Compensation is integral to every employee’s relationship with their employer. The ability to clearly explain how your organisation determines pay is essential for employee engagement, retention, and trust.
By Jessica Pillow, Global Head of Compensation at Deel
New Zealand is on the verge of a shift in how we talk about pay in the workplace. The Employment Relations (Employee Remuneration Disclosure) Amendment Bill could soon make so-called “pay gag clauses” unenforceable, giving employees the legal right to discuss their salaries without fear of reprisal.
The Bill’s goal to support efforts to reduce New Zealand’s gender pay gap of more than 8% – is a worthy one, but I challenge business leaders to look beyond compliance. The real story isn’t about a law change; it’s about rising expectations from your employees. Pay transparency is increasingly being driven not by policymakers, but by people who now have much greater access to salary data through public websites and are demanding clarity.
Pay transparency remains a complex issue in many workplaces. A recent nationwide survey commissioned by Deel, found New Zealand workers evenly divided on how comfortable they feel discussing their salaries with colleagues: 39% are comfortable, while 35% find it too private.
However, two-thirds (65%) believe pay transparency is ultimately good for employees. This is mostly driven by the reduction in inequality and the motivating impact of knowing what others are earning. Younger workers are driving this change. Seventy-eight percent of under-35s support pay transparency. They now have much greater access to salary data and expect clarity not just on pay figures, but on the principles and processes behind them.
Speaking with my colleagues overseas, it’s clear that the businesses who thrive in an environment of rising pay transparency are laying the groundwork well before the rules change. Forward-thinking companies should already be preparing for a more open pay culture.
Laying the foundations for pay transparency
Real change happens when companies are transparent not just about pay figures, but about the principles and processes behind those figures. That’s why having a clear compensation philosophy and robust compensation strategy are vital if efforts to improve pay transparency are to succeed.
A compensation philosophy is your guiding star. It outlines your organisation’s beliefs about how and why people are paid – whether you aim to lead, match, or lag the market; how you balance internal equity with performance incentives; and how your pay practices reflect your culture and business goals.
Crafting one isn’t without challenges, as it requires balancing market competitiveness with affordability, ensuring equity across roles and geographies, and navigating shifting employee expectations. Fortunately for New Zealand employers, it’s possible to learn from the experiences in other markets, leveraging readily available salary benchmarking tools and free compensation templates.
A compensation strategy is where those principles are put into action. It includes how you set pay ranges, determine bonuses, review roles, and communicate changes. Your strategy must evolve over time as businesses change, markets shift, and employee needs develop. Whether you’re updating job specs, implementing performance-based pay, or adding new benefits, your compensation approach should be reviewed regularly.
These two pillars allow team leaders to answer the tough questions: Why does my colleague earn more than me? How is my pay determined? What do I need to do to earn more? When leaders can confidently and consistently respond, trust increases and legal risk decreases.
The global context: Why this matters now
New Zealand is playing catch-up. Other developed countries, including Australia, Canada, Sweden and the UK, have already banned pay secrecy clauses. Many have also mandated the reporting of gender pay gaps. In the United States and Europe, expectations around pay transparency are even higher, and legislation is evolving rapidly. The EU Pay Transparency Directive, which EU member states must implement by June 2026, introduces a set of requirements for employers to promote transparency, fairness, and accountability in their pay practices.
For any New Zealand-based organisation with international ambitions, or hiring globally, the need for clarity on pay practices is vital. Are you ready to explain your compensation structure to an American hire? Can you defend why two people in similar roles are paid differently in your Auckland and London offices?
Even for businesses operating solely in New Zealand, the bar is rising. Employees want to understand their employers’ approach to compensation, and not just what the pay ranges are, but how they are decided.
The way organisations approach compensation differs – and so do employee expectations, especially when they move between companies or countries. A clear and consistent approach not only sets expectations but also reinforces your company’s values.
Start the conversation now
Compensation is integral to every employee’s contractual and emotional relationship with their employer. The ability to clearly explain how your organisation determines pay is essential for employee engagement, retention, and trust.
My advice to New Zealand business leaders is this: don’t wait. Use this moment to start – or strengthen – the conversation about how and why you pay the way you do.
