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The dangers of being too open about pay

Pay transparency has slipped to a six-year low in the UK, with reports suggesting that only 60% of job adverts in 2022 disclosed the offered salary, down from 64% in 2021.

With the cost of living crisis deepening and frustration in certain sectors building, some employees are taking to TikTok and other platforms in the latest social media trend to share their salaries to promote pay transparency in the workplace.  

Pay transparency:

Salary transparency in job ads reaches six year low

Will pay transparency solve the gender pay gap?

UK work culture discourages employees from discussing salary

Many employees think pay transparency will help to end the gender pay gap, highlight areas of other pay discrepancies, such as the difference between CEO and staff wages, and ensure that everyone is paid fairly for their work.

However, employers argue that full transparency could make it harder to adjust an employee’s pay based on their individual circumstances, such as experience, achievements or additional workload, and could potentially bar high-performing workers from moving up the pay scale.  

The Equality Act 2010 prohibits pay secrecy clauses that try to prevent employees from discussing pay information when they are seeking to uncover differences that may be linked to a protected characteristic which could in turn lead to a claim of discrimination.

It also protects employees from being victimised for making a complaint or allegation about equal pay or giving evidence or information about such a complaint. 

However, if employees are discussing the matter without the purpose of finding a potential equal pay claim, then there could be consequences from the employer.

Workers should be aware that any social media campaign or general discussion around pay may not be protected by the provisions of the Equality Act, meaning that employers could take action if such discussions affect the reputation of their business or where employees act in breach of confidentiality terms applicable to their employment. 

If a company chooses to be open about its pay, it may also risk confusion among its workforce, as employees may not be aware of the background information such as skills, experience, and level of responsibility that can influence their pay.

Without this background knowledge, employees may jump to conclusions about salary, potentially creating a hostile workplace environment and resentment among colleagues.

Another disadvantage could be that high-performing individuals may feel dissatisfied if they are paid the same as other team members who may not have the same experience or results, however, employers who are committed to pay transparency could mitigate this risk through the use of incentive programmes that reward high performers, such as a bonus scheme.  

Pay transparency can be beneficial for businesses as employees will feel more comfortable knowing that they are being paid fairly for their job, which can then build trust with their employer.

When prospective employees see that businesses are open and transparent with their workers, they may also be more inclined to join the company, as they will be able to align with those values.  

While the issue of pay transparency is far from straightforward, employers may choose to implement open channels of communication for workers who have concerns about their pay, and conduct a personal, discussion-led, approach that is aimed to build trust with the individual by holding meetings about promotions or conducting regular pay reviews.

This may be more effective than the traditional approach of adhering strictly to a formal policy or putting in contractual restrictions.  

Regardless of the shape or size of a business, if an employer is confident that they are treating their employees equally, then there could be substantial benefits to being transparent about pay, from greater loyalty and staff retention to attracting better quality candidates to roles.

However, it is important to remember that whichever path is chosen, communication is key, as the risk of reputational damage from a social media trend may not go away any time soon. 

Rhys Wyborn is employment partner at law firm Shakespeare Martineau