Government seeking feedback on Fair Pay Agreements system

The Government has now published a discussion paper on Designing a Fair Pay Agreements System and is seeking feedback. Submissions on the discussion paper are due by 5pm on 27 November 2019.

The discussion paper outlines options for a new system to allow workers and employers/principals to negotiate minimum terms and conditions of employment for their occupations and sectors. These are known as Fair Pay Agreements.

Fair Pay Agreements – purpose

The discussion paper states that the “Government wants to support employees who are experiencing poor labour market outcomes while ensuring that employers are still able to compete, adapt and innovate.”

Last year, the Fair Pay Agreement Working Group (FPAWG) provided its recommendations to the Minister for Workplace Relations and Safety on the design of a Fair Pay Agreements system. See the FPAWG report here and our summary here. The Government has used these recommendations as a basis for its proposed options outlined in the discussion paper and is now seeking public feedback before making further decisions.

Feedback sought

The Government is seeking feedback on six key areas:

1. Initiation – how Fair Pay Agreements could be initiated, including who can initiate, how much support is needed, and the role of public interest.

The FPAWG recommended that there should be two circumstances where a Fair Pay Agreement collective bargaining process may be initiated: (i) in any sector or occupation, workers should be able to initiate if they can meet a minimum threshold of 1000 workers or 10 percent of workers in the nominated sector or occupation, whichever is lower; or (ii) where the representativeness threshold is not met, a Fair Pay Agreement may still be initiated where there are harmful labour market conditions in the nominated sector or occupation.

2. Coverage – how to define who is covered by a Fair Pay Agreement, and what scope there is for options to help vulnerable businesses or cater to regional labour market differences.

The FPAWG recommended that Fair Pay Agreements cover all workers (contractors as well as employees) in the named sector or occupation.

3. Bargaining – who the bargaining representatives for the parties should be and what bargaining support is required for an efficient and effective process.

The FPAWG recommended that (i) parties must bargain in good faith; (ii) legislation should set the minimum content that must be included in each Fair Pay Agreement; (iii) only employer organisations and unions should represent affected parties at the bargaining table; (iv) groups with representatives at the bargaining table (and by extension their members) should not bear an unfair share of these costs; and (v) there should be a government‐funded ‘facilitation’ function, to support a more efficient and effective bargaining process and to minimise the risk of disputes occurring.

4. Dispute resolution – what systems need to be in place for dealing with situations where the bargaining parties cannot resolve an ongoing disagreement.

The FPAWG recommended designing a dispute resolution system that would maintain the existing processes under the Employment Relations Act, with additions or simplifications where appropriate. The FPAWG recommended that where a dispute cannot be resolved through mediation, parties should be able to apply to have the matter decided by a determining body (most likely the Employment Relations Authority). The deciding body would then either issue a determination including terms for settlement or refer the matter back to mediation where appropriate.

5. Anti-competitive behaviour – how to minimise the potential negative consequences of Fair Pay Agreements, such as anti-competitive behaviour.

The FPAWG suggested that the Government investigate ways to ensure that the potential negative consequences of Fair Pay Agreements are kept to a minimum.

6. Concluding a Fair Pay Agreement – how to move from a bargained agreement to an enforceable set of minimum terms and conditions for workers and employers.

The FPAWG recommended that where parties reach agreement, conclusion should require ratification by a simple majority of both employers and workers. Where bargaining is referred to determination of the terms of the agreement, the final agreement should not need ratification.

Submissions due 27 November 2019

If you are an owner, director, shareholder, or manager of a business that employs or engages workers (employees and contractors) then Fair Pay Agreements could have a direct impact on your business or organisation.

This is an important issue and if you want to have your say, submissions can be made by downloading the submission form and sending it to the Ministry of Business, Innovation and Employment no later than 5pm on 27 November 2019. You can access the submission form by downloading it from MBIE’s website here.

Further information

For more information on Fair Pay Agreements, click here. You can directly access the discussion paper here. You can also directly access the consultation summary document here.

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If you have any questions about Fair Pay Agreements or would like assistance with submissions, please contact one of our experts as soon as possible.

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