Employment Gagging Clauses To Be Made Unenforcable

The government has now confirmed that ‘Gagging’ clauses, which are written into employee contracts to stop staff discussing their salaries and bonuses, are to be made unenforceable from October 2010.

Figures from the Equality and Human Rights Commission show that men received five times more bonuses than women in the City, on top of an average pay gap of 39%. The national pay gap for all roles stands at 16.4 per cent. However it is very difficult for people to insist on fair pay if they do not know if they are being paid fairly, and gagging clauses in employment contracts currently present a large obstacle to obtaining the necessary information.

The changes introduced under the Equality Act 2010 are intended to help with this problem. However the changes are not all-encompassing. The Act will not ban confidentiality clauses, and pay-related confidentiality clauses will only be ineffective under the new Act (under s77) if there is a ‘relevant pay disclosure’. This means where the purpose of the disclosure is to find out whether there is a connection between a difference in pay and a ‘protected characteristic’ such as sex or age. In those circumstances, the section offers protection to both the asker and the discloser against being sued for breach of contract or against victimisation.

This means that the critical element is the purpose of your enquiry. If someone discovers they are being paid less than a peer during idle gossip about salaries then there is no protection. Colleagues are also under no obligation to reveal their pay.

Many academics though are considering it to be a good start.

Nick Barnett

Published on 13/08/2010