FAIR PAY AGREEMENTS
15 JUNE 2021
Fair Pay Agreements
The Government plans to introduce “Fair Pay Agreements”, which is a new system for collective bargaining for working pay and conditions. The proposal is loosely based on Australia’s Modern Awards system. The purpose of the Fair Pay Agreement system is to increase wages, which the Government believes have not kept up with gains in productivity over the last 30 years.
The Fair Pay Agreements regime would mean that employees’ pay and conditions would be bargained for on a sector-by-sector basis, between unions and organisations representing employers (rather than between particular employers and their employees). The Government would contribute to the bargaining organisations costs.
Subsequent agreements would cover all employees in the sector (i.e. regardless of whether they belonged to the union), and all employers (not just members of that employer organisation/s). Agreements would be able to provide for different terms and conditions for people doing different work, and also for regional differences. Exemptions may apply for businesses in significant financial hardship.
Proposed rules are being developed for how a bargaining process would start. For example, a union may be able to start one if they have support from 10 percent of the relevant workforce or 1,000 employees.
There will be a ratification process. If a union and an employer representative organisation reach a bargain, employers and employees covered by that bargain get to vote on whether they accept it.
If bargains cannot be reached, matters can be sent to the Employment Relations Authority for mediation and/or a recommendation and, if necessary, for a decision. The Employment Relations Authority’s role is designed so that disputes do not lead to industrial action. Agreements vetted by the Employment Relations Authority, to check that they are lawful.
Once agreements are finalised, they will be given legal status and will be enforceable (in much the same way as minimum terms of employment are legally enforceable at the moment).
All Fair Pay Agreements will have to include certain things, ie: wage rates, ordinary hours, and overtime rates. Some other topics must be discussed, but don’t have to be agreed upon (including redundancy, leave, and health and safety).
The proposed Fair Pay Agreement regime has been strongly criticized by some employer and business groups, who argue that it is undemocratic and likely to lead to business closures, unemployment, and inflation and that it takes too much of a “one size fits all” approach.
The system as presently proposed would only apply to employees. However, the Government is looking at extending it to contractors.
The Government plans to introduce proposed legislation into Parliament later this year, with a view to it being passed and becoming law by the middle of 2022.
Tim Blake
Senior In House Solicitor
Hospitality NZ