Pay secrecy law explained

Employers are no longer able to stop employees discussing their salaries after a change to New Zealand employment law on 26 August 2025. The new law prevents employers from enforcing pay secrecy clauses in employment contracts and instead, enables employees to openly discuss their salaries without reprisal if they wish to do so.

It’s critical that employers take notice, since companies found in breach of the legislation could be liable for penalties of up to $20,000. 

We’ve collected all the information you need to know in our factsheet, as well as tips to get ready for employers. Even if you’ve never enforced pay secrecy clauses, every New Zealand employer can take some steps to ensure their business adapts to this change in law. 

Download the factsheet now by filling out the form on the right.

What is a pay secrecy clause?

A pay secrecy clause is a clause in an employment agreement that restricts employees from talking to others about their pay. 

This new law means that employers can no longer enforce a pay secrecy clause in their companies. Employees will be free to share their current remuneration with anyone, without any retaliation from employers.

The banning of pay secrecy clauses isn’t unique to New Zealand. Our cousins across the Tasman banned the clause in Australian employment contracts in June 2023.

Why have the changes to pay secrecy clauses been introduced?

According to the details of the new legislation, the law’s intention is to “ensure that employees can discuss and disclose their own pay rate to others without detrimental repercussions to their employment”.

The legislation goes on to say that the law is designed to increase transparency about pay, allowing pay discrimination to be more easily identified and remedied.

What does banning pay secrecy mean for employers?

For employers who currently have pay secrecy clauses in their employment agreements, they will no longer be able to enforce them. They also won’t be able to take retaliatory action in the case of the conditions of the clause being broken. That includes taking any actions that have a detrimental effect on the employee’s employment, job performance or job satisfaction.

There is also a new ground for a personal grievance laid by an employee: ‘adverse conduct for a remuneration disclosure reason’. 

In the light of this new law, employers could also see greater scrutiny around how pay is determined in their businesses. If companies are seen to be guilty of pay discrimination, this could severely affect their reputation and employee satisfaction. 

What do employers need to do?

For employers who haven’t used a pay secrecy clause in their employment agreements, it may seem like this law will have no effect on them. However, the increase in pay transparency will likely have a knock-on effect for a few businesses. Every employer in New Zealand can do a few things to protect their business in the context of the new law. 

Our factsheet goes into detail about what employers can do right now, including vetting their current employment agreements and auditing their current remuneration criteria. 

For the complete advice, download the factsheet by filling out the form on the right.

The information in this article is current as at 26 August 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.