Pay Secrecy: Can You Tell Employees To Keep Their Salary Secret? (2025 Updated)

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In Australia, pay secrecy is often found to be a sensitive topic. You may have found yourself bound to an employment contract where you aren’t allowed to disclose your salary – these are pay secrecy clauses.

Pay secrecy clauses are particularly common in industries that offer bonuses or discretionary incentives. Some businesses use these clauses to differentiate pay amongst employees.

But are they legal in Australia?

The short answer here is no.

As of 2025, pay secrecy clauses remain banned following the cultural and legislative shifts introduced through the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022. This Act, which received royal assent in December 2022, continues to ensure that employees have the absolute right to openly discuss the details of their remuneration.

Pay secrecy clauses reduce employee bargaining power and often result in economic disadvantage. They have also been shown to contribute to the gender pay gap and other forms of workplace inequality.

So, in light of this clear legal mandate and contemporary best practices in 2025, it’s important for businesses to steer clear of pay secrecy territory altogether. In this article, we’ll go through the details of pay secrecy, its disadvantages, and what you can do as an employer to avoid penalties under the Fair Work Act.

What Are Pay Secrecy Clauses?

Pay secrecy clauses prohibit your employees from discussing their salary and remuneration with one another. These clauses are typically inserted into employment contracts to prevent employees from sharing pay information with their coworkers.

The key takeaway here is that such clauses are now illegal in Australia. This move is consistent with similar reforms in the United States and the United Kingdom, where the elimination of pay secrecy measures has been part of broader efforts to reduce discrimination and empower employees.

What Are The Reforms?

The law was reformed to officially ban any pay secrecy clauses in employment contracts. As a result, there is no longer any restriction on employees discussing their pay or salary.

As an employer, it’s now your obligation to ensure that none of your contracts – including any ancillary confidentiality clauses – contain provisions that prevent employees from discussing their remuneration. This change reflects a growing consensus that transparency leads to fairer outcomes in the workplace.

For instance, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 continues to underpin this reform in 2025, fortifying the rights of employees across all sectors.

I’m An Employer – What Do I Do Now?

Following these changes, it’s best to have a legal professional review your employment contracts to ensure they do not include any pay secrecy clauses. Eliminating these outdated provisions helps protect your business from potential penalties and reputational damage.

It’s also wise to consider whether you need to adjust your overall remuneration structures. For instance, you may wish to take a closer look at any issues related to gender pay inequality in your workplace, especially given the growing body of evidence linking pay transparency to fairer outcomes.

In addition, establishing best practices such as regular salary audits, clear remuneration policies, and an open dialogue about pay can greatly improve trust within your team. For further guidance on maintaining regulatory compliance in your business, check out our resources on legal requirements for starting a business and operating as a sole trader where applicable.

What Are The Disadvantages Of Pay Secrecy Clauses?

While pay secrecy is now banned across Australia, it’s important to understand the reasons behind this decisive move. Such clauses have long been associated with gender pay inequality and workplace discrimination. Let’s explore the disadvantages in more detail.

1. Pay Secrecy Can Lead To Workplace Inequality

Pay secrecy can give rise to both actual and perceived inequality.

Actual inequality can occur when businesses use pay secrecy clauses to unfairly differentiate pay levels without employees even realising the discrepancies.

Perceived inequality arises when employees, aware that such clauses exist, automatically assume that there must be unfair differences in pay – even if this isn’t the case.

As a business owner, both forms of inequality can harm your company’s reputation and disrupt workplace morale.

Employees naturally expect to be compensated fairly compared to their colleagues. Without transparency, they may assume that any pay differences are due to inequities, which can foster feelings of mistrust within your organisation.

Evidence from recent 2025 reports indicates that in the public sector, where pay is transparent, the gender pay gap is around 11.0%, compared to an average of approximately 19.5% in the private sector – a difference of roughly 8.5%. These figures underscore how the absence of transparency can exacerbate pay disparities.

Understandably, there is a strong drive to replace pay secrecy with pay transparency, thereby reducing inequalities and promoting a fairer workplace.

2. Pay Secrecy Can Decrease Motivation

Not only does pay secrecy encourage assumptions of inequality, but it may also dampen your employees’ motivation.

If your employees suspect that pay secrecy is concealing unfair differences in remuneration, it can directly impact their job satisfaction and motivation.

Motivation is strongly linked to the feeling of being fairly rewarded for one’s efforts. When employees are uncertain whether their pay is comparable to that of their peers, their drive to perform could be diminished.

Employees often compare their performance and outcomes with those of their coworkers. Without access to transparent pay information, it becomes harder for them to gauge if their efforts are appropriately valued, ultimately hindering overall motivation.

3. Pay Secrecy Negatively Impacts Employee Culture

Most employees want to feel recognised and appreciated by their employer. This is typically reflected in how pay, incentives, and bonuses are handled.

When bonus or incentive pay remains secret, employees may struggle to discern whether such rewards are equitably distributed. This uncertainty can dilute the positive impact of these rewards and obscure the business’s level of appreciation for its staff.

Furthermore, withholding pay information can lead employees to question the intentions behind such clauses. They may assume that secrecy is masking unequal treatment, which adversely affects trust, loyalty, and the overall culture within your business.

In small and medium-sized enterprises, a healthy employee culture is vital. Pay secrecy can seriously disrupt team dynamics and harm the reputation of your company.

Key Takeaways

Pay secrecy is a controversial topic. Now that the law has clearly banned such clauses, it’s essential that business owners and employers update their contracts and practices accordingly in 2025.

If you have concerns or questions about pay secrecy or other employment-related legal issues, it’s a good idea to review the latest guidelines on the Fair Work website or explore our comprehensive resources on legal requirements for starting a business. Don’t hesitate to contact us if you need further support.

Our expert lawyers will happily review your employment contract to ensure there are no pay secrecy clauses (or confidentiality clauses that could have a similar effect!).

For a free, no-obligations chat, reach out to us at team@sprintlaw.com.au or call us on 1800 730 617.

Bella Duncan

Bella has experience in boutique and large law firms with particular interest in privacy and business law. She is currently studying a double degree in Law and Psychology at Macquarie University.

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