'You're going to see this perhaps being something that helps or doesn't help with attracting good people,' lawyer says
From February 27 2024, the Workplace Gender Equality Agency (WGEA) will publish the gender pay gap of businesses with more than 100 employees.
It comes after parliament passed legislation to publish gender pay gap information.
“For the first time, we will see at an individual level what's happening in individual businesses across Australia," Women minister Katy Gallagher said.
She added that it will be a good indication of how long it will take to close the gender pay gap.
"I think everyone's in agreement that 25 years is too long, and we want to see it significantly reduced," she said.
So what will the new law mean for employers?
A positive step for gender equality
Currently, employers with 100 or more employees must report their policies around gender equality, including pay equity, to WGEA annually. Once all the information is collected, WGEA then sends an executive summary and industry benchmarking information to employers.
But with the new law change, that information will be publicly available.
In addition, other changes will be taking effect under the new law. As of November 2023, employers will have to share the executive summary and industry benchmark report with their board members.
And from April 1 2024, other changes will take place, including:
Amanda Junkeer, partner in the workplace advisory team at Gadens law firm, explained how the new law could have a positive impact, referencing how the UK has a similar practice of publishing gender pay gap data.
“The indications are that – through the UK and international experience – publishing those pay gaps could lead employers to increase their focus and the priority on narrowing the gap essentially,” she told HRD Australia. “So it is a way of increased transparency and providing more oversight in terms of what is actually happening.”
Publishing the data will also mean employers in various sectors and industries will be able to compare themselves, Junkeer added.
“Having that competitive angle in terms of looking at gender pay gaps could improve outcomes in terms of reducing the pay gap,” she said. “So if this step helps to contribute to reducing the pay gap, then that will be a good thing for gender equality in the workforce. I think we still have some way to go and this is another step along the way to improving it.”
What gender pay changes will mean for employers
Junkeer explained how the new law will affect recruitment, both immediately and in the long term.
“In the immediate sense, employers who are striving and committed to gender equality would most likely have in place already policies and processes to minimise the risk of any gender disparity in terms of its recruitment and selection decisions,” she said.
But in the long term, it could impact the attraction of new candidates. Junkeer explained how employees are likely to look at various factors that will attract them to a particular employer.
“How an employer approaches gender equality and pay equality in particular is very significant for many people because it could be an indicator of what their experience will be in the workforce,” she said. “And whether there's promotion and whether there are opportunities for development and duration in an organisation.”
And with the information on pay gaps becoming publicly available, competitors will be able to access the information as well, Junkeer added.
“Competitors will look at it to create a point of difference as well,” she said. “You're going to see this perhaps being something that helps or doesn't help with attracting good people.”
Recruitment and retention
Beyond attraction, the new law could also impact the internal recruitment process, with Junkeer saying that employers would need to look at how they shortlist and select candidates.
“Do you have the right systems and processes and understanding of how your selection and shortlisting processes perhaps favour gender or somehow creates further disparity?” she said.
Another long-term impact this could have is on retention, Junkeer added.
“The risk to retention leads to turnover and more turnover means more recruitment,” she said. “So sometimes employers end up in this turnover cycle where they're losing… especially if they're losing more women, for example, than men. Is that an indicator of some kind of disparity? Is something going on in the organisation?”
What HR should do to prepare
The publication of the gender pay gap data in February is of information WGEA already has, Junkeer said. So employers don’t have anything more to do as they would have already submitted that information.
But what employers and HR teams will need to prepare for are the other reporting obligations that will be required, Junkeer added.
“Sometimes it takes a little bit of time to gather,” she said. “Yes, the reporting starts after the first of April but sometimes it can take weeks, if not months, to gather that data especially in a larger corporate where policies might sit in different places.
“There are some steps that employers and HR teams and those employers can start taking to start preparing for the additional reporting obligations.”
In addition, WGEA will give employers the opportunity to provide a statement to accompany the results of their gender pay gap data. It’s something an employer can also prepare for.
“This is something an employee can choose to do to explain its gender pay gap,” Junkeer said. “Some employers would want to explain it because that raw number doesn't tell the full story. It doesn't tell the story about commitment to improving a pay gap or maybe the journey that the employer has already been on to improve that pay gap and that it might be coming down for example.”
