Can an employer add a clause in an employee contract that forbids staff to discuss or disclose salaries? Esther Smith and Martin Brewer advise.
I have just come across a clause on a contract where it states that any discussion or disclosure of salaries is subject to disciplinary action. Is this legal these days?
Esther Smith, partner, Thomas Eggar
There is nothing wrong or unlawful in the contractual term you have come across. An employer can impose such a rule as a matter of contract, and can discipline employees for their failure to comply with this contractual stipulation.
However, quite how practical such a rule is, is another matter. In reality, employees will discuss salaries whatever rules employers impose, and even if you do seek to discipline someone for breaching this rule, the penalty imposed as a result of that disciplinary procedure must be fair and reasonable in all the circumstances. Therefore the employer is going to be fairly restricted in its ability to impose any significant sanction above a warning, which is unlikely to serve as a real deterrent against employees sharing information with each other.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.
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Martin Brewer, partner, Mills & Reeve
Some employers are quite sensitive about this because they fear that if employees do discuss salary differentials it may lead to discontent. There’s nothing unlawful about such a clause. It’s simply a matter of contract. To discuss or disclose salaries in such circumstances would be a breach of contract and there is no reason why that could not be the subject of disciplinary action.
As with any other breach or infringement of the rules, the employer would have to have sufficient evidence and would need to consider the seriousness of such a breach but, as I say, there is nothing unlawful about the clause.
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