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January 29, 2016

Is it a good idea for employees to keep their salaries secret?

The top-drawer salaries of some CEOS de-motivates employees, according to a recent UK survey.

That was the big news. But the survey also raised larger questions about pay transparency. An astonishing 7 out of 10 employees wanted to see more transparency in wages, and more than half wanted complete disclosure at all levels of their company.

Believe it or not, virtually complete transparency is the norm in some working environments. For example, in most Federal and Provincial departments, employees are unionized and paid based on a grid. Curious folks can ballpark their co-worker’s salaries using job codes. And much of management is on the sunshine list, which means the boss’s take-home is just a few clicks away.

And the sky hasn’t fallen. In fact, those environments tend to have a flatter pay hierarchy (whether or not that’s caused by salary transparency is another question, obviously.)

What about in other (non-unionized, private sector) working environments?

There is not a default rule that requires or forbids internal disclosure of a company’s pay structure.

Employers generally treat pay information as private, and there is good reason for doing so. Employers may also want to discourage comparisons, because in some cases it can lead to friction and politicking.

Employees in some cases may even be forbidden from disclosing their own salaries to their coworkers, either by company policy or by their employment contracts. Such a term is very likely enforceable, and depending on the wording of the provisions could extend to wage voyeur websites like Glassdoor.ca.

Employees who are thinking about sharing information about their salary with coworkers should give it some thought before doing so. Firstly, they need to be aware of their obligations arising from corporate policy and their employment contract or collective agreement. Secondly, they need to think about the dangers of poisoning their relationships with coworkers and management. Nonetheless, there may benefits to doing so, especially employees are looking for leverage in salary negotiations.

coworkerEmployers may wish to make available salary ranges of its various jobs or departments in a way that respects their employees’ privacy. This has a number of potential benefits, including dispelling wage myths and helping employees plan their own career trajectories. Of course, such disclosure has the very real possibility of backfiring, especially if it would reveal no coherence in pay.

For both sides, the bottom line is — as is often the case — proceed with caution.

Millard & Company specializes in employment law and has represented both employers and employees in many legal cases.


Photo cc by Tony Stovall

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