Fair Pay Agreement Plan Announced

After much anticipation, the Government has finally announced today how it proposes the Fair Pay Agreement (FPA) system in New Zealand will work.

FPAs are a set of terms and conditions of employment for an occupational group or industry sector, and the announcement today confirms FPAs will set minimum standards for wages, hours of work, overtime and penalties. These standards will apply nationally, across the entire occupation or industry, to union members and non-members alike, although there will be regional variations to account for the cost of living.

FPAs have been on Labour’s agenda for some time and were part of their 2017 election campaign. A working group was established in 2019, led by former Prime Minister Jim Bolger.

The key points of the system are:

• Bargaining for a FPA can be an initiated by a union provided they have support from 10% or 1000 workers in the proposed coverage area, or if a “public interest” test is met
• Unions will decide what work is covered – there will be either occupational or industry FPAs
• Once initiated, the employer must enter into bargaining
• If an agreement is reached, the FPA will need to be voted on by both employees and employers. If there is support by a majority on both sides, the FPA will be put in place
• If a second ratification vote fails, the Employment Relations Authority will determine the FPA terms
• If the parties reach an impasse during bargaining, there will be a dispute resolution process
• If bargaining is unsuccessful after dispute resolution has been utilised, the Employment Relations Authority will determine the FPA terms

The system is based on the Fair Pay and Conditions Standards system in Australia. Unions have welcomed the announcement, saying FPAs provide a “framework for fairness”. ACT and National have already announced they would repeal FPAs.

A draft version of the Bill will be released later this year. The Anderson Lloyd employment team will provide further information on FPAs once more information is forthcoming, and once a Bill has been drafted.

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If you have any questions about the Standards, please contact our specialist Employment Team.

PDF version: Fair Pay Agreement Plan Announced