Australia: Scrutinising the gaps - WGEA publishes private sector gender pay gaps

Recently, for the first time in Australia, the Workplace Gender Equality Agency (WGEA) revealed the gender pay gaps of nearly 5,000 individual private sector employers in Australia. The WGEA has used that data to publish its Employer Gender Pay Gaps Snapshot.

The data, which covers the Gender Equality Reporting period from 1 April 2022 – 31 March 2023 can be accessed via the WGEA Data Explorer, where users can review reporting results by industry and individual employer.

The move to publish individual employer’s pay gaps is aimed at driving transparency and accountability in addressing gender inequality, with Minister for Women, Senator Katy Gallagher, stating:

“By shining a light on gender pay gaps at an employer level, we are arming individuals and organisations with the evidence they need to take meaningful action to accelerate closing the gender pay gap in Australian workplaces”.^[1]

The results include a number of significant national and industry trends. The headline being, the median total remuneration gender pay gap for the relevant reporting period sits at 19%, and workplaces with women in leadership positions are more likely to report neutral gender pay gaps of between -5% and +5%.

One of the points of interest is the ability for stakeholders to contrast and compare individual employers against a number of primary measures. This is consistent with the above stated intention to drive increased transparency, and will likely impact the way in which employers engage with their stakeholders in respect of their gender pay gap.

Background

The WGEA was created by the Workplace Gender Equality Act 2012 (WGE Act) to promote and improve gender equality in Australian workplaces. Under the WGE Act, “relevant employers” are required to report to the WGEA annually against the following six Gender Equality Indicators:

1. Gender composition of the workforce
2. Gender composition of governing bodies of relevant employers
3. Equal remuneration between women and men
4. Availability and utility of employment terms, conditions and practices relating to flexible working arrangements for employers and to working arrangements supporting employees with family or caring responsibilities
5. Consultation with employees on issues concerning gender equality in the workplace
6. Sexual harassment, harassment on the ground of sex or discrimination

Previously, the WGEA has used the information gathered in these annual reports to report on gender inequality at an industry specific level. However, in response to a 2021 review of the WGE Act,^[2] the Federal Government passed the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Act 2023 in March 2023, enabling, among other things, the WGEA to publicly report on its website the gender pay gaps at the individual employer level, and not just the industry level.

What employer information has been published?

The data published by the WGEA covers the Gender Equality Reporting period from 1 April 2022 – 31 March 2023 for all relevant private sector employers under the WGE Act – that is, employers with 100 or more employees in Australia.

The data is published on the WGEA Data Explorer, with a clear focus on making the results accessible, displaying the bulk of the information in pictorial form and utilising interactive graphs and charts. Of particular significance is the “Compare Data” function, which allows users to easily create and print comparative tables setting out the performance of individual employers in relation to a number of primary measures against the national and industry-based results. The function, which also allows users to add and remove other individual employers from the comparative tables, provides a mechanism for the simple aggregation and comparison of data.

The published information sets out:

• the individual employer’s base salary and total remuneration median gender pay gaps, which are expressed as the percentage difference between women’s and men’s earnings at the organisation, and
• the gender composition at each organisation per pay quartile.

For this year, the WGEA is reporting only the median, and not the average, gender pay gap. As we address below, that is not the position moving forward. The median pay gap is determined by calculating the difference between the middle values of male remuneration and female remuneration, such that it is not skewed by the extreme values at either end.

A closer look at the results

While the WGEA reports a median total remuneration gender pay gap of 19%, the gap falls to 14.5% when looking only at median base salaries. This indicates that additional payments such as bonuses, overtime, and sales incentives, are larger and more common in male-dominated industries.^[3]

Every industry categorised in the data reported a median gender pay gap in favour of men, with construction showing the largest total remuneration gender pay gap at 31.8% and Accommodation and Food Services reflecting the lowest at 1.9%.^[4]

Results show that employers in male-dominated industries are more likely to have larger gender pay gaps, while those in female-dominated industries are more likely to have a lower gender pay gap.^[5]

The WGEA reporting also indicates that there is a clear link between women in leadership and a lower gender pay gap, with employers whose boards are comprised of a higher proportion of women more likely to have gender pay gaps within the neutral range (-5% -- +5%).^[6] These results are also mirrored for employers with more women in key management positions.^[7]

What next?

