Tech giant Microsoft will free employees from non-competition clauses and begin publishing clear salary guidance for its job postings, the company has announced as part of a series of reforms that highlight the tech industry’s growing push for transparency in hiring.

The tech giant will publicly disclose salary ranges for all of its internal and external job postings in the US market, the company said in announcing a number of changes, positioning the new policies as building on past efforts to report on equal pay data and prevent recruiters asking applicants about their pay histories.

The new policies – which also include a civil rights audit of the company’s workforce policies and practices that will be published upon completion – will see current and former Microsoft employees freed from contractual non-compete clauses that, the company said, “feel at odds with our talent principles” such as “making people the priority, and creating a culture that attracts and inspires world-class talent to unlock innovation aligned to our mission.”

The removal of confidentiality provisions will also see former employees free to talk more openly about issues they experienced while working at the company such as discrimination, harassment, retaliation, sexual assault, or pay violations.

“There have been times when Microsoft resolved disputes with employees or provided separation benefits through agreements that had typically included confidentiality provisions,” the announcement said.

“We can further strengthen our workplace culture and encourage employees to come forward with workplace concerns by addressing these non-disclosure clauses.”

A push towards transparency

Microsoft’s latest policy changes are about more than just corporate largesse, however: the planned introduction of pay transparency next year coincides with the introduction of laws in the company’s home state of Washington that will force employers to list salary ranges and benefits in all internal and external job postings.

Similar legislation in jurisdictions like California, Colorado, Nevada, and New York City reflects a growing wave of sentiment that employers should increase the transparency of an overheated jobs market where, particularly in tech, surging salaries and competitive offers are driving many employees to jump between jobs with increasing regularity.

With just 12 per cent of US job listings including salaries, the increased transparency could dramatically shift the hiring conversation as well as increase the onus on employers to monitor changing requirements in what one analysis called “the ever-growing patchwork of pay transparency laws”.

Pay transparency is slowly gaining momentum in Europe and Australia, where concerns that lack of salary information is perpetuating a gender pay gap – exacerbated during the pandemic – where male executives can earn 35 per cent more than women in the same job.

With employees taking control of their careers and increasingly demanding salary rises – especially in the technology and finance industries – the stakes have never been higher, with employers climbing over themselves to hire the best tech talent.

In its latest Salary Guide survey, recruitment firm Hays found that 88 per cent of employers intend to increase salaries this year – up from 67 per cent last year – and that 37 per cent expect this will involve raises of more than 3 per cent.

The fact that just 12 per cent of respondents said the same last year confirms that employers increasingly recognise the need to use salary as a sweetener to recruit key staff. Indeed, 76 per cent of employers had offered higher salaries than they expected in order to convince key talent to join their ranks.

Taken in the context of a red-hot employment market, increasing salary transparency could benefit all concerned parties.

Consulting giant PwC Australia recently disclosed the salaries of its key staff and announced that it will include salary details across the spectrum of roles – although the near 100 per cent variation in salaries across most employment categories makes the figures more informative than instructional.

KPMG Australia is planning to follow suit, while Big Four banks are removing pay secrecy clauses in their contracts – which, the Financial Services Union (FSU) noted in a recent investigation into industry practices, explicitly prevent employees from discussing remuneration and other employment conditions with anybody other than family members and legal and financial advisors.

Salary transparency has long been a “polarising topic”, recruitment firm Hays has observed, noting that the policies have pros and cons but that increasing transparency “not only helps to improve understanding in how pay levels are set, but it improves trust with employees.”

“By being open and honest about how pay levels are set,” the firm notes, “everyone can be confident that their salary aligns with their skills, experience, and results.”