Fair Pay Agreements To Improve Pay And Conditions For Essential Workers
Hon Michael Wood
Minister for Workplace Relations and Safety
The Government is delivering on its pre-election commitment to implement Fair Pay Agreements which will improve wages and conditions, as well as help support our economic recovery, Workplace Relations and Safety Minister Michael Wood announced today.
Fair Pay Agreements will set minimum standards for all employees and employers in an industry or occupation. The Government today released the details of the process unions and employers will go through to agree set minimum standards that are relevant to their sector. These proposals substantively implement the system proposed by the Rt Hon Jim Bolger led Working Group in 2019.
Michael Wood said Fair Pay Agreements are about investing in our people which is part of the Government’s COVID-19 recovery plan.
“Fair Pay Agreements will improve wages and conditions for employees, encourage businesses to invest in training, as well as level the playing field so that good employers don’t get undercut and disadvantaged.
“For too long New Zealanders working in critical roles like cleaners, supermarket workers, and bus drivers whose work was essential to keep our country going during the pandemic, have been undervalued by our workplace relations system. Fair Pay Agreements are about turning that around and ensuring that working kiwis get a fair go again.
“We’re taking a balanced approach and have designed Fair Pay Agreements to be negotiated between business and unions who are familiar with the particular sector or occupational group being negotiated for. Industrial action cannot occur during Fair Pay Agreement negotiations.
“Fair Pay Agreements will help good employers by stopping the race to the bottom we’ve seen in various industries and encourage competition that isn’t based on low wages, but on better products, services, and innovation.
“We’re committed to helping both businesses and unions through the process. We’ll provide support for both BusinessNZ and the Council of Trade Unions to help them coordinate FPAs, as well as potentially providing a support person and direct financial assistance to bargaining parties,” Michael Wood said.
The Government will now draft legislation, which will be introduced later this year, and is expected to pass in 2022.
Overview of process and proactively released cabinet paper attached
Fair Pay Agreements will create an opportunity to bring sectors together to embed good practice and create consistency. They have significant similarity to the Australian Modern Awards, with the main difference being that in the Australian system, terms and conditions are set by an independent commission, whereas Fair Pay Agreements will be bargained between employers and unions.
The parties bargaining a Fair Pay Agreement will need to agree minimum terms, such as wages and working hours, while allowing the flexibility to address other relevant topics like skills and training, health and safety, and flexible working.
Any union can initiate the Fair Pay Agreement process as long as they can demonstrate support from either 10 per cent or 1,000 employees in the proposed industry or occupation. A Fair Pay Agreement can also be initiated via a public interest test in an industry or occupation where employment issues exist, such as low pay or limited bargaining power.
In some instances of financial hardship, bargaining parties can agree to give businesses limited, time-bound exemptions to Fair Pay Agreements. Contractors are not currently included in the system. Work is beginning shortly to address this and contractors will be included in a future amendment to the Act.
Negotiations of this nature can be challenging so the Government will provide financial support to bargaining parties. This includes:
- $250,000 each a year for three years for the NZCTU and BusinessNZ to support their role in coordinating Fair Pay Agreements, identifying bargaining parties and helping to raise awareness about Fair Pay Agreements and the bargaining process.
- Giving the opportunity for bargaining sides to receive a contribution of up to $50,000 towards the cost of bargaining. They may be able to seek additional funds where low union or industry body membership makes coordination difficult. They can also seek a bargaining support person to assist with the negotiations.
- Providing funding to support the bargaining of four Fair Pay Agreements each year. If more than four Fair Pay Agreements are initiated per year, the government will determine which Agreements receive funding support. Other Agreements will be able to work through the process without this support.
MBIE and the Employment Relations Authority (ERA) will support the implementation of Fair Pay Agreements. The ERA will play a role in determining conditions of an FPA in the event that bargaining becomes protracted or if ratification of the Agreement fails twice.
Both employees and employers covered by a proposed FPA will be able to participate in the ratification process for a proposed FPA. In the case of employers, there will be a small weighting towards small businesses to ensure that they have appropriate voice in the process.