On 12 April 2023, changes to the Gender Equality Act 2012 (Cth) (Act) took effect to accelerate employer led action in closing the gender pay gap, which is currently reported at 13.3% in Australia. The reforms:
- introduce a positive obligation on organisations to disclose their gender pay gap; and
- allow the Workplace Gender Equality Agency (WGEA) to name and shame organisations that do not meet industry gender equality benchmarks. WGEA will make the gender pay gap information publicly available its website.
Until now, the WGEA has collected gender pay gap information from certain employers, but has not had the legislative authority to publish their findings. Instead, the WGEA provided a confidential report to employers, which employers were not obliged to action. This reduced the WGEA’s ability to effect substantive change.
In this insight, we examine what the reform is, its implications for private and public sector organisations, and what sparked the changes.
Who do these gender pay gap reforms apply to?
The reforms apply to public and private sector organisations with 100 employees or more, including full-time, part-time, casual, and temporary or fixed-term employees, but excluding independent contractors and employees hired through labour hire companies. These employers are referred to as “Relevant Employers” in the Act.
What are the reforms and when do Relevant Employers need to comply?
The reforms will be implemented by the WGEA progressively, to the private sector then public sector. Exact dates have not been confirmed by the WGEA, but they have provided an indicative timeline as follows:
Mandatory sharing of reports to governing body
Currently, private organisations with over 100 employees must report their gender pay gap annually to the WGEA. At the end of each annual reporting period, the WGEA provides these organisations with an Executive Summary Report outlining their gender pay gap, including an Industry Benchmark Report comparing their performance with similar organisations.
From late 2023, these organisations must provide WGEA Executive Summary Reports to their Board.
The WGEA publication of private sector gender pay gaps
From early 2024, Relevant Employers in the private sector must prepare a gender pay gap report, and submit it to the WGEA within 2 months of the annual reporting period end date. Initially, the WGEA will publish gender pay gaps by median and remuneration quartiles. In future, the WGEA will also publish gender pay gaps by mean.
The Act empowers the WGEA to review a Relevant Employer’s compliance, request further information and issue directions accordingly. If an employer fails to comply with a direction, the WGEA may name the employer in its reports to the Minister or its publicly published reports, and highlight their non-compliance.
For more information on how to register and lodge reports, visit the WGEA’s website here.
Collection of more detailed information to fill knowledge gaps
From April 2024, information that was previously reported voluntarily will become mandatory reporting, to allow the WGEA to collect more detailed information. This includes questions on CEO remuneration, sexual harassment, and discrimination experienced within an organisation.
This will increase transparency, close gaps in the WGEA’s data, and strengthen the WGEA’s understanding of gender equality in workplaces across Australia.
Reporting on sex-based harassment, harassment on the ground of sex, and discrimination
Mandatory reporting requirements will be introduced on the prevention of and response to sexual harassment, harassment on the ground of sex, and discrimination in the workplace.
From April 2024, Relevant Employers must report:
- their policies and strategies for:
- preventing and responding to sex-based harassment, harassment on the ground of sex, and discrimination;
- the provision of training in relation to harassment, its frequency, and its content;
- the disclosures process, and management of disclosures of harassment incidents;
- leadership statements or communication to demonstrate commitment to prevention of, and response to, harassment;
- information on sexual harassment risk management;
- information on the prevalence data collected; and
- supports available to staff.
This obligation is designed to encourage Relevant Employers to enact policies that effectively prevent and manage sex-based harassment, harassment on the ground of sex, and discrimination in their workplace.
Gender Equality Indicator Policies
From April 2024, Relevant Employers must implement or reinforce policies or strategies for each of the six Gender Equality Indicators (GEIs) established by the WGEA.
Gender Equality Indicators
The GEIs provide insights into how businesses can improve their gender equality. These indicators are set out in the Act, and represent key areas of gender inequality. They include:
- gender composition of the workforce;
- gender composition of governing bodies of relevant employers;
- equal remuneration between genders;
- 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;
- consultation with employees on issues concerning gender equality in the workplace; and
- sexual harassment, harassment on the grounds of sex or discrimination.
Information on these indicators must be included in Relevant Employers’ annual reports to the WGEA.
Late 2024 to 2025
The WGEA will publish Commonwealth public sector employers gender pay gaps
From late 2024 to 2025, reporting requirements for private organisations will be extended to also apply Commonwealth public sector employers.
What sparked the reform?
The gender pay gap in Australia is currently 13.3%. According to ABS data on today’s average weekly earnings, women earn 87 cents for every $1 earned by a man. The gender pay gap has been improving at a very slow rate, and was stagnant from 2022 to 2023. According to the 2022 Global Gender Gap Report, Australia only ranks 43rd in the world for gender equality, despite being perceived as a country that prides itself on equality.
In 2022, the WGEA Gender Equality Scorecard reported that, while 54% of employers conducted a gender pay gap analysis, 40% failed to take action to rectify the inequalities revealed. This is speculated to be due to a lack of legislative pressure to do so, and lack of proactively set targets. This highlights why the reforms have sought to put the onus on businesses to be more proactive in setting and achieving gender equality targets.
Interestingly, the UK recently implemented legislation similar to the Act, and has found that publishing reports on gender equality has motivated employers to prioritise gender equality and contributed significantly to a drop in the gender pay gap. UK employers are investigating the causes of their gender pay gaps, and boards are becoming more engaged and holding their organisations accountable for their gender equality standards. In 2017, prior to the UK’s introduction of the legislation, its gender pay gap was 18.4%. As of 2022, it is 14.9%, a significant reduction which evidences the need for reforms.
The publication of gender pay gap data is a legislative step towards remuneration transparency in Australia. The Act follows the Federal Government’s introduction of legislation in October 2022 to promote pay transparency by outlawing pay secrecy clauses in employment contracts.
Organisations should be aware of the ramifications the reforms may have on their performance, given their gender pay data will be publicly available. The reforms will hold organisations accountable to the public.
What does this all mean for employers?
Australian employers must become more responsive to gender inequality. As a matter of best practice, organisations should establish gender equality targets and implement or revise their policies and strategies, to combat inequality present in their business, large or small.
Organisations that already report to the WGEA should review their most recent WGEA Executive Summary Report and Industry Benchmark Report, and determine what actions they must take to comply with the new reporting requirements.
Sainty Law is available to assist you to review your existing business practices, and establish policies and strategies to enable you to improve gender equality in your workplace, and readily meet your reporting obligations under the Act.
Please get in touch with us to understand how your obligations my change in light of the reforms to the Gender Equality Act 2012.