Fair Pay movement likely to bring industrial action

17 Jun 21

Column written by John Farrow and published in the Otago Daily Times on 17 June 2021.

The recent nurses strike brought into focus issues around fair pay across an entire industry. While the Government has introduced a variety of changes to improve pay for workers, it seems there is more to be done.

The minimum wage has increased from $15.75 per hour in 2015 to $20 in 2021. There have also been increases in statutory parental leave, bereavement leave and sick leave entitlements. The next initiative is Fair Pay Agreements. The Fair Pay System is likely to come into force in 2022. It will allow industry or occupation-wide bargaining for minimum terms and conditions of employment.

The intention of the Fair Pay Agreement system is to address reducing wages or employment conditions; rectify reduction in Union membership and ensure that wages grow proportionately with increases in labour productivity.

There are concerns that while addressing these issues, the Fair Pay System will also change the labour market landscape and have a detrimental impact on small and medium-sized businesses while increasing the cost of products and services.

In addition to Fair Pay Agreements setting minimum standards, they will apply nationally across the entire occupational industry, to union members and non-members alike. However, there will be regional variations to account for the cost of living.

Bargaining can be initiated by a union provided it has support from 10% of members or 1000 workers in the proposed coverage area. Bargaining can also be initiated where the ‘‘public interest’’ test is met. This is where there is evidence that there is either low pay, low bargaining power, lack of progression or long hours and contractual uncertainty that is not properly compensated and so a Fair Pay Agreement would be deemed to be in the public interest.

Unions will decide what work is covered — there will be either occupational or industry Fair Pay Agreements.

Once initiated, the employer must enter into bargaining. If agreement is reached, the Fair Pay Agreement will need to be voted on by both employees and employers. If there is support by a majority on both sides, the Fair Pay Agreement will be put in place.

Whether or not an employer participates in the bargaining process, they will be bound by the finalised Fair Pay Agreement. All employees within the industry will also receive benefits of the new minimum employment terms contained in that agreement.

While initially Fair Pay Agreements will apply only to employees, there is an intention to expand this to apply to contractors. Michael Wood has recently announced a working party to explore contractor issues.

If bargaining becomes deadlocked, the traditional MBIE dispute resolution processes are available. If these are unsuccessful then the Employment Relations Authority can determine the terms of the agreement. There is no right of appeal from the authority. There is already a significant backlog of Employment Relations Authority cases following Covid19. With this additional role, the authority is going to need to be better resourced.

The system will also require much stronger and better resourced unions. Workers will benefit from belonging to a union. Bargaining parties will be able to agree to include a preferential payment for union members. Unions will be entitled to access to workplaces and employers will have to pay employees for union stop-work meetings.

There is not only concern about the cost to businesses of increased wages but also about the costs of bargaining. The Government has promised to contribute some money towards the cost of bargaining but it is unlikely to be enough. The Government’s proposal is that the balance of costs will ‘‘lie where they fall’’. However, some of these costs are not easily apportioned to any one party.

The nurses are now back at the bargaining table. Come 2022, we are likely to see a lot more industrywide industrial action in support of Fair Pay.


Want to know more?

If you have any questions about the Fair Pay Agreement, please contact our specialist Employment team.

This article was included in Edition 12 of our employment newsletter – Employment News which you can read here.

For more information contact:

John Farrow