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Far-reaching new legislation now bans ”gagging clauses” in work contracts about pay so employees can discuss their salary with colleagues.  Workingmums.co.uk carried out a survey to find out how working parents would feel about knowing what everybody else earns in the same workplace.

Far-reaching new legislation now bans ”gagging clauses” in work contracts about pay so employees can discuss their salary with colleagues.  Workingmums.co.uk carried out a survey to find out how working parents would feel about knowing what everybody else earns in the same workplace.

Why was the legislation introduced?
The new Equality Act which came into force earlier this month has rules which will allow employees to be able to break ”gagging clauses” to discuss pay with colleagues, providing this is done to establish if they are being discriminated against.  The idea behind the legislation is to promote transparency and equality in the workplace.  It’s particularly aimed at making it easier for women to find out if they are being paid less than men.  A recent report by the Equality and Human Rights Commission found the gender pay gap between men and women was 16.4% in 2009.

Repercussions?
The new rules, however, could lead to massive repercussions in the workforce if employees found out for certain that colleagues at the same level were paid more.  A poll carried out by PricewaterhouseCooper found almost half (49%) of workers would demand a pay rise or seek a new job if they knew colleagues earned more.
Michael Rendell, head of HR consulting at PwC, said: ”Although the provisions in the Equality Act banning gagging clauses were watered down considerably in the final drafting of the legislation, the new rules are part of the growing culture and regulatory drive for greater disclosure around pay.  A further step in this direction will be the requirement also contained in the Equality Act for private sector employers with more than 250 employees to report their gender pay gap.  This obligation is due to come into force in 2013, although it is possible it may happen sooner.
”Given this environment, it is all the more important employers can justify or remove any potential disparities in salaries among people at similar levels.  Our poll of workers shows the importance individuals attach to the perceived ‘fairness’ of pay and the risk of losing good employees if these differences are not addressed.  The Equality Act demonstrates how seriously the Government is taking this lesson.”

Our survey
A survey carried out by Workingmums.co.uk which asked ‘Do you know what your colleagues earn?’ revealed only 16% of people know what their colleagues are paid – they said they liked to be open with each other because they feel it’s the best way of protecting their own interests.   
More than a quarter (26%) told our poll they were willing to stump up with the details of what was in their monthly pay packet, but their openness had been rejected by colleagues who were unwilling to tell others how much they earned.
But the majority (53%) preferred secrecy about wage levels in their workforce – they said they didn’t know what their fellow workers were paid, but they didn’t want to know because they felt it was a private matter between employer and employee.

Short-term effects
Rendell warns the short-term effects of the Equality Act could prove troublesome in discrimination disputes.
”In consolidating the plethora of laws around discrimination that have developed over the last 40 years, the Equality Act should in theory make it easier for employers to improve equality in the workplace,” he said.  ”However, in the short-term there is likely to be confusion and concern as employers get to grips with new provisions, particularly given some elements of the Act are not coming into effect immediately.  There is a risk discrimination disputes could become even more complex and protracted until these issues are ironed out.”

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