Moving forward, the WGEA will annually publish figures in relation to the Gender Equality Reporting period for the preceding year. For example, from next year, the WGEA will be required to publish figures for the reporting period from 1 April 2023 - 31 March 2024.

The published figures for that reporting period, and all subsequent reporting periods, will include not only the median employer gender pay gaps, but also the average employer gender pay gaps. The average pay gap will be determined by calculating the difference between the total male remuneration, divided by the number of males in the organisation, and the total female remuneration, divided by the number of females in the organisation.

The justification for waiting until next year to report average employer gender pay gaps is that this figure will reflect the meaningful impact of executive remuneration on the pay gap, but that will be more accurately calculated once the legislative changes requiring employers to report CEO, Head of Business and Casual Manager remuneration is reflected in the Gender Equality Reporting data.^[8] At this stage, CEO remuneration does not include remuneration for Partners in a partnership structure because the WGEA dataset only captures employees. However, the WGEA has reported that it is working with the Federal Government to consider how to include Partners in its data collection, noting that was an express recommendation of the 2021 review.

While the employer specific figures offer a snapshot assessment of gender equality in that particular workplace, employers are also able to provide an optional Employer Statement to be published on the WGEA website alongside their results. These statements give employers an opportunity to explain any relevant context to their gender pay gap result, and to outline actions being taken to address it.  Employers have had an opportunity to understand their organisational gender pay gap in advance of publication in order to have an opportunity to develop an Employer Statement. However, it is worth noting that employers can still add or update the link to an Employer Statement following the WGEA’s publication of the gender pay gap data.^[9] 

While the recent reporting is limited to data from the private sector, the WGEA is expected to publish the first set of public sector employer gender pay gaps in late 2024 / early 2025.

Takeaways

When the WGEA recommended that it be able to publish gender pay gaps at an organisational level, it argued that such reporting would cause employers to ‘assess systems and processes for pay, job evaluation and performance’, and could ‘… generate stakeholder engagement and pressure and inform investment decisions’.^[10]

Given the extent of the gender pay gaps identified by the data and WGEA Data Explorer’s accessible presentation of that data, including the functions allowing for straightforward comparisons of individual employers against a number of primary measures, employers can expect increased stakeholder engagement aligned with the WGEA’s claim above.

In particular, employee engagement with these issues is likely to become more robust, and employers may experience pressure from unions, as well as other stakeholders, motivated to leverage the gender pay gap results in terms of negotiations or public relations strategies.

The publication of the recent figures, along with the significant associated media coverage in nearly all corporate flagship media outlets, indicates the appetite in the private sector for transparency in addressing gender inequality. We expect it will further motivate employers to consider how they can address the gender pay gap within their respective organisations, and to ensure they are not lagging behind industry standards.

This article was prepared by Rachel Dawson, Partner, and Hugh McLaurin, Solicitor.

[1] WGEA, ‘Employer Gender Pay Gaps Published First Time’ (Media Release, 27 February 2024) [6].
[2] Department of Prime Minister and Cabinet, ‘WGEA Review Report – Review of the Workplace Gender Equality Act 2012’ (December 2021).
[3] WGEA, ‘Employer Gender Pay Gaps Snapshot’ (27 February 2024) 3.
[4] Ibid, 4.
[5] Ibid, 7-8.
[6] Ibid, 13.
[7] Ibid, 14.
[8] WGEA, ‘Publishing Employer Gender Pay Gaps FAQ’.https://www.wgea.gov.au/about/our-legislation/publishing-employer-gender-pay-gaps.
[9] WGEA, ‘Publishing Employer Gender Pay Gaps FAQ’.https://www.wgea.gov.au/about/our-legislation/publishing-employer-gender-pay-gaps.
[10] Explanatory Memorandum, Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023, 13.