New federal Labor government gender pay equity impact on company remuneration, ESG performance measures and disclosures
10/06/2022
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The new Australian federal Labor government has promised action on closing the gender pay gap in their Australian Women, Labor’s Plan for a Better Future (see HERE).

The Labor government has promised to:

  • Require ‘large’ companies to report their gender pay gaps. These will be published online. Companies which fail to comply will be ineligible to tender for government contracts. GA comment: These provide a ready source of data for ESG investors. Depending on the extent of the gap, this may compel companies to directly address the issue head-on in their sustainability reports with an action plan for change. If a major issue, it may require companies to consider tying monetary measures to “closing the gap” performance. More realistically, some companies may want to re-focus the narrative on “pay equity”, which is fundamentally different to narrowing pay gaps.
  • Prohibit pay secrecy clauses. Many companies anticipated this and put in place policies prior to the election.
  • Legislate a fair definition of casual employment and limit the number of fixed term contracts.
  • Introduce “Same Job Same Pay” laws to ensure enterprise agreements are not undercut by outsourcing. GA comment: It will be interesting to see how this will be enforced. If not done well the Fair Work Commission, employer federations and unions will be engulfed by layers of bureaucracy and highly technical assessment of “same job”. Many Canadian provinces went that way in the 1980s for gender equity purposes and are still groaning under the weight.
  • Make gender pay equity an object of the Fair Work Act and strengthen the ability of the Fair Work Commission to order pay rises for underpaid women workers. GA comment: See above.
  • Put in place a statutory Equal Remuneration Principle. GA comment: See above.
  • Continue working with ASX companies to boost the representation of women on private boards and as Chief Executive Officer. GA comment: The pool of talented women for potential director positions is much larger than most companies’ search firms will have them believe. Get them working harder for their fees.
  • Maintain a target of 50% representation of women on Australian Government Boards.

We note that while they do not define the gender pay gap, the Labor party does refer directly to the Workplace Gender Equality Agency (WGEA) reported gender pay gap of 13.8%. The WGEA defines the gender pay gap as “the difference between the average earnings of women and men in the workforce, expressed as a percentage of men’s earnings.” This approach does not directly compare pay for men and women occupying the same positions or address equal pay, which by law, requires men and women be paid the same amount for the same work. You can find a review of the WGEA’s 8th edition of the gender equality scorecard release HERE.

You can read the new government’s plan to support Australian women HERE.

© Guerdon Associates 2022
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