Can employees be required to keep salaries confidential?

While many professional-employees unions in Denmark arrange courses on salary-negotiations, most people are still uninterested in sharing salary information with their colleagues.

That’s because discussing salaries is still taboo for most people – especially executives and other key employees. Although everyone is curious about how much their colleagues are paid, they still refuse to open up about their own salary – which they consider a private matter.

On the legal side, many employment contracts and associated bonus agreements still state that salaries are confidential and not to be disclosed to anyone. In other cases, no contractual obligation prevents sharing information on salaries. Nonetheless, it is still common perception that such information should not be shared.

But according to the Danish Equal Pay Act, all employees have the right to disclose information about their salaries. Section 2a of the Act provides that each individual employee has the right to disclose information on his/her own salary. That information may be disclosed to anyone, e.g. colleagues, shop stewards or their union.

That implies that in an employment contract, an employer cannot include provisions stating that salary is to be kept confidential. Likewise, employers cannot hold employees liable for punitive measures if they share information on salary or bonuses.

Most employers know that employees working more than eight hours a week for more than one month should receive a written contract or a document containing necessary employment information. The contract or the document must give details of specifically set out terms (10 in all) as well as other material terms and employment conditions.

If such an employee does not receive a contract or a document with that essential information, or if the information is lacking in either, the employee is entitled to compensation.

Is an employee entitled to compensation, however, if the employer has inserted a condition in the contract or document beyond the mandatory rules? That would be the case, for example, if an employer states in a bonus letter that the amount/calculation method of the bonus specified in the letter is confidential.

In three cases dating from December 2010, the Danish Supreme Court laid down the legal framework for such compensation. In one specific case, the High Court’s Eastern Division awarded compensation based on the fact that the employer had unlawfully included a provision in the document with essential information that salary was to be kept confidential.

Employers should review all their employment contracts to ensure that they comply with the legal requirements in respect to all necessary material; this should include matters that require written agreements, for example, solicitation or non-competition clauses.

The requirement for agreements in writing also applies to the provision of the Danish Salaried Employees Act governing termination at a short notice in connection with long-term illness or excessive sick days.