Proposed pathway for Fair Pay Agreement process announced

The Fair Pay Agreement Working Group (Working Group) has reported back to the Government with its recommendations on the scope and design of Fair Pay Agreements (FPAs). In essence, if the recommendations were implemented, an FPA ratified by a simple majority of employers and employees in a sector or occupation, would set minimum wage and condition standards for all workers in that entire industry or occupation. Such an agreement would bind all employers.  An opt out is not available.

The Working Group proposed a design for a FPA collective bargaining system applicable to New Zealand’s context. Based on the Working Group’s recommendations:

  • The bargaining process for a FPA would be initiated by workers in an occupation or sector if they make up either ten per cent or 1000 workers in that occupation or sector.
  • The bargaining process for a FPA could also be initiated if it is in the public interest to do so. This would cover situations where there are harmful labour market conditions in a particular occupation or sector.
  • FPAs would cover all workers in the defined sector or occupation. Notably, this would include independent contractors as well as employees.
  • FPAs would automatically bind all workers in the relevant sector or occupation once they have been negotiated and ratified by simply a majority of employers and employees in the sector.
  • FPAs would have to cover wages, how pay increases will be determined, working hours, redundancy, leave, skills and training, flexible working arrangements, penal rates and overtime.
  • National Representative Bodies would represent employee and employer groups in the bargaining for a FPA.
  • There would be no recourse to industrial action during an FPA bargaining process. Disputes during the bargaining process would instead be solved via mediation as a first port of call, and then through the Employment Relations Authority if required.

The Government is now considering the recommendations of the Working Group. Given the far reaching implications not only for employers in New Zealand but those engaging contractors this is an important issue.  It is expected that a bill will be introduced by the government and all businesses should ensure that they engage in that process and any other avenues available for providing feedback.

Our specialist team can advise on any questions you may have.

Who can help

Related Articles