Why Salary Disclosure Should Be a Hard No for Candidates

The debate on salary disclosure has grown in recent years, particularly after the UK government’s decision in 2023 to permit employers to request salary information from candidates and mandatory salary expectations while dropping plans to require salary ranges in job postings.

Supporters of salary transparency argue that it fosters pay equity, but there are strong legal and practical reasons why candidates should avoid salary disclosure. From an employee’s perspective, sharing salary history or being required to declare salary expectations can weaken negotiation power and perpetuate existing inequalities. While employers benefit from this information, candidates often face disadvantages, leading to a skewed recruitment process.

In the UK, the Equality Act 2010 offers important legal protection for employees. It prohibits pay secrecy clauses and aims to reduce gender pay gaps. Section 77 of the Act allows employees to discuss their pay with colleagues without fear of reprisal. However, this protection does not require employers to disclose salaries during the recruitment process. This creates a legal tension: while employees are protected from being silenced about pay internally, candidates are not shielded from potential harm when required to disclose pay in negotiations.

This situation creates a significant power imbalance in favour of employers. They benefit from having more information than the job candidates, allowing them to offer lower salaries based on the candidate’s past, possibly discriminatory, compensation rather than their true market value. This undermines the purpose of equal pay legislation (Equality Act 2010, s 77).

Employers can gain an unfair advantage by asking for salary disclosures during the recruitment process. When employers know a candidate’s previous or expected salary, they can set offers at the lower end of the candidate’s range, effectively capping potential earnings.

This tactic benefits businesses by reducing salary inflation and controlling labour costs. It aligns with the government’s rationale for abandoning mandatory salary disclosure in job postings in 2023, citing concerns about salary inflation and reduced job mobility (Department for Business, Energy and Industrial Strategy, 2023).

However, it stifles candidates’ ability to negotiate based on the value they bring to the organization rather than their past earnings, which may have been depressed by systemic biases, such as gender or racial discrimination (Hall, 2021).

Advocates for disclosing salaries argue that it promotes fairness by preventing over- or under-estimation of a candidate’s market value. The idea is that if everyone knows the going rate for a role, then candidates, regardless of background, will be treated more equitably. However, this perspective is flawed.

Past salary is not a true reflection of an individual’s value. Many candidates, especially women and minorities, have historically been underpaid due to discriminatory practices. This is supported by data from the gender pay gap reporting introduced by the UK government in 2017 (Gov.UK, 2021). Basing salary offers on past earnings risks perpetuating the very pay disparities that transparency advocates seek to eliminate (Adams, 2022).

Furthermore, salary expectations can be deeply personal, influenced by a candidate’s financial situation, location, and past negotiating experiences. When candidates reveal their salary expectations early in the process, they may unintentionally undervalue themselves, especially if they are unaware of the market rate for a specific role (Roberts, 2020).

This lack of knowledge puts candidates at a disadvantage, as employers who have access to broader market data and salary benchmarks can use this information asymmetry to make lower offers. In contrast, candidates are left without the necessary leverage to negotiate a fair salary based on their experience, skills, and the specific requirements of the role.

The UK government’s decision to allow employers to ask for salary disclosures without requiring transparency on their part creates a one-sided dynamic. Equal pay legislation, which ensures that men and women are paid equally for the same work, should theoretically prevent discriminatory pay practices (Equality Act 2010).

When job postings do not include mandatory salary ranges, it becomes more challenging to enforce the legal protection provided by equal pay laws. Employers can claim that offers were determined based on disclosed salary histories or expectations, making it harder for candidates to challenge unfair pay offers based on gender or race (Saunders, 2023).

Candidates should view refusing to disclose salary expectations as a necessary negotiating strategy, not a refusal to engage transparently. They should be evaluated based on their skills, experience, and the value they bring to an organisation, rather than what they earned in their previous role.

By maintaining salary privacy, candidates can preserve their negotiating power and ensure that their compensation is based on the market value of the role, rather than their past financial history. While refusing to disclose salary expectations may come with risks, such as being eliminated from consideration, candidates should consider this risk in comparison to the potential long-term financial harm of locking themselves into a salary bracket that does not reflect their true worth (Adams, 2022).

In conclusion, although salary transparency may help in promoting fair pay practices, candidates should approach disclosing their salary history with caution. While candidates are legally protected against discriminatory pay within a role, revealing their salary history can perpetuate existing inequalities. From a business perspective, employers gain a significant advantage when negotiations are anchored around a candidate’s disclosed salary, often resulting in unfair outcomes.

Ultimately, salary disclosure should be avoided as it disadvantages candidates, undermines their negotiation power, and risks perpetuating historical pay disparities. The focus should be on evaluating candidates based on their merit rather than their past pay to ensure a fair and equitable hiring process.

References

1. Equality Act 2010 s 77.
2. Department for Business, Energy and Industrial Strategy, Abandonment of Mandatory Salary Disclosure Measures (2023).
3. G Hall, Gender Pay Gap in the UK: Causes, Consequences, and Remedies (2021).
4. UK Government, ‘Gender Pay Gap Reporting’ (Gov.UK, 2021) https://www.gov.uk/government/publications/gender-pay-gap-reporting accessed 15 October 2024.
5. R Adams, ‘Salary History Bans: The Case Against Asking About Prior Pay’ (2022) Journal of Labour Studies.
6. S Roberts, The Power of Salary Negotiation: Protecting Candidates from Pay Inequity (2020).
7. L Saunders, ‘Equal Pay, Salary History, and the Challenge of Transparency’ (2023) Legal Journal of Employment Law.