Employers may be forced to reveal starting salaries in job adverts

The Government should consider making it compulsory for employers to publish starting salaries when advertising jobs, Parliament’s Education and Workforce select committee has recommended.

It said that requiring the publication of salaries in job adverts would help address an “information imbalance” between employers and potential employees.

The committee has also recommended the Government should consider placing restrictions on employers’ ability to demand “pay secrecy” in employment contracts through clauses that prevent employees from sharing details of their pay.

Both measures were called for by the Council of Trade Unions in a submission to the committee in October.

READ MORE:
* We made a law to stop sexism impacting pay – but we forgot about racism
* Here’s why we should talk about what we’re being paid
* Revealing pay rates will help close NZ’s pay gap, says commissioner

The council also went further by arguing workers should have the legal right to request information from their employer about what people in roles similar to their own were being paid.

The select committee has been conducting an investigation into “pay transparency” with the main goal of reducing unexplained pay gaps between men and women, different ethnic groups, and for the disabled.

It voiced support for a mandatory and “comprehensive pay transparency regime” that required action by employers above a certain size to address inequities, and that went beyond simply encouraging businesses to report on pay gaps.

“Research indicates that voluntary compliance models are less effective than those where reporting and implementation are strictly enforced,” it said.

“The most effective models appear to be those that require companies to prepare action plans with clear, time-bound and measurable goals for narrowing the gender pay gap.”

The committee noted that in Sweden all private-sector employers with more than 10 staff are required to have comprehensive plans in place to combat pay gaps, but said “the most useful data is captured from entities with more than 50 employees”.

BusinessNZ had made a submission to the inquiry, but chief executive Kirk Hope said he had not known the idea of requiring starting pay to be advertised was on the table.

“It would be important to know what the rationale behind it was,” he said.

Hope questioned what such a policy would mean in practice, assuming firms would be allowed to advertise a likely salary band rather than a single starting salary.

“You could advertise a salary range. But you’re never going to know what the salary is at the end of that process because of the process of negotiation.”

Hope also expressed reservations about the committee’s backing for a mandatory pay transparency regime to ensure pay gaps were reported and addressed.

“We support voluntary reporting,” he said.

Despite the committee’s conclusion that compulsory regimes had achieved better results, Hope said BusinessNZ believed it was too early to tell whether they had made “a meaningful difference” in Australia and the UK.

Hope said everyone supported the goal of better pay transparency but BusinessNZ did not want it to become a “box ticking exercise”.

The National Party members of the Education and Workforce select committee put out a dissenting report backing the voluntary “Mindthegap.nz” pay-reporting regime supported by BusinessNZ.

“National Party members do not support, however, a mandatory and broad pay transparency regime at this time,” they said.

The National MPs said they did not think this was the time to be adding additional mandatory requirements on businesses, given many medium-sized firms were struggling due to the business environment and Covid.

“There is research that pay transparency mandates are likely to make employers reluctant to grant individual salary increases, lest they force a pay increase for everyone across the board,” they said.