Illuminating pay disparity: Australia embraces global transparency trends – essential steps for businesses in anticipation of the 2024 reforms

Australia is following a global trend to increase transparency of gender pay disparity. From 1 April 2024, certain businesses will need to provide additional data to comply with new reporting obligations on their gender pay gap under the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Act 2023 which commenced earlier this year (Gender Pay Gap Act). Importantly, information specific to individual businesses will also be made publicly accessible.

The Workplace Gender Equality Act 2012 (Cth) (WGE Act) already requires relevant businesses to submit reports on gender equality indicators annually to the Workplace Gender Equality Agency (WGE Agency). The WGE Agency use the information to develop benchmarks, review compliance and report to the Minister.

The purpose of the Gender Pay Gap Act is to improve gender equality and to expedite business action, such as by increasing transparency of remuneration in workplaces and accountability, by adopting 6 out of 10 recommendations (partially or in full) of the WGE Agency’s 2021 Review.

We summarise the upcoming changes here, including which businesses are required to report, provide steps to prepare in the lead up to reporting and options once businesses have been notified about publishable data. Businesses are encouraged to prepare well ahead of the new reporting requirements coming into effect from 1 April 2024.

Australia’s current gender pay gap in perspective

After the UK introduced reporting requirements in 2017 which required organisations, including government departments, to publish data showing their average gender pay gap, businesses required to report narrowed their wage gap by an average of 19% (according to London School of Economics and Political Science). With the gender pay gap in Australia currently at 22.8% (according to the WGE Agency), and Australia ranked 26 globally in the World Economic Forum’s Global Gender Gap Report 2023, changes to business reporting requirements seek to mirror this trend in the UK which is now ranked 15 globally and sitting at around 8.3% gender pay gap amongst full-time employees.

Whilst evening up the pay gap will take consistent and ongoing measures, the UK’s progress provides a promising indication that Australia could shift the current trajectory.

Which businesses are impacted by the Gender Pay Gap Act?

Only organisations and entities which were required to report under the WGE Act will be impacted. For reference, this captures:

• registered higher education institutions that are employers;
• natural persons, bodies or associations that employ more than 100 employees in Australia; and
• Commonwealth companies and entities that employ more than 100 employees in Australia.

Key changes of the Gender Pay Gap Act: expanded reporting obligations

Additional information required in workforce data reports

In addition to previous reporting requirements, under the Gender Pay Gap Act, businesses will also need to provide data on:

• employee year of birth;
• employee primary workplace location;
• payment or non-payment of superannuation during parental leave; and
• CEO (or equivalent) remuneration (note that individual remuneration would not be public but would be aggregated to calculate gender pay gaps and used for other remuneration analysis).

Additional reporting on sex discrimination, sex-based harassment and sexual harassment

Businesses will be required to report on certain data (where previously businesses could elect to voluntarily provide this information):

• company policies and strategies for prevention, including the frequency and content of training, disclosure procedures and statements / communication demonstrating commitment to prevention and response;
• information about the data collected on prevalence and risk management of sexual harassment, harassment on the ground of sex or discrimination; and
• supports available for victims or witnesses.

Businesses will also need to provide their WGE Agency Executive Summary Report and Industry Benchmark Report to their Board or governing body.

Additional requirements for large businesses

Relevant businesses (with over 500 employees) are also obliged to have policies and strategies against 6 sex gender equality indicators, as follows:

1. gender composition of the workforce;
2. gender composition of governing bodies;
3. equal remuneration between women and men;
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/caring responsibilities;
5. consultation with employees on gender equality in the workplace; and
6. sexual harassment, harassment on the ground of sex or discrimination.

Publication of individual business data from early 2024

In addition to the current publication of the gender pay gap data at a national, industry and occupational level, the WGE Agency will commence publishing business specific data to its website to improve transparency.

Having this data publicly accessible may impact business reputation and employers should be prepared to explain why gaps exist and their plan to address differences.

The first publication of private sector data will occur in early 2024, covering 2022-2023 reporting, while the Commonwealth and public sector data will be published in late 2024 or early 2025 and cover 2023 data, with data then published annually.

Businesses’ data will be published by mean, median and employer remuneration quartile (with the first publication in 2024 likely not including mean).

What happens after reporting to the WGE Agency?

Businesses will receive their gender pay gap results prior to data being publicised and will have an opportunity to provide a statement alongside their results, which allows an opportunity to provide context or an action plan.

The WGE Agency maintains a ‘Non-compliant organisations’ list for businesses that fail to comply with these reporting requirements which is publicly reported.

Recommendations for businesses to prepare for new reporting requirements

Employers are encouraged to:

Action now (in the next 1 to 3 months):

• determine whether the additional reporting requirements are applicable to their business, well ahead of April 2024; and
• review and analyse if a gender pay gap exists in their business, and if so, seek to understand and adjust these differences in preparation for reporting in 2024.

Action near term (in the next 3 to 6 months):

• review the effectiveness of their data collection methods, storage (including where and how data is stored and in relation to privacy laws) and reporting methods to consider if adjustments are needed; and
• review current training implementation, policies, communications, strategies and whether the 6 gender equality indicators are adequately covered (especially for businesses with over 500 employees).

This article was co-authored by Rebecca Coen-Gibson.

Read other items in the Australian Employment Brief - July 2023.