The Workplace Gender Equality Amendment (Closing the Gender pay Gap) Bill was passed by Parliament and has amended the Workplace gender Equality Act 2012 and received Royal Assent on 11 April 2023.

The Bill is part of the government’s effort to address persistent gender pay gaps.

The reforms apply to organisations that are already required to annually report their gender pay gap to the Workplace Gender Equality Agency (WGEA). These are companies with more than 100 employees.

The reforms will gradually take effect with full application by early 2025 and are as follows:

• The current ‘minimum standards’ in the Act are amended to be renamed as ‘gender equality standards’.
• Employers must provide additional information on employees including age, primary workplace location, CEO, and manager remuneration.
• Employers must share their WGEA Executive Summary Report and Industry Benchmark with their governance body, that is, their board. Failing to do so will be taken as non-compliance with the Act.
• Reporting will be mandatory for sexual harassment, harassment on the grounds of sex, or discrimination.
• WGEA will publish Commonwealth public sector gender pay gaps.
• Employers with more than 500 staff must have a policy or strategy for each six gender equality indicators.

The gender equality indicators are:

1. Gender composition of the workforce
2. Gender composition of the governing bodies
3. Equality of remuneration between genders
4. Leave and flexibility arrangements supporting employees with families or caring responsibilities
5. Consultation with employees on issues concerning gender equality in the workplace
6. Sex-based harassment and discrimination

The increased level of public reporting is intended to increase awareness of the gender pay gap problem and lead to greater gender equality. WGEA will be publishing aggregate information, for each relevant employer for each reporting period, for the purpose of showing the employer’s performance and progress in achieving gender equality in relation to remuneration for the employer’s workforce.

For the past decade WGEA has reported its summary statistics in the form of averages. While averages are widely used and accepted, they can be problematic and non-representative in areas of endemic inequality. Consider, for example, a company with 51 employees, with 1 male founder getting paid $1, 25 female employees all getting paid $100,000, and 25 male employees all getting paid $104,000. When the averages are calculated, the inclusion of the founder reduces the average male pay to $100,000.038 and the average female pay of $100,000 – indicating no gender pay gap.

However, it is factually evident that the male employees are systematically paid 4% more than the female employees. An alternative measurement, such as a median, would eliminate the effect of outliers and skewed income data, and provide a better representation of the pay of each – the median of the male sample would be $104,000 and the median of the female sample would be $100,000. That better reflects the facts.

So, if employers are genuinely looking to improve their gender pay gap, they would do well to not simply rely on their reporting to the WGEA.

From a company and governance perspective, boards may consider adopting elimination of the gender pay gap as a part of their ESG measures for incentives.

Other ways to close the gender pay gap could be considered by government and policy makers. For example, Canada’s gender pay gap legislation in 2018 mandated that employers which met certain criteria establish pay equity plans. Under these plans, remuneration of any predominantly female job classes that are receiving less pay than their male counterparts must be increased to the same level.

See HERE for the amending Bill and Explanatory Memorandum.

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