Secrecy Clauses

A lot of media attention has been focussed on claims that secrecy clauses in relation to pay are going to be banned. However, the Equality Act will not actually make it illegal for contracts to contain a secrecy clause about pay. Rather, the Act will make it impossible for an employer to enforce the clause. This does have the effect of rendering the clause almost useless in many circumstances.

Section 77 of the Act will make any secrecy clause that prevents employees from making ‘relevant pay disclosures’ unenforceable. For example, if a female employee thinks she may be getting paid less than a male colleague who does the same job and she asks him how much he gets paid, the Company would not be able to take action if he does disclose his pay. It will also cover discussions regarding pay with unions, advisors etc.

This effectively means that employees can discuss their pay with each other. In theory the Act only renders the clause unenforceable where there’s a ‘relevant disclosure’ but it’s difficult to see how that could be proved. The aim of this section of the Act is to promote equality of pay.

However, a business would still be able to take disciplinary action if an employee breaches a confidentiality clause in their contract by disclosing their pay to a third party such as a competitor.

Those who have already circulated contracts containing secrecy clauses don’t necessarily need to issue new contracts with the clause removed, but it is important to be aware that the clause is unenforceable. Businesses that are particularly concerned about competitors or third parties finding out about what their employees are paid may wish to review their confidentiality clauses in order to make sure employees are aware that disclosure of their pay to third parties is still a disciplinary offence.