How should you approach the matter of salary confidentiality at your business? Can employees openly discuss wages? This guide explains the topic for you.
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Is Salary Confidential by Law?
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Pay & benefits are what your employees receive for the work they do for your company.
The following are mandatory benefits employees must receive, retirement pay, holiday pay, maternity/paternity pay, and sick pay, as well as their salary.
There are other types of benefits you can give your employees, such as bonus schemes, company cars, employee expenses, and share schemes.
Peninsula can offer you expert advice on pay & benefits, ensuring you pay your staff correctly and avoid claims being raised against you.
Yes, if you don't pay your staff their legal entitlements claims can be raised against you. This could lead to financial damages being paid,
Pay inequality has been a prominent, ongoing issue in the UK economy for years. Not only through gender, but the government has recently found disparities within ethnic and disability demographics.
When it comes to paying staff, employers must ensure the right amounts are given – especially for those not on full-time contracts. Pro rata ensures these employees are compensated correctly; and that includes wages, holidays, and benefits.
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In your business, staff members will have varying rates of annual pay. But is salary confidential by law (UK)? It's important you understand this to ensure you're acting fairly.
As such, this guide takes a look at the right steps to take in approaching this side of your business.
Peninsula offers expert advice on salary confidentiality and the rules surrounding it, contact us here to find out more.
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Generally, you can attempt to prevent your workers from discussing and comparing their earnings. You do this through the following salary confidentiality clause example, which you can establish within a contract of employment. You can construct these through your salary confidentiality policy.
In this, you can outline a requirement for your staff. If you want, it can state you don’t want them to discuss their wages. If they do, you can state they’ll face disciplinary action. You can also instruct employees to sign an employee salary confidentiality agreement (UK – this may vary by country).
That blocks this information from disclosure to third parties outside of the workplace. However, you should approach introducing a requirement for privacy with caution. If this is something you want to explore, you should consider why such a policy is necessary.
Attempting to enforce wage discretion can suggest you’re making unfair assessments on how your staff members’ pay. It also hints that you’re not able to justify it. So you should remember that secrecy isn’t a way to hide the fact you’re failing to provide the minimum wage.
An employee in this situation would still be fully within their rights to raise a grievance or disclose this information to the HMRC. In time, that can result in a public naming and shaming. As well as a fine of up to £20,000 per employee.
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The Equality Act 2010 also outlines that it’s unlawful to prevent employees from disclosing a difference in salary if they’re trying to understand whether it’s an equal pay issue between male and female workers exists.
If an employee is penalised for the gender pay gap and is able to prove they were trying to identify a potential issue of unequal pay, they may be able to claim discrimination.
Employers should therefore bear in mind that wage privacy could be difficult to enforce and may not be well received by a workforce. A contractual confidentiality clause will not overrule the statutory protection provided by the Equality Act.
If someone in one role is getting a higher salary than someone else in the same role the employer should first consider the reason for this before attempting to prevent it being discussed. If you’re able to display a clear record as to why you gave a higher wage to person, and it’s a justified position, you should have nothing to fear from staff discussing salaries.
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We’ll help you understand the right approach for your business to take with employees discussing their wages. Get in touch for more details: 0800 028 2420.
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