News and updates

Effective date: 27 August 2025
Law: Employment Relations (Employee Remuneration Disclosure) Amendment Act 2025

New Zealand has enacted a pay transparency amendment that protects employees’ rights to discuss pay and prohibits employer retaliation for those discussions. Adverse action tied to pay disclosure can now trigger a personal grievance, with a reverse onus on the employer to prove the action wasn’t because of the disclosure. Pay-secrecy clauses are now unenforceable and should not appear in new agreements.

What changed (in plain English)

• Employees can freely talk about pay. Staff may discuss their own pay, ask about others’ pay, and engage in related conversations.
• No retaliation for pay talk. “Adverse conduct” (e.g., dismissal, disadvantaging, withholding equal benefits, coercing resignation/retirement) is prohibited if linked to pay disclosure.
• Covers actions from 27 Aug 2025 onward. Protections apply to any adverse action taken on/after that date, regardless of when the conversation occurred.
• New personal grievance ground. Employees can claim if they suffer adverse conduct due to pay-related discussion.
• Reverse onus. It’s presumed the disclosure prompted the adverse action unless the employer proves otherwise on the balance of probabilities.
• Pay-secrecy clauses unenforceable. Don’t include them in new agreements; existing ones can’t be relied on.

Why this matters for leaders, teams, and culture

For leaders

• Trust & credibility: Trying to suppress pay conversations will erode trust and create legal risk. Lean into transparency and fair process.
• Manager capability: Leaders must handle pay questions with composure, facts, and empathy.
• Documentation discipline: Decisions around pay must be evidence-based, consistent, and recorded.

For teams

• Psychological safety: Normalising pay talk (within respectful boundaries) supports a culture where inequities are surfaced and fixed.
• Clarity beats secrecy: Clear job levels, bands, and progression criteria reduce rumours and churn.

For organisational culture

• Fairness as a system: Equity isn’t a memo; it’s a set of repeatable practices (bands, calibration, reviews, audits).
• Retention & engagement: Transparent frameworks can improve belonging and reduce pay-related disengagement.

What to do next: a 30/60/90-day action plan

Next 30 days (Foundations)

1. Pause and assess:
   • Stop using any pay-secrecy language in templates or offers.
   • Brief your execs, HR, and people leaders on the core changes and legal risks.
2. Manager talking points: Issue a one-pager (sample below).
3. Risk scan: Identify roles/teams where compression or unexplained variance is likely.
4. Set principles: Publish your organisation’s pay transparency principles (e.g., fairness, role-based bands, evidence-based decisions).

31–60 days (Structure & capability)

1. Document the system:
   • Job architecture (levels/families), pay bands by role/level, and progression criteria.
2. Train leaders:
   • How to discuss pay, handle comparisons, and explain decisions and pathways.
3. Audit history:
   • Review the last 12–24 months of pay decisions for consistency and documentation quality.

61–90 days (Operate & improve)

1. Run a calibration: Cross-check pay by role/level/tenure/performance; flag outliers with action plans.
2. Publish an explainer: Share how pay is set, how progression works, and how employees can raise concerns safely.
3. Set rhythms: Annual pay equity review; biannual band refresh; quarterly leader refreshers.

Update your documents (fast fixes)

Remove or replace

• Delete any clause that restricts discussing pay or penalises disclosure. Do not include secrecy language in new agreements.

Add (example)

Respectful Pay Transparency
We support employees’ rights to discuss pay and to ask questions about pay practices. Leaders will respond to pay queries respectfully and will not take adverse action in connection with lawful pay discussions.

(Adapt this to your tone; ensure consistency across employment agreements, policies, and manager guides.)

Manager talking points (copy/paste)

If asked “Can we talk about my pay or others’ pay?”

Yes. You are free to discuss pay. I won’t discourage or penalise pay conversations. I can explain how we set pay—by role, level, market bands, and performance—and how progression works here. If you have concerns, let’s review the facts together.

If asked “Why is X paid more than me?”

I can’t share someone else’s personal data, but I can explain the framework we use—role/level bands, experience, scope, and demonstrated impact. We can also look at your growth path and what would move you to the next band.

If emotions spike

I want this to feel fair and respectful. Let’s take a moment, then focus on the evidence and the pathway. If you like, we can schedule a follow-up with HR to go deeper.

Guardrails & pitfalls to avoid

• Retaliation (even subtle): Any disadvantage or pressure after a pay discussion can be construed as adverse conduct. Train managers meticulously.
• Inconsistent documentation: If you can’t explain why a pay decision was made, you’re exposed—especially with the reverse onus.
• Opaque criteria: Vague notions of “market” or “merit” without defined bands and rubrics invite disputes.

Metrics to watch

• Pay variance (by role/level/tenure/performance)
• Demographic pay gaps (gender, ethnicity)
• Internal mobility and time-to-progression
• Exit reasons citing “pay/fairness”
• Manager confidence scores in “discussing pay”

Team norms you can adopt this quarter

• “We discuss pay respectfully and focus on roles, levels, bands, and evidence—not people’s private details.”
• “Every pay decision must be explainable against our framework.”
• “Concerns are welcomed and explored without penalty.”

FAQs for leaders

Do we have to publish everyone’s salaries?
No. The law protects conversations and bans retaliation; it doesn’t mandate publishing individual salaries. Focus on role-based transparency (bands, criteria).

Do we need to reissue contracts?
You don’t have to proactively update current agreements, but pay-secrecy clauses are unenforceable and must not appear in new agreements. Check your templates.

What if someone stirs conflict with pay talk?
Address behaviour, not the topic. Reinforce respectful dialogue and the framework. Don’t penalise the fact of discussing pay.

What if an employee raises a grievance?
A new grievance ground exists for adverse conduct linked to pay disclosure, with a reverse onus on the employer. Ensure your documentation and decision-making stand up to scrutiny.