Legal reforms aim to close the gender pay gap in Australia

On 30 March 2023, Federal Parliament passed the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 (Bill) in an effort to boost transparency and facilitate action towards closing the gender pay gap in Australia.

As part of the legislative reforms, the Workplace Gender Equality Agency (WGEA) will soon publish the gender pay gap information of employers with 100 or more employees. WGEA will publish the first set of private sector employer gender pay gaps in early 2024 and Commonwealth public sector gender pay gaps from late 2024/ early 2025.

What is the gender pay gap?

The gender pay gap is the difference between the average earnings of women and men. It is a measure of gender equality and indicates the overall financial position of women in the paid workforce in comparison to men.

WGEA has reported that the gender pay gap between men and women in Australia was 13.3% as at February 2023 (referencing data from the Australian Bureau of Statistics).¹ WGEA also reported that men earned on average $26,596 more than women in the 2021-2022 financial year.²

What is the current position?

Under the Workplace Gender Equality Act 2012 (Cth) (WGE Act), employers with 100 or more employees in Australia are required to prepare and lodge an annual public report to WGEA. The report must address the following gender equality indicators.

1. Equal remuneration between women and men (noting that there is currently no requirement for gender pay gap information to be published).

2. Gender composition of the workforce.

3. Gender composition of governing bodies of relevant employers.

4. Availability and utility of employment terms, conditions and practices relating to flexible working arrangements for employees and to working arrangements supporting employees with family or caring responsibilities.

5. Consultation with employees on issues concerning gender equality in the workplace.

What are the legislative reforms?

The overarching purpose of the Bill is to promote and improve economic equality for women in the workplace. The Bill amends the WGE Act to include the following key changes.

• Employers with workforces of over 100 employees will be required to have their gender pay gap information publicly reported on the WGEA website.
• From April 2024, the gender equality indicators (referred to above) will be amended to include matters relating to sexual harassment, harassment on the ground of sex or discrimination.
• From April 2024, employers will be required to provide additional workforce data to WGEA on employee age, primary workplace location, and CEO remuneration.

How will the gender pay gap be calculated and what will be published?

WGEA will calculate both the base salary and full-time equivalent annual remuneration (including bonuses, superannuation and other additional payments) gender pay gaps using the reported information from the employer. This will also require converting part-time and casual salaries to full-time equivalent earnings.

WGEA will express an organisation's mean and median gender pay gap both as a percentage and the average dollar difference between men's and women's earnings at the organisation.

WGEA will also publish employer gender pay gaps and workforce composition data by remuneration quartiles. That is, the data will show the proportion of men and women in the highest paid, second-highest paid, second-lowest paid and lowest paid quartiles and the average dollar difference in earnings between men and women in each quartile.

How can employers prepare for the upcoming changes?

Employers with workforces of over 100 employees can prepare for the upcoming changes by:

• assessing whether their organisation has adequate systems in place to accurately report the data and information required by WGEA
• ensuring their organisation understands the proposed reporting requirements to avoid the risk of being publicly named on the WGEA list of non-compliant employers
• taking meaningful action to minimise gender pay gaps within their organisation
• championing equity, diversity, and inclusion within their workplace. This should flow down into hiring practices and promotions.

How do these legislative reforms compare to other jurisdictions?

Australia will not be the first jurisdiction to require companies to report and publish their gender pay gap data.

United Kingdom

In the United Kingdom, any employer with 250 or more employees must annually report their gender pay gap data.³ Public and private sector employers are required to publish:

• mean and median hourly gender pay gaps
• mean and median bonus payment pay gaps
• the proportion of female and male employees receiving a bonus payment
• the proportion of female and male employees in four quartile pay bands, e.g. the proportion of women in the top 25% of income earned.

Iceland

Iceland introduced an Equal Pay Standard, which requires companies with 25 or more employees to annually prove they are paying women and men equally for a job of equal value. If companies can demonstrate they pay men and women equally for the same position, they receive equal pay certification.⁴

Image sourced via Unsplash

¹ WGEA media release: "National gender pay gap of 13.3% just a fraction of the real cost on women". 23 February 2023

² WGEA Scorecard 2022: The state of gender equality in Australia

³ Gov.uk | Gender pay gap reporting: guidance for employers.

⁴ Government of Iceland | Equal pay certification