WRITTEN BY John Wilson & Kieran Pender
According to data from the Workplace Gender Equality Agency (WGEA), Australia’s present national gender pay gap is 13.3 per cent. That means, on average, for every dollar earned by Australian men, women only earn 87 cents (based on average weekly ordinary full-time earnings across all industries and occupations). Over the course of a year, that adds up to a disparity of $13,182. Each year, WGEA designates equal pay day – a date after the end of the financial year at which point the average Australian woman has ‘caught up’ to the average man’s annual earnings. Last year it was 29 August – i.e., 60 additional days of work.
Discrimination in the workplace on the basis of sex has been unlawful in Australia at a federal level since the Sex Discrimination Act 1984 (Cth) (SDA). While the landmark statute will celebrate its fortieth anniversary next year – and has no doubt contributed to significant progress in that time – the gender pay gap data underscores the ongoing discrimination problems faced by Australian women. The presence of the SDA means that explicit pay discrimination is rare (although certainly not unheard of) – it takes a particularly arrogant employer to deliberately pay a woman less than a man, for the sex distinction alone. More common, and more insidious, is the issue of unconscious bias in recruitment, retention and advancement.
In mid-April, the Victorian Court of Appeal delivered judgment in Austin Health v Tsikos, a landmark decision pay gap discrimination. The judgment, subject to any appeal and subject to what happens on remittal, is significant in recognising the discriminatory impact of unconscious bias in pay decisions. If the judgment is accepted in other jurisdictions, including federally, Tsikos could create considerable liability risk for employers that do not take steps to mitigate unconscious, systemic bias in HR decision-making.
Tsikos is therefore deserving of close analysis, which will be the task of this article. It bears consideration not just for employment and anti-discrimination practitioners, but for all lawyers in management or partnership roles.
In January 2009, Christina Tsikos was employed by Austin Health as an orthotist/prosthetist. Tsikos was allocated a grade specified in Austin Health’s enterprise agreement, and paid accordingly. 18 months later, Tsikos was promoted – to manage the orthotist/prosthetist department. She was elevated to a higher grade in the enterprise agreement. In both roles, Tsikos was paid at, not above, the rate specified by the enterprise agreement.
Following her 2010 promotion, Tsikos had responsibility for managing 14 staff. Ten were male – of these, six were paid above the minimum remuneration for their ‘true’ classification under the enterprise agreement, and all were allocated a grade higher than their role actually was under the agreement. One such employee, Sam Spalding, had been recruited to Austin around the same time as Tsikos. Despite Tsikos’s seniority and management responsibility, Spalding was paid $41,000 more than Tsikos – a rate significantly higher than that provided for his classification under the enterprise agreement. This was, purportedly, because he had initially been recruited for a ‘special’ revenue raising role, although this role had ceased.
Between 2011 and 2014, Tsikos repeatedly sought to renegotiate her remuneration – no less than six times. Her requests were denied. In mid-2018, she wrote to Austin summarising this history of attempts to initiate negotiations and highlighting the ongoing discrepancies, including Spalding’s pay. Austin again refused to negotiate. Instead, the company said that two of her employees were paid above-agreement remuneration as they had been transitioned to a ‘more appropriate’ enterprise agreement, while Spalding’s pay was ‘recognised as being an anomaly’. Austin indicated it was considering what could be done in relation to the Spalding anomaly, but was silent about Tsikos’ latest attempt to negotiate her pay.
Subsequently, Tsikos commenced proceedings in the Victorian Civil and Administrative Tribunal (VCAT), alleging discrimination on the basis of her sex (and age), I breach of the Equal Opportunity Act 2010 (Vic) (EO Act).
In VCAT, Tsikos claimed that Austin had denied her access to benefits relating to her employment, being the opportunity to negotiate remuneration, receive above-agreement remuneration and be paid at or above the remuneration paid to Spalding. She also claimed that Austin had subject to her detriment by refusing to negotiate and by not paying her above-agreement or on-par with Spalding. Austin denied these claims.
To support her claim, Tsikos tendered an expert witness statement from an organisational psychologist who canvassed the extensive research on bias and the gender pay gap. In part, Austin sought to refute Tsikos’ claim on the basis that an approximately equal number of men and women within Austin were paid above-agreement. However, the expert observed: ‘a far greater proportion of employees overall [at Austin] are women. In effect this means that a greater proportion of employees who are paid more than the classification for their role are men. This dynamic is well-evidenced in research.’
The expert also canvassed stereotypical gender expectations and the backlash that can be faced when women do not meet them, including the ‘pushy penalty’ which can deter women in negotiation settings. When Tsikos had sought to negotiate her salary, she had been accused of being ‘motivated by money’. The expert noted that such a claim ‘was less likely to be levelled at a male employee.’
VCAT rejected Tsikos’ EO Act claim. It noted that, to succeed, she had to satisfy the tribunal that she had received ‘unfavourable’ treatment because of her sex or age – and she had sought to do that by reference to Spalding’s favourable treatment. VCAT held:
it has been established that Mr Spalding has a salary higher than [Tsikos], but there is insufficient evidence to demonstrate that he has had an opportunity to negotiate it or its retention. The consequence is that [Tsikos’] claim that she has been denied or limited in her ability to negotiate her salary is barely made out. She has not demonstrated that she has received unfavourable treatment in regard to the treatment received by Mr Spalding.
The tribunal also held that, while Tsikos had shown that Austin ‘did not encourage and informally disregarded the attempts to negotiate’, she had not demonstrated ‘with sufficient strength or particularity a denial or limitation of the attempts’, or that such unfavourable treatment was done on the basis of her protected attributes.
Victorian Supreme Court
Tsikos appealed. One appeal ground related to the comparison with Spalding. The EO Act had previously required a ‘comparator’ to prove discrimination, but, following much criticism, this requirement was repealed. Although Tsikos’s case itself had put the comparison front and centre, Richards J accepted that VCAT had considered this comparison to the exclusion of other aspects of her case. Her Honour held:
The question for determination was whether Ms Tsikos had been treated unfavourably, not whether she had been treated less favourably than Mr Spalding or anyone else. The Tribunal’s approach unfortunately reintroduced an ‘unnecessary technicality’ associated with the former definition of direct discrimination.
Had it not been for this and related errors of law, Richards J held, ‘it would have been open to the Tribunal to find that Austin Health treated Ms Tsikos unfavourably between 2011 and 2018.’
Her Honour then turned to whether unconscious or unintentional discrimination could be contrary to the EO Act. It would defeat the objects of the anti-discrimination law, Richards J noted, if questions of causation were confined to ‘subjective reasons of individual decision-makers.’ Tsikos’ discrimination complaint was one of ‘systemic discrimination by a large organisation’, which could not ‘be reduced to a few isolated interactions with specific individuals.’ Accordingly, Richards J held,
Taking all of these matters together, I consider that it would have been open for the Tribunal to find that Ms Tsikos’ sex was a substantial reason why Austin Health had, between 2011 and 2018, failed or refused to negotiate over-agreement remuneration with her, and had not paid her at over-agreement rates. That inference could have been drawn from findings that were open on the evidence, including the uncontested opinion evidence about the presence in the Department of factors known to contribute to entrenched gender pay inequality in the broader workforce.
The matter was remitted to VCAT for reconsideration.
Victorian Court of Appeal
Austin appealed. It argued, among other things, that the Tribunal had applied the right test to determining whether Tsikos had been treated unfavourably. The Court of Appeal – Emerton P, Walker JA and J Forrest AJA – rejected this contention. It held that the Tribunal’s analysis had been ‘reductive’ in seizing on Spalding’s special circumstances and looking no further. ‘As a consequence,’ their Honours continued, ‘the Tribunal did not have regard to the complex picture of unfavourable treatment advanced by Ms Tsikos.’ That picture included Tsikos’ repeatedly blocked requests to negotiate, the expert evidence on the operation of structural inequality and unconscious bias in the workplace, and the empirical evidence: a proportionate over-representation of employees on above-agreement pay, all being men.
Given these (and other factors), not only was it open to the Tribunal to find that the ‘composite picture was one of unfavourable treatment, it is difficult to see how the Tribunal could reasonably have concluded otherwise.’
Tsikos is a significant case. It should cause those responsible for managing medium and large workplaces, or advising such workplaces, to pause for thought. The Victorian Court of Appeal’s endorsement of a more sophisticated focus on systemic factors, including unconscious bias, lifts the bar for employers in preventing sex discrimination. Particularly in sectors with discretionary pay systems (including performance-linked pay and bonus structures), historical gender disparities, and a disproportionate number of women at junior level and men at senior level (all characteristics of the legal profession, for example), remuneration and promotion decisions may be subject to heightened scrutiny following Tsikos.
Workplaces may wish to consider undertaking a thorough review of pay levels, performance-linked pay structures and promotion/advancement pathways in light of Tsikos. Having robust, objective and express performance and pay criteria in place is an important first step, together with a clear paper trail for decision-making. Such measures should be supported by ongoing scrutiny of pay and promotion, to monitor for disparities that might arise – and be attributable to unconscious bias or systemic barriers.
Tsikos is a particularly glaring example of gendered discrimination – with a female supervisor being paid significantly lower than her male employee, and repeatedly rebuffed in seeking to address the disparity. Not all cases will be so overt. But liability may arise even in less egregious cases. Employers are now on notice.
John Wilson is the managing legal director at BAL Lawyers. Kieran Pender is an honorary lecturer at the ANU College of Law and a consultant at BAL. The views expressed here are their own. The authors thank Jacinta Moss-Pinch for her research assistance.
For all employment related queries or concerns, please contact our Employment Law & Investigations team at BAL Lawyers.
  VSCA 82 (17 April 2023) (‘Tsikos’).
 Facts as summarised in ibid –.
 Ibid .
 Ibid .
 Tsikos v Austin Health  VCAT 1387 (9 December 2020).
 Ibid .
 Tsikos v Austin Health  VSC 174 (11 April 2022) .
 Ibid .
 Ibid .
 Ibid .
  VSCA 82 (17 April 2023) –.
 Ibid .