On 20 August 2025, Parliament passed a new law that purports to promote pay transparency by protecting employees who discuss their own remuneration (which may or may not involve disclosing their own remuneration) or enquire into the remuneration of another employee, with the goal of helping detect and address pay inequities - particularly relating to gender, Māori, and Pasifika pay gaps.

The new law is awaiting the Royal Assent now and will take effect thereafter.

Here is what you need to know about it:

• A new personal grievance ground (in relation to "adverse conduct for a remuneration disclosure reason") is added to the Employment Relations Act 2000. A "remuneration disclosure" captures an employee discussing their own remuneration, or asking another employer for their remuneration, or any participation in remuneration-related enquiries. It is immaterial whether or not they disclose their remuneration. “Adverse conduct” covers disciplinary action, including dismissal, denial of equivalent employment terms, or any other detriment to an employee's employment, job performance, or job satisfaction. Once the occurrence of "adverse conduct" is established, the employer must prove the remuneration disclosure was not a substantial reason for the adverse conduct.
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• Whilst employment agreements may still lawfully include a provision that stipulates that the employee must not disclose their remuneration to others, such pay secrecy clauses will not be enforceable (except for those relating to any payment or other benefit received by the employee as an owner of the business), meaning that no disciplinary action (or breach of contract claim) can be brought by the employer in response.
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• Employees will not be obliged to discuss their remuneration with others. The new law is not about mandating pay disclosures - disclosures will be voluntary (except for an exception in the public service). It is about ensuring employees cannot be penalised for speaking about their pay.

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Apart from not being able to take disciplinary action for a breach of contract (as such action would have been justifiable), the immediate practical implications of this law change are, in our opinion, limited.

That said, the new law may potentially trigger increased pay comparisons amongst colleagues, and issues around pay parity and inequities may surface more easily, causing tension in the workforce and problems for the employer. The new law may potentially trigger an increase in remuneration-related discrimination claims. Whether all this may indeed happen and to what extent remains to be seen.

However, employers may take this change as an opportunity to review their pay practices to ensure consistency and fairness and prepare to explain how remuneration decisions are made. This may not only help with defending any potential claims, but it may also build trust and loyalty amongst the workforce.

If you would like any further information, agreement templates, or guidance on how to communicate this change to your team, we will be happy to assist further.

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