Australian employers should start planning now for new gender equality target setting requirement

The new gender equality measure imposes another reporting requirement for employers, in addition to the current obligation to report gender pay gap data to the Workplace Gender Equality Agency (WGEA).  Taking gender pay gap reporting further than anywhere else in the world, many Australian employers will not only have to report on what their gender equality status is, but also have to actively set targets for improvement and demonstrate that they are progressing towards gender equity.

With baseline reports to be based on 2024 data, for which the reporting period is currently open, we recommend employers start planning now to select targets which are reasonable and achievable to progress towards gender equality in the business, aligned with business values and will help organisations gain a commercial, competitive and reputational advantage.

Employers should also be aware of changes to the Workplace Gender Equality Act 2012 (Cth) (the Act), which were made under the Workplace Gender Equality Amendment (Setting Gender Equality Targets) Act 2025, and what they mean going forward.  

Which employers does it apply to? 

Employers with over 500 employees in Australia will be required to set and improve against targets over a three-year target cycle.  They are referred to under the Act as Designated Relevant Employers (DRE).  For corporate groups: 

• where a parent company or subsidiary individually employs 500 or more people, they are each considered to be a DRE and must set and improve on targets separately; and 
• a subsidiary or parent company will not be considered a DRE if they would need to be combined with other entities in the corporate group to employ 500 or more employees.

If the number of employees falls below 400 for six continuous months, the employer will no longer be a DRE and will not be required to report against the targets.

The legislation does not apply to smaller employers with between 100 and 499 employees, however, these employers can voluntarily select and measure progress against targets, if they wish to do so.

What are the targets?

DREs must select at least three targets every target cycle and at least one of which must be a numeric target, for example 30% female representation or reduce pay gap to 5%, from a list of targets based on six 'gender equality indicators: 

Gender composition of the workforce (all numeric)

• increase the representation of women in non-managerial roles;
• increase the number of women in managerial positions; 
• ensure more women are promoted to managerial roles; or  
• improve the representation of women in higher pay quartiles.

Gender composition of governing bodies

• achieve gender balance on governing bodies (numeric).

Equal remuneration between women and men

• narrow the pay gap between men and women (numeric); 
• reduce pay gaps within managerial and non-managerial roles (numeric); 
• conduct regular analyses of gender pay gaps; or 
• implement policies ensuring equal pay for equal work.

Enhancing employment terms and conditions

• provide paid parental leave funded by employers; 
• increase the uptake of the under-represented gender taking parental leave (numeric); 
• enhance the quality and accessibility of parental leave; 
• provide better support for employees with caregiving responsibilities; 
• improve flexible work offering for employees; 
• increase the percentage of managers working part-time; or 
• improve supports for employees experiencing or at risk of domestic abuse or violence.

Consulting with employees on gender equality issues

• consult with diversity committees or employee representative groups, and with all staff, using methods like surveys, focus groups, and exit interviews.

Addressing sexual harassment, harassment on the ground of sex, or discrimination

• enhance policies on leadership accountability, training, reporting processes, support systems, and monitoring outcomes; or
• expand reporting practices to include issues like identified risks, prevalence, trends, and outcomes of sexual harassment.

What if an employer fails to set targets or make progress?  

A DRE fails to comply with the Act if, by the end of a target cycle, they have not met or shown improvement against each selected gender equality target without a reasonable excuse.  The consequences of non-compliance without a reasonable excuse, is that WGEA may publicly name the employer in a report to the Minister or through other means.

There is ongoing consultation on what “without a reasonable excuse” means, which will be set out in a WGEA guideline.  At this stage, WGEA has suggested that being busy during the reporting period or changes to key personnel would not typically constitute a reasonable excuse.  Submissions from industry groups have suggested it might include significant business changes such as mergers, demergers, restructures, or redundancy programs.

However, apart from the statutory consequences, the media interest and public commentary around gender pay gap reporting has increased considerably in recent years.  Employers should be aware that the potential reputational impact that can arise, from employees, potential employees, media, industry and competitors, may be more significant an impact than that which WGEA may impose at this stage.  

Timeline 

2025: Gender pay gap reporting sets baseline 

Large employers must submit gender pay gap information to the WGEA as usual.  WGEA will use this year's reporting data to establish a baseline for target selection and provide employers with a baseline report.  

2026: Target selection required

Private sector employers will select and declare their targets to WGEA between 1 April and 31 May 2026.  The targets and their baseline will be published on the WGEA Data Explorer.  DREs who do not set targets without a reasonable excuse may be publicly named.

2027: Year 1 – Reporting towards targets but not published

Employers submit an annual gender equality report that includes data on selected targets, but progress is not published.  

2028: Year 2 - Reporting towards targets but not published 

Employers submit an annual gender equality report that includes data on selected targets, but progress is not published.  

2029: Year 3 – Reporting towards targets, and progress against targets published 

Employers submit their annual gender equality report, marking the final year of the three-year target cycle, and select three new targets based on the 2028 baseline.  WGEA publishes data on whether employers have met or improved against each target on the Data Explorer, along with the new targets. Employers who do not meet or improve on their targets are subject to WGEA's non-compliance processes, with an opportunity to provide a reasonable excuse.  

What should employers do now? 

When setting reasonable and achievable targets which are aligned with business values, and which give the businesses real commercial, competitive and reputational benefits, an in-depth understanding of current gender equality data is essential.  We recommend a deep dive into the business’s gender equality data to use as a forecasting and modelling tool to determine which targets to select and where to set numeric targets.

The benefits of well-planned and considered targets based on a comprehensive view of the business’s gender equality data and a proper forecasting process include:

• the ability to improve gender equity profile to industry-leading standards, giving a competitive advantage in attracting and retaining talent;
• enhancing remuneration and benefits proposition, giving a competitive advantage in attracting and retaining talent; and
• reducing reputational risk associated with negative publicising of poor progress on pay equity

For employers with fewer than 500 employees, we recommend considering what targets would be reasonable and achievable for the business and tracking progress against them internally.  Progress towards internal targets can be included in internal and external communications around at the same time as WGEA data is reported each year.  This will demonstrate commitment and compliance with best practice and allow smaller employers to leverage the same benefits as DREs.