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.
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:
- age of employees;
- location of primary workplace;
- superannuation data;
- CEO remuneration; and
- 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:
- gender composition of the workforce;
- gender composition of governing bodies of relevant employers;
- equal remuneration between women and men;
- availability and utility of employment terms, conditions and practices relating to:
- flexible working arrangements for employees; and
- working arrangements supporting employees with family or caring responsibilities.
- consultation with employees on issues concerning gender equality in the workplace; and
- 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.
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.