Why must you disclose your last-drawn salary for a new job?

By reducing the decision on a new hire to a number, employers ignore the fact that salary alone is not decisive in the process.

- Mark Mortensen

The practice by prospective employers of asking job candidates last-drawn to disclose their salary has long been one of the more contentious aspects of the hiring process. While this remains a common request in Singapore, certain states in the United States including California and New York - have enacted laws that make it illegal. The European Union Pay Transparency Directive, which was established in early 2023, also prohibits employers from inquiring about a candidate's pay history.

When speaking with people in the job market about this topic, I find it often helps to keep in mind the simple calculus involved on both sides. To put it bluntly, employees are trying to maximise their salary while employers are trying to minimise it. Both parties have boundaries (Batna's, or Best Alternative to a Negotiated Agreement) - employees typically won't take a job that offers less than they can get elsewhere, and employers won't offer more than the value they think the candidate can bring to the organisation.

As such, there is no reason why a company will need to ascertain what a candidate was paid in their previous role when determining what salary to offer them. The budget for the position will already have been allocated and will be based on what the company is able to afford, and this will be benchmarked against competitors and current market rates.

HARD TO QUANTIFY VALUE