Fair Pay Agreements

One of the more controversial labour law changes on the “to do list” of the Labour led government is the proposal of “Fair Pay Agreements” (FPA’s) which would set minimum employment terms and conditions for all workers in an industry or occupation covered by the agreement.

The government has now set up a working group, headed by Jim Bolger, to make recommendations on the design of a sector-level bargaining system that will introduce FPAs in New Zealand. The group will work closely with businesses, organisations and workers to solidify a structure that is good for both employees and workers.

The concept of FPAs is not new and Australia has been using them for over nine years. According to New Zealand’s Workplace Relations Minister, Iain Lees-Galloway, it is time to move toward new models of bargaining and adopt a sector-level approach that is common across the developed world.

As part of the minimum terms and conditions, the FPAs would include pay rates, hours of work and leave arrangements across entire industries and occupations, including non-union workers. It is proposed that FPAs will be determined through collective bargaining between unions and employers within each sector, without the need for negotiations with each individual employer.

A FPA would not override Individual Employment Agreements or Collective Agreements; it would sit alongside them, with the FPA determining industry wide minimum standards for employment terms and conditions. Lees-Galloway has, however, confirmed that strikes and lockouts will not be acceptable for FPAs.

Looking at our counterparts, the Fair Work System in Australia was created by the Fair Work Act 2009 and covers most Australian workplaces. The primary purpose of the system is to enforce minimum employment laws and agency bodies. The key features of the Australian Fair Work System are:

  • The national minimum wage;
  • 10 minimum National Employment Standards;
  • Protection from unfair dismissal; and
  • Awards that apply nationally for specific industries and occupations.

These features make up a safety net of employee entitlements. The Fair Work Commission and the Fair Work Ombudsman are independent government organisations that regulate Australia’s workplace relations systems. It is uncertain if it would be the Ministry of Business, Innovation and Employment in New Zealand that would undertake a similar role.

There are opposing views as to the effectiveness of FPAs in the workplace. Some say it will be very valuable to New Zealanders to enforce minimum terms and conditions specific to industries, whereas other can not comprehend how it would work in practice.

Jim Bolger and his working group will report back with their recommendations by the end of the year. These will then be considered by Cabinet and changes will be made accordingly before this becomes law. Once the legislation is passed, it will be up to workers and employers in a sector to begin negotiating FPAs.

National have already indicated that they would repeal any legislation about Fair Pay Agreements the next time they form government.

Workplace Law team

If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:

Employment: Andrew Shaw, Fiona McMillan, Gwen DrewittMaria Green,  Hannah Martin, Joseph HarropHolly StruckmanAlex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia StrickettKen Huang, Mary Zhou, Shi Sheng Cai (Shoosh)Sarah Kirkwood, Janeske SchutteLingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew ShawFiona McMillan

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