In the past, disclosing salaries was a controversial topic. Explicit company policies or a general sense of workplace taboo discouraged employees from discussing how much they earn. However, with the rise of remote work and transparency across businesses, salary confidentiality is becoming increasingly difficult to maintain.
The question lingers: Is it legal and, more importantly, ethical to restrict conversations about one’s salary in today’s workplace?
This blog will answer that question. We’ll explore salary confidentiality laws in the Philippines and other countries, discuss your rights and obligations as an employer, and teach you how to foster a culture of open communication about compensation.
What is Salary Confidentiality?
Salary confidentiality is the practice of keeping employee wages private. Employers only discuss salary details with the employee receiving them to maintain privacy and respect individual financial information. Plus, compensation varies based on employees’ experience, skills, and negotiation abilities—even among those with similar titles and roles.
Some workers may disclose their salaries to each other to understand their market value or negotiate better terms. However, for you as an employer, maintaining salary confidentiality is crucial to prevent workplace conflicts and disputes. It also supports fairness and a merit-based compensation structure within your organization.
Lastly, it promotes a respectful work environment that keeps employee morale high and maintains a stable culture.
An Overview of Salary Confidentiality Laws Worldwide
The idea of keeping salaries confidential exists worldwide, but the legal frameworks for discussing them differ. Here are some that you should know.
United States
Section 202 of Executive Order 11246 states that employers can’t punish employees for inquiring about or disclosing their wages or those of their colleagues. Companies also can’t have policies that prevent or discourage employees or job applicants from discussing or sharing their own or others’ pay.
However, if an employee’s job involves accessing salary information (like HR or payroll), they can’t share that info with everyone. They can only do so under a specific situation, like a legal investigation or responding to a formal complaint.
United Kingdom
According to Section 77 of the UK’s Equality Act, employers can’t legally forbid employees from disclosing their wages. Employees can ask their current and former colleagues about their pay. The law also protects pay discussions if employees aim to identify and address potential pay discrimination.
European Union
The EU’s new pay transparency rules require companies to disclose salaries and take action if their gender pay gap exceeds 5%. Some of the specific regulations include the following:
- Workers have the right to request information about average pay levels broken down by sex for employees doing the same work or work of equal value.
- Companies with more than 250 employees must report annually on their gender pay gap to national authorities.
- If a report shows a gender pay gap exceeding 5% that objective criteria cannot justify, the company must conduct a joint pay assessment with the workers’ representatives and take corrective actions.
- Employees who suffer from gender pay discrimination can claim compensation, including back pay and related bonuses.
Australia
The Secure Jobs, Better Pay Bill gives employees in Australia the right to share or not share information about their pay and employment conditions. They can also ask others about their pay and conditions. Meanwhile, employers can’t force employees to disclose this information, and these rights remain even after employment ends.
These protections apply to employment contracts made on or after December 7, 2022, or to older contracts if they don’t include conflicting pay secrecy terms
Philippines
Unlike other countries, the Philippines doesn’t have specific statutory laws addressing salary confidentiality. Instead, employers manage through non-disclosure agreements or internal policies. They typically prohibit employees from disclosing sensitive information, including salary details, without authorization.
How to Approach Salary Confidentiality with Confidence
Salary confidentiality doesn’t have to be awkward between you and your employees or among workers themselves. Here are some practical tips for navigating salary discussions effectively.
Understand your labor regulations
Although the Philippines doesn’t have specific laws against discussing salaries, navigating salary confidentiality still requires knowledge of relevant labor regulations.
For instance, the Data Privacy Act of 2012 sets the framework for how organizations handle personal data, including employee payroll information. It doesn’t specifically prevent salary discussions but ensures responsible handling of personal information.
Develop clear policies on salary confidentiality
Don’t leave things open to interpretation. Develop clear policies that outline expectations around salary confidentiality. While you can’t legally prevent discussions, you can emphasize professionalism and respect for colleagues’ privacy.
Your policy could be: “While we respect employees’ right to discuss their salaries, we encourage such conversations to happen professionally and respectfully.”
Foster a culture of trust and professionalism
The best way to handle salary confidentiality is to build a culture of trust and professionalism. After all, employees wouldn’t feel the need to investigate pay gaps if you were more transparent about it.
So, encourage open communication and address employee concerns directly. Instead of shutting down salary conversations, hold regular review meetings where employees can understand wage structures and ask questions openly.
Help employees understand their salary ranges
Instead of keeping them a mystery, publish salary ranges for open positions or share anonymized data on average department salaries. This way, you can empower employees to see how their compensation compares to their peers and allow them to negotiate with confidence.
Pay people fairly
Ensure your compensation practices are fair and based on merit. When employees feel valued and are paid competitively, the need for secrecy lessens.
Conduct regular compensation analysis to compare your employees’ pay with their colleagues or other companies in your industry. With a standard compensation structure, you can increase your desirability in the job market and attract and retain top talents. You can also reduce your employees’ need to seek salary details from their peers.
Don’t Let Salary Confidentiality Disrupt Company Culture
Salary confidentiality may seem like a workplace norm, but the tide is turning. Navigate these conversations confidently by understanding your legal landscape, fostering trust, and prioritizing transparency. Remember, a happy and informed workforce is a productive one!
Do you need help finding top Filipino talent? Look no further than Manila Recruitment, a trusted recruitment agency in the Philippines. We specialize in connecting businesses to employees with the perfect fit, ensuring a transparent and successful hiring journey.
Contact us to start your recruitment journey.
DISCLAIMER: The information in this webpage / blog / article / infographic we have published and the associated commentary are presented as general information and is not a substitute for obtaining legal advice in this area. Manila Recruitment does not accept liability for any action taken based on the information presented or for any loss suffered as a result of reliance on the information provided.
