New pay gap reporting requirements

New laws aimed at increasing gender pay gap transparency and accelerating workplace gender equality have been legislated – we take a look at what directors need to know.

On 30 March, the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 passed Parliament. The package of reforms implements the Government’s election promise and response to the 2021 review of the Workplace Gender Equality Act 2012 (Review), which found that progress on workplace gender equality in Australia has stalled and that employers are not following up with sufficient action to address their gender pay gaps.

In February 2023, Australia’s national gender pay gap (expressed as a percentage or a dollar figure, it shows the difference between the average earnings of women and men) dropped to 13.3 per cent. Although trending in the right direction, the Workplace Gender Equality Agency (WGEA) cautioned that Australia’s gender pay gap was sitting at 13.4 per cent three years ago, suggesting progress has been slow. The February statistic also only reflects base salary for full-time workers, and does take into account the wages of part-time or casual workers – many of whom are lower paid and also women.

Directors should be aware of key changes introduced under the legislation that will increase workforce data reporting requirements for organisations and make employer gender pay gap information publicly available.

What are the key changes for employers?

Currently, organisations with more than 100 employees are required to report their gender pay gap annually to WGEA. The key change introduced by this legislation will enable WGEA to publish the gender pay gaps of all private sector employers with 100 or more employees from early 2024 (and Commonwealth public sector employers from 2025). Organisations’ data will be published on the WGEA website and employers will be given an opportunity to provide a statement that gives context to their gender pay gap results or outlines theirs plans for actions.

The first disclosure of employer gender pay gap information in early 2024 will not include CEO remuneration, which can have a significant impact on the mean gender pay gap calculation. However, from early 2025 WGEA will publish employers’ mean, median and quartile employee gender pay gaps.

Importantly, individual employee and CEO remuneration will not be published by WGEA and will remain confidential.

Mandatory sharing of reports to governing body

WGEA currently provides confidential reports to each employer’s CEO on their gender pay gap result at the end of the reporting period. Changes under the legislation will require CEOs of employers to provide their WGEA Executive Summary and Industry Benchmark reports to their board or governing body from late 2023.

This measure implements the Review’s call for strengthened accountability of employers to take action to improve gender equality in their workplaces.

Collection of more detailed information to fill knowledge gaps

From 2024, employers will be required to report additional workforce data including:

• employee age (year of birth);
• primary workplace location; and
• CEO remuneration

Reporting on sex-based harassment, harassment on the grounds of sex or discrimination

The legislation also expands reporting requirements on prevention and response to sexual harassment, harassment on the grounds of sex or discrimination in the workplace. These changes support recent reforms recommended by the Australian Human Rights Commission’s Respect@Work Report, including the new positive duty on employers to prevent workplace sexual harassment (see AICD article here for further detail).

Employers who do not currently collect this data have time to prepare with new reporting questions in 2023 to be asked on a voluntary basis. Reporting the following information to WGEA will be mandatory from 2024:

• policies and/or strategies for preventing and responding to workplace sexual harassment
• information about:
  • organisational training initiatives and leadership communications
  • sexual harassment risk management
  • supports available for staff

Gender Equality Indicator policies for large organisations

From 2024, large organisations with 500 or more employees will be required to have policies or strategies that cover all six Gender Equality Indicators (GEIs) – including: Gender composition of the workforce and governing bodies; equal remuneration between women and men; employment terms and practices relating to flexible working arrangements and supports for employees’ family or caring responsibilities; consultation with employees on workplace gender equality issues; and sex-based harassment and discrimination.

Non-compliance

Organisations which fail to comply with these reporting requirements risk being named publicly on WGEA’s ‘Non-compliant organisations’ list, which lists employers who have not met their obligations or have not met WGEA’s minimum standards to show commitment to gender equality.

Next steps

Before these measures take effect in early 2024, directors should understand these changes and that their organisation has appropriate systems and processes in order to drive towards pay parity.  Organisations should be prepared to explain to staff, and potentially broader stakeholders, as to why gaps exist and their plan to address them.

This might include looking at unique workplace features or settings that exacerbate any current gap and taking steps to address these through more inclusive initiatives (e.g. increasing the share of women in leadership roles, increasing availability of flexible work practices and equal paid parental leave policies for men and women).