“We want a strong economy that delivers for all Australians. We want to see more workers in good jobs: jobs with security, fair pay and proper protections. We want workers to have a pathway to a better life and businesses to thrive.”

Among the proposals included is the right for employees to disclose their remuneration, and the terms and conditions of their employment that are reasonably necessary to determine remuneration outcomes (such as the hours they work), to any other person and to ask other employees (within or outside their organisation) for this information.

Employees will be able to choose whether they disclose this information on request, and employers would be banned from including pay secrecy clauses in employment contracts that would prevent these disclosures and requests.

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Significance of removing pay secrecy

In conversation with Lawyers Weekly, Clayton Utz partner Amanda Lyras (pictured) said that employees in law firms have, traditionally, been required to keep the terms of their employment confidential, including their remuneration, and that they do not typically have access to information around pay bands within their firms.

“This can perpetuate gender pay gaps and inequities, including as a result of career breaks, family and caring commitments, and unconscious biases,” she explained.

“Pay secrecy can have the effect of masking unjustified discrepancies in pay between genders.”

The government’s proposal, Ms Lyras outlined, will give permission for open conversations to be had regarding pay outcomes within firms and the broader profession and create a more equal bargaining position.

This, in turn, “can foster more equal footing for women in the profession and help to address the gender pay gap”, she said.

While the recent Annual Profile of Solicitors report has found that women are increasingly making up the majority of the profession nationwide, the gender pay gap remains evident and is most noticeable for those aged over 30, with a greater proportion of full-time males earning over $150,000 compared to full-time females.

This finding was consistent, Ms Lyras pointed out, across all practice sectors, and the gap was evident among males and females of the same age, as well as males and females who have been admitted for the same number of years.

“The proposal has the potential to significantly impact reputationally on firms [that] are exposed as having a gender pay gap or not being in line with the market, and on the management of staff morale and retention more broadly,” she said.

Open the floodgates for transparent salaries in law

However, if the government’s proposal is passed, Ms Lyras said that she expects it to “drive greater transparency by firms around pay”.

It will, she posited, “necessarily result in difficult conversations being had around any actual or perceived pay inequities and factors that go to pay outcomes, such as performance”.

“Specifically, as there is no guarantee that what employees tell each other aligns with pay outcomes in reality, I expect these reforms, if passed, will see law firms go the way of the large professional services firms in disclosing pay bands so they can control the message around pay within their organisation,” Ms Lyras detailed.

“This would be significant in allowing lawyers to understand how they are paid relative to others, facilitate open discussions about why this is, and expose any gender pay inequities.”

Impacts of greater transparency

Furthermore, Ms Lyras went on, pay transparency will ensure that law firms are accountable for pay outcomes and any gender pay disparities that are evident from those outcomes.

“In a context where the employment market is currently leveraged heavily in favour of employees, and employee retention and productivity is a key commercial priority, greater transparency and accountability is likely to translate in more equitable pay outcomes,” she argued.

“A failure of leadership to address any gender pay inequities has the potential to impact significantly on firm reputation, the retention of staff and, ultimately, the bottom line.”

Conversely, Ms Lyras said, firms that get this right can harness the benefits of enhanced staff morale, engagement and productivity.

“The federal government has flagged that it will seek to require public disclosure of gender pay gaps in the future, and firms who have not proactively managed this as a leadership priority will be on the back foot in responding to any deficits evident in public disclosures,” she said.

How employers and employees should interpret the bill

When asked what lessons can or should be drawn from the government’s proposal, Ms Lyras said that business owners and team leaders in law would “need to get on the front foot”.

They will have to consider, she suggested, “how they will manage pay equity and communications around pay, so they are not reactively responding to discussions that may be taking place between employees or publicly as a result of employee disclosures”.

“In a tight employment market, staff retention can be adversely impacted if firms are not perceived to be paying in line with the market, ensuring equitable pay outcomes, or managing employee concerns,” Ms Lyras warned.

“Lessons can be taken from the large professional services firms [that] publicly disclose pay bands and pay gaps and have reported that this has driven lasting, system-wide change and more equitable outcomes.”

For individual lawyers, she continued, it should be noted that the Albanese government’s floated changes give them a choice to disclose or not disclose their remuneration outcomes.

“There will be some that want to engage in open discussion around pay and others that will not feel comfortable doing so,” Ms Lyras mused.

“On the whole, these proposals are likely to drive firms to communicate with employees more transparently around pay, and this is likely to have positive impacts on exposing any gender pay inequities, creating a more equal bargaining position, and enabling lawyers to have open discussions around how they are positioned from a pay perspective.”