Fair Pay Agreements Bill

Fair Pay Agreements Bill – Submissions Close 19 May 2022

The Fair Pay Agreements Bill is considered by many commentators to be the most radical overhaul of workplace laws in New Zealand in 30 years. Once in force, the new Act will allow Unions to negotiate compulsory, industry-wide minimum standards for base wage rates, ordinary hours, overtime and penalty rates.

The Act will provide a framework for collective bargaining for fair pay agreements (FPAs) across entire industries or occupations, rather than just between unions and particular employers. The Bill has been introduced to Parliament, passed its first reading, and is now at the Select Committee stage. Submissions from the public are open until 11.59pm Thursday, 19 May 2022.

How is the FPA process initiated?

The bargaining process for an FPA can be sparked in several ways. A union in the sector can commence the process if they have the agreement of either 10 per cent of a workforce or 1000 employees. They can also meet a “public interest test”. If they meet one of these tests, bargaining between the union (or unions) and the employers begin. The Government will fund both sides $50,000, and employers must allow employees two two-hour paid meetings during the bargaining.

Bargaining process

Unions will represent employees. Employers will choose representatives who meet specified requirements. The bargaining sides must use best endeavours to represent all those in coverage, including non-members, and to ensure Māori interests and views are effectively represented.

Employer representation

BusinessNZ has launched a major media campaign opposing the legislation and has rejected an offer by the government to be a formal partner in the legislation and a default bargaining agent for employer and industry groups. This position has caused the government to introduce a parliamentary paper alongside the bill that outlines a proposed change to the bill referred to as “the backstop”. If no eligible representative steps forward to be a bargaining party on one side, then the Employment Relations Authority would set the terms of the agreement.

Next steps

Once the select committee has heard all submissions and reported back on any recommended changes to the bill, the legislation is expected to enter into force by the end of 2022. If you wish to make a submission on the bill or require any advice relating to fair pay agreements, the CLM Employment Law team will be happy to assist.

9 May 2022