Fair Pay Agreements
The Fair Pay Agreements Bill has been passed into law. It’s anticipated to come into effect in December 2022.
Lots of noise from both Unions and employers about what each sees as the likely impacts. How likely is it to have any of these impacts. Time will tell. National have vowed to repeal it if they are elected.
Thresholds for initiating bargaining
Essentially, the new law - which adds yet another layer to the existing system of collective agreements - will enable a union to initiate bargaining for an FPA (either based on an occupation or on an industry sector) where they satisfy the Chief Executive of MBIE of a threshold of support from either:
(a) 1,000 employees within intended coverage; or
(b) (where it can be demonstrates there is “public interest” i.e. “low pay” and also one of the following is demonstrated: little bargaining power, lack of pay progression, inadequate pay having regard to things such as - long or unsocial hours, uncertainty of employment) 10% of employees within intended coverage.
The proposed FPA will cover union and non-union staff and will cover all employers in the industry or who employ people in that occupation.
Strikes unlawful
It will be unlawful to strike for an FPA, but in the event an impasse is reached or if a representative of employers cannot be established, then the union can refer the claim to the Employment Relations Authority which can “fix” the terms and conditions of the FPA