What New Pay Transparency Laws Mean for New Zealand Businesses

A new law has just passed Parliament on 20 August 2025, awaiting Royal Assent and set to come into effect the day after, ushering in a new era of pay transparency for businesses nationwide.

What the Law Does

1. Protects employees who discuss their own pay

• • Employers can no longer take adverse action against employees for talking about their salary or pay terms
  • Pay secrecy clauses in contracts remain legal—but they can’t be enforced under this new legislation

2. Creates a new ground for personal grievance

• • The Employment Relations Act 2000 now includes “adverse conduct for a remuneration disclosure reason” as a personal grievance ground

3. Adverse conduct includes:

• • Dismissing someone.
  • Refusing equal terms or opportunities compared to peers.
  • Pressuring someone to resign or retire.
  • Penalising employees in any way for discussing pay

4. Two-part test with reverse onus

• • To bring a grievance, the employee must show (a) that adverse conduct occurred, and (b) that the conduct was substantially motivated by remuneration disclosure.
  • The law presumes this connection unless the employer proofs otherwise on the balance of probabilities

Implications for Businesses

• • 1. Contracts and HR policies need updating
  • While pay secrecy clauses don’t need to be removed, including them in future agreements is ill-advised since they can no longer be enforced
  • HR policies should now openly support pay discussions, emphasizing that speaking about remuneration is a protected right.

2. Training on adverse conduct risks

• • Managers must be trained to avoid adverse reactions when employees discuss pay, even if those conversations feel awkward or unwelcome.
  • Such conduct could open a business to personal grievance claims, which are costly and reputation-damaging.

3. Internal fairness audits become critical

• • With pay transparency increasing, businesses should proactively audit pay across roles, genders, ethnicities, and disability status. Being caught off-guard by discrepancies exposed via employee discussions can trigger scrutiny or legal exposure.

The Amendment aligns with a broader wave of employment law changes, including the removal of the “30-day rule,” privacy updates, wage theft criminalisation, and more all of which we will bring to you once they come into force. For more information please contact anna@networkhr.co.nz