workplaces.

It aims to (among oth­er things): improve pay gap trans­paren­cy, strength­en the focus on gen­der equal­i­ty by renam­ing min­i­mum stan­dards’ to gen­der equal­i­ty stan­dards’, and increase Aus­tralian organ­i­sa­tions’ account­abil­i­ty for gen­der equality. 

Clos­ing Remarks

Under the New law, it is hoped that the gen­der pay gap in Aus­tralia will nar­row. With these changes on the way, employ­ers will now attract increased pub­lic scruti­ny in rela­tion to their gen­der pay gaps. While there is an addi­tion­al admin­is­tra­tive bur­den, it also rep­re­sents an oppor­tu­ni­ty for pro­gres­sive busi­ness­es to demon­strate the steps being tak­en to address the prob­lem of work­place gen­der inequality.