Ch-ch-ch-changes (of Government): Fair Pay Agreements

While the official results of the election will not be published by the Electoral Commission until 3 November, and the exact formation of the next Government is unknown, we do know that the National Party won the largest number of votes in the General Election and is expected to form a coalition Government with the ACT Party and, should it be necessary, New Zealand First.

Two key employment policies that are part of both National and the ACT Party’s ‘First 100 days’ promises are:

  • repealing Fair Pay Agreements (FPAs); and
  • reintroducing 90-day trial periods for all New Zealand employers.

In this article, we discuss the current status of Fair Pay Agreements. This article discusses the proposed changes to 90-day trial periods.

Since the announcement of the Fair Pay Agreement Bill in May 2021, Fair Pay Agreements have been the subject of much debate between the Labour Government, unions, and some employer and Business NZ. The legislative framework for FPAs came into force on 1 December 2022.

What are FPAs?

In short, FPAs are sector-wide agreements that that contain minimum employment terms for all employees covered in an industry or occupation. Our Fact Sheet, which sets out (in brief) the process for initiating, bargaining for, voting on and finalising an FPA can be downloaded from this link.

Current Status of Fair Pay Agreements

MBIE’s Fair Pay Agreement dashboard (reviewed 18 October 2023), provides an overview of the applications the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE) has received to initiate bargaining, and sets out the progress of the bargaining through the FPA process.

The dashboard indicates that there are currently 7 applications currently involved in the FPA process. In August, RNZ reported that the FPAs in process covered 200,000 workers.

One application (for waterside workers) is currently sitting with the CE for assessment as to whether one of the legal tests (either representation or public interest) have been met. Our Fact Sheet explains the requirements of these tests.

The other 6 applications are at the ‘Bargaining’ stage and have all been at this stage for over 3 months. These applications include:

  • Interurban, rural and urban bus transport—Bus drivers, coach drivers, and cleaners
  • Hospitality industry
  • Security officers and guards
  • Commercial cleaner
  • Early childhood education industry
  • Grocery supermarket industry

No FPAs have been finalised.

What happens now?  

If FPAs are repealed, employees will no longer be entitled to bargain for such agreements. We do not yet know how the FPAs will be repealed, in particular what will happen to FPAs currently bargaining. A press conference doesn’t change the law and we await the Parliamentary process.

Accordingly, until the FPA legislation is repealed, FPA processes remain live, and parties engaged in bargaining should continue to do so in good faith. It is noted that Parliament is closed over the summer break, and often doesn’t meet again until February. It may be some months before FPAs are officially repealed.

We will continue to watch this issue unfold, and keep you updated.

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