Show Me the Money: Introducing Pay Transparency into New Zealand Legislation

By Georgia Osmond

The Equal Pay Act 1972 prohibits employers from refusing to offer or afford employees the same terms of employment, conditions of employment, opportunities for training or promotion and fringe benefits based on gender. However, there is nothing in legislation that requires businesses to be transparent in how much they pay their employees. This is detrimental to all employees, for without access to pay scales and comparisons with other employees, they will be less likely to bring a claim under the Act. However, it is widely known and accepted that women are, on average, paid less than their male counterparts. Women already have difficulties in negotiating new pay, and even if they do enter negotiations, they are still less likely to be successful. No access to pay information is another obstacle to women receiving similar (if not the same) pay as men. The introduction of pay transparency would clarify how much employees in the same or similar occupation are earning and begin the process of further decreasing the pay gap. The introduction of pay transparency through the amendments to the Equal Pay Act would force businesses to be upfront in how much they pay their employees.  

The Right to Equal Pay

 Receiving equal pay has been recognised as a fundamental human right and has been affirmed in International Labour Organisation treaties, the Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW), and the International Covenant on Economic, Social, and Cultural Rights. New Zealand, by agreeing to these international instruments, has opened itself up to obligations that it must fulfil, but this has not been the case. In the past five reviews of the CEDAW Committee on New Zealand, the Committee has been critical of New Zealand’s adherence to the equal pay principle scheme. In its most recent review in 2018, the Committee recommended that New Zealand adopt and enforce the pay equity principle. This could be done through revising employment relations legislation, including both the public and private sectors, holding regular pay surveys and reviewing wages in women-dominated sectors. These reviews are held once every five years — which means that, since 1998, the CEDAW Committee has been recommending that New Zealand better adhere to equal pay principles with no success. 

 Pay Inequality in New Zealand and the Call for Transparency

The failure to recognise and ensure equal pay for women at an earlier stage has resulted in greater inequality now. The most recent data available on pay rates across New Zealand from the Human Rights Commission comes from their interactive dataset, Tracking Equality at Work, and was released on June 27th 2018. Several important conclusions arose from this. First, the group deemed to be least marginalised were European males aged between 45-64 with a median hourly pay rate of $31.64. This is significantly larger than the most marginalised group, Māori women aged between 15-24, who earn a median hourly pay rate of $16.75. Considering the data overall, European men and women earn higher than Māori, Pacific, Asian and MELAA (Middle Eastern, Latin American, African, and other ethnicities) employees, but between European men and women, there was still a pay rate difference of $3.20 per hour. The largest difference between median hourly pay rates was between European men and Pacific women at $7.28. This raises the important issue that it is not just the gender pay gap but also the ethnic pay gap that must be decreased. 

According to Statistics New Zealand, the gender pay gap between men and women at August 21st 2019 was at 9.3%, which has remained unchanged since 2017. This has led to the Human Rights Commission and its 10 coalition partners placing pressure on the government to introduce pay transparency into legislation and begin to close the gender pay gap. Their campaign, Demand Pay Transparency, is focused on introducing pay transparency into legislation and introducing an independent agency to monitor reporting from businesses. Their petition on their website currently has 1,854 out of 2000 signatures needed.

This renewed call for pay transparency has come as a result of the current amendment process of the Equal Pay Act. The Amendment Bill introduces new sections relating to pay equity claims. This includes setting out who may and may not bring a claim, the process around introducing and proceeding with a claim, bargaining, how claims are to be assessed, and settling claims.

During the submission period, the Human Rights Commission made recommendations relating to the inclusion of pay transparency. Their first recommendation discussed section 13K of the Bill. In this new section, parties to a pay equity claim have a duty, when requested, to provide information to the other party that may support or substantiate their claim. The Commission argued that this provision was too narrow as parties should be entitled to pay-related information whenever they want it, not just when they are planning to start a claim. This is because, in knowing whether or not they should bring a claim, employees need to know if there is any disparity to begin with. The Commission recommended that a pay transparency provision should be included in the Equal Pay Act to allow employees to access information relating to comparable pay rates at any time. Their second recommendation suggested that an independent body should be established with the purpose of receiving transparency reports and providing information and resources to employees.  

This type of legislation is not new compared to other countries, New Zealand is well behind on introducing pay transparency into legislation. In Australia, the Workplace Gender Equality Act 2012 requires non-public sector businesses with over 100 employees to submit an annual report on their gender pay gap. The Workplace Gender Equality Agency was also established, which ensures compliance with the reporting obligations of each company. If a company does not meet their obligations, they can face consequences such as ineligibility to tender Commonwealth contracts or ineligibility to receive Commonwealth grants and other financial assistance. Since the introduction of the Act and the Agency, the gender pay gap in Australia has decreased by 4%. Germany’s Act on the Transparency of Pay 2017 provides employees in a business with over 200 employees the right to know how much their colleagues are being paid. This right extends to information on two different types of wage components, namely bonuses and base salary, pay that employees of the opposite gender in a similar position earn on a monthly basis, and the criteria for determining how an employee is paid for their work. The United Kingdom, Iceland, and several Canadian states have also introduced their own pay transparency legislation.

 Equal Employment Opportunities Commissioner Saunomaali’i Karanina Sumeo has emphasised the importance of pay transparency in expressing unconscious biases in the workforce, especially related to gender and ethnicity. The way to begin dismantling these biases is through including pay transparency in legislation. This is no longer something that New Zealand should do but needs to be done if we are to uphold our international obligations and truly become an equal society.

Image sourced from Pixabay

 The views expressed in the posts and comments of this blog do not necessarily reflect those of the Equal Justice Project. They should be understood as the personal opinions of the author. No information on this blog will be understood as official. The Equal Justice Project makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The Equal Justice Project will not be liable for any errors or omissions in this information nor for the availability of this information.