Christine Parker, Westpac’s Group Executive Human Resources
Westpac has moved to shield its reputation as a supporter of pay equity in the banking industry after announcing it will remove so-called “pay secrecy” clauses in staff contracts.
The bank’s decision comes as the Finance Sector Union steps up pressure on CBA and other banks to dump the controversial clauses that prevent employees from discussing their pay rates with each other.
Pay secrecy clauses have been roundly condemned by economists who mostly see them as a way of blindsiding employees about the value of skills in labour markets.
The secrecy conditions deployed by the major banks have led to creation of information asymmetries in the industry where employees with in-demand skills can be paid less than less qualified colleagues because staff are prevented from conducting first-hand research on pay rates in their workplaces.
RBA Governor Philip Lowe has described the practice as “alien”.
“From my individual perspective, people should be free to talk about their remuneration with their colleagues,” Lowe told a parliamentary committee last August.
“It's so alien to me to say that you can't talk about the employment relationship with your peers.”
The governor addressed the issue last year after he was notified by politicians that the Reserve Bank had also inserted pay secrecy conditions in its work contracts.
Since then the RBA has removed the clauses for new staff entering work contracts with the bank and promised not to enforce pay secrecy requirements contained in contracts that were negotiated before August.
An RBA spokesperson told Banking Day that removing the clause in existing contracts would have been time-consuming.
“This particular clause has been removed from contracts issued to new employees,” the spokesperson said.
“We considered reissuing new contracts to all existing employees, but the benefits of doing this did not justify the significant amount of work it would entail.”
Westpac said yesterday it had removed pay confidentiality clauses from contracts for staff who had joined the bank since December, but that the requirement would also be binned for all other employees from the start of April.
The bank’s decision appears to have been prompted by a wide body of academic research indicating that pay secrecy as a human resource strategy is a contributor to the gender pay gap.
Christine Parker, Westpac’s Group Executive Human Resources, said the bank had been overhauling practices in recent years to improve equality for women in the workplace, and the removal of pay confidentiality obligations was another step in reducing the risk of bias.
“More broadly, the past two years has seen increased visibility and awareness of important issues including gender equality, women’s economic security and women’s safety,” Parker said.
“There is more to do, but we’re encouraged by the current conversations and willingness to engage.”
The FSU, which has fought against pay secrecy conditions for almost a decade, welcomed Westpac’s decision but cautioned that the bank had recently used the secrecy clause to discipline staff.
“As recently as last week FSU members who raised issues about pay parity were told by Westpac management that they were not permitted to discuss salaries publicly,” said FSU national secretary, Julia Angrisano.
“The FSU hopes that Westpac will take the next step and introduce a disputes procedure that provides their workforce with a mechanism to challenge inequities in pay when they are uncovered.”
Angrisano said the full-time gender pay gap in the finance industry was 26.9 per cent and much of it was driven by a lack of transparency.
“Workers pay an enormous price for pay secrecy and it is long past time for the CBA to end this practice,” Angrisano said.
“If Westpac can do it, so can the Commonwealth Bank of Australia.”