Current ‘minimum standards’

Under the Workplace Gender Equality Act, the Minister sets the minimum standards in relation to gender equality indicators (section 19 of the Act).

The Workplace Gender Equality (Minimum Standards) Instrument 2014 (Minimum Standards Legislative Instrument) sets out the minimum standards which apply to relevant employers with 500 or more employees. The Minimum Standards Legislative Instrument is at: https://www.legislation.gov.au/Details/F2014L00365

Relevant employers with 500 or more employees must have policies or strategies in place to support one or more of the following indicators (section 5(3) of the Minimum Standards Legislative Instrument):

• gender composition of the workforce
• equal remuneration between women and men
• flexible working arrangements, and
• sex-based harassment and discrimination.

Currently 100 per cent of relevant employers with 500 or more employees comply with the minimum standards, with almost every company having a policy or strategy in place on sex-based harassment and discrimination.

Although the minimum standards only apply to employers with 500 or more employees, 99.2 per cent of employers with 100‑499 employees currently comply with the minimum standards.

Proposed approach

Strengthen existing minimum standards to bridge the ‘action gap’

Stakeholder views

There was widespread support for WGEA in the consultation process. Its dataset was often applauded for being world-leading due to the coverage of the data, with some calling it a ‘national treasure.’ Many were positive about the role WGEA has played thus far. But a major theme in the consultation was that employers should have to take action to improve gender equality in their workplaces in order to comply with WGEA’s reporting requirements.

Stakeholders proposed substantial strengthening of the minimum standards as a mechanism to drive change towards gender equality. They criticised the current legislative framework that only requires reporting data to be enough for WGEA compliance – without any need for employers to take action and show progress on gender equality. There were concerns that progress is not happening fast enough and the current bar for compliance with the minimum standards is too low.

In line with these broad views, recent comparative research on gender pay gap reporting recommended that action plans are essential for change, finding that ‘employers should be mandated to create time-bound targets to redress pay gaps, setting out clear and measurable goals’ (Global Institute for Women’s Leadership, October 2021). Companion research recommended that Australia introduce ‘outcome-based’ minimum standards (Global Institute for Women’s Leadership and Australian National University, October 2021).

A number of business peak bodies were concerned that it is not the time to introduce any additional reporting requirements on business, particularly given serious challenges for business posed by COVID-19. These concerns have been taken into account throughout this report including in Recommendation 1 (making it easier for employers to report) and Recommendation 4 (reducing the regulatory burden for employers).

In contrast, a number of employers supported changes to WGEA’s legislation to accelerate gender equality in workplaces. They see improving gender equality in their workplaces as a key part of their business strategy as it has benefits across a number of key business areas. Research by the Bankwest Curtin Economics Centre (BCEC) and WGEA found that an increase in the share of female ‘top-tier’ managers by 10 percentage points or more led to a 6.6 per cent increase in the market value of Australian ASX-listed companies, worth the equivalent of AUD$104.7 million. The report, Gender Equity Insights 2020: Delivering on Business Outcomes, reveals a strong and convincing causal relationship between an increase in the number of women in key decision-making positions and subsequent improvements in company performance.

Recommendation to bridge the action gap

It is recommended that the minimum standards be enhanced to accelerate progress on gender equality in workplaces. The WGEA Review has taken different stakeholder views into account – views about both the need to accelerate progress on gender equality in Australian workplaces and the need to be mindful of the regulatory impact on employers.

To accelerate gender equality in workplaces, it is recommended that a new minimum standard be added to require relevant employers with 500 or more employees to commit to, achieve and publicly report to WGEA on measurable genuine targets to improve gender equality in their workplaces against three of the six gender equality indicators. This is a central recommendation of this review (Recommendation 3.1.a).

It is also recommended that the existing minimum standards be strengthened to require relevant employers with 500 or more employees to have a policy or strategy against all six gender equality indicators, not just one of four as is currently the case (Recommendation 3.1.b).

To reflect the increased ambition of these proposals to enhance the minimum standards, it is recommended that the minimum standards are renamed as ‘gender equality standards’ (Recommendation 3.1.c).

Balancing views from different stakeholders, it is proposed that the new minimum standards apply only to employers with 500 or more employees rather than apply to all relevant employers with 100 or more employees. This tiered approach is in line with the reporting framework in the Minimum Standards Legislative Instrument, which currently applies only to employers with 500 or more employees. It is not recommended that the renamed and expanded gender equality standards apply to employers with 100-499 employees given the likely regulatory impact, particularly in the current context where employers face many challenges dealing with the impacts of COVID-19. While many employers with 500 or more employees already have the required policies or strategies to meet the minimum standards, employers with 100 or more employees would be more likely to have to develop policies or strategies to meet such a proposed change.

In the consultation process stakeholders asked that there be a co-design process to develop any new standards that might require them to take action against targets. As this is another key change, further consultation with stakeholders is proposed to work out the best approach to implementing the recommendation for employers to commit to, achieve and publicly report on measurable genuine targets to improve gender equality in their workplaces.

The consultation process will be an opportunity to consider how the targets are set, by whom, their content and the reasonable timeframes to meet them. Targets could be set against data already provided to WGEA. For example, a target that could be set against data already reported to WGEA by employers could be ‘to have a gender balanced board with at least 40 per cent women.’ This could be a target against gender equality indicator 2 (gender composition of governing bodies of relevant employers). Another example of a target could be ‘key management personnel are gender balanced with at least 40 per cent women.’ This would be a target against gender equality indicator 1. The consultation process will provide an opportunity to work out implementation details such as whether these kinds of targets would be part of a suite of targets set out in the Workplace Gender Equality (Minimum Standards) Instrument from which employers could choose and the reasonable timeframes to meet the target.

Given the significance of this proposed change to the renamed gender equality standards, it is also recommended that a regulatory impact assessment be conducted ahead of implementation (Recommendation 3.1).

Improve accountability

In the short-term – ahead of changing the minimum standards as proposed in Recommendation 3.1 – it is recommended that the Workplace Gender Equality Act be amended in two ways to strengthen the accountability of employers to take action (Recommendation 3.2).

First, to embed accountability into the reporting process, and foster transparency of gender equality challenges and progress within organisations, it is recommended that the WGEA legislation be amended to require relevant employers to report the date their gender equality reports to WGEA are shared with employees, shareholders, and/or members (Recommendation 3.2.a).

Second, given the important strategic role boards play, it is recommended that both the Executive Summary report and Industry Benchmark report that WGEA provides to employers should be provided on an annual basis to the employer’s Board or Governing Body (Recommendation 3.2.b). Currently the CEO is required to sign off on reporting provided to WGEA. But there is no requirement for the reports that WGEA provides to employers to be provided to an employer’s Board or Governing Body.