Sarah Chilton: New rules on equal pay may put an end to jealousy

THE days of wondering about who is earning what in the office are virtually over. The Equality Act 2010, which comes into effect today, will end wage or salary secrecy among employees by making a contractual clause to this effect unenforceable in most situations.

Many firms still insist on a "salary secrecy clause" in their terms and conditions and that breaking this clause - by revealing one's level of salary to a fellow employee or, worse still perhaps, a rival company - could result in disciplinary action and, in some cases, outright dismissal.

By making such a clause unenforceable, the government hopes that ending salary secrecy will lead to more transparency and, by implication, greater levels of equality in the workplace.

The act will apply across the employment spectrum, although in the public sector - with its grading structure - salary levels tend to be fairly transparent.

However, with remuneration in the world of business much more flexible, individual levels of pay are much wider.

So it is almost part of accepted office culture to speculate about what colleagues are earning.

Under the new legislation, employers will still be permitted to encourage employees to be circumspect about their salary levels but they will no longer have the power to insist on enforcing such a clause as part of a contract of employment.

Therefore any individual who wishes to do so can be completely open to colleagues about his or her salary.

The legislation technically only renders such clauses unenforceable when employees discuss salaries with a view to uncovering unequal treatment.

However, in practice, it will be difficult for employers to show that the employee was discussing pay for any other reason.

The legislation also maintains the right of employees to ask questions of their employer, in relation to pay, with a view to establishing if they have been the subject of unequal treatment on the grounds of sex.

For example, a female carrying out the same job as a male is permitted to ask questions of their employer with a view to establishing if they are being paid equally, and vice versa, as the legislation applies equally to men, as it does to women.

As for employers, rather than look for exclusions, they should be encouraged to embrace the letter and spirit of the legislation. In this day and age pay secrecy is something of an anachronism.

If a firm decides to stick strictly to the letter of the law, even with the new legislation in force, employees may still need to extend some effort (either on their own or through a union representative) to gain information on pay discrepancies.

However, one potential spin-off for bosses is that salary transparency may lead to a reduction in unwarranted petty jealousies, thoughts of favouritism and other generators of disharmony in the workplace.Therefore, in those companies where wage disparity among people doing basically doing the same job still exists, it may pay dividends in terms of office morale.

For some firms of a certain size, there may eventually be no other option because there are also plans on the table to bring in provisions which would order organisations with more than 250 employees to carry out what is described as "gender pay reporting".

If these come into force this will mean that affected employers will be required to publish information on pay and that information would, it is expected, show up any pay disparities.

These rules are not coming into force at present but there is provision for them to be introduced, should the government wish to do so. If one looks at the shift in the balance towards transparency and "employee rights" over the past decade, and the volume of equal pay claims which have already progressed through tribunals and courts, there seems a reasonable possibility that such a provision could also become law.

• Sarah Chilton is a solicitor with Murray Beith Murray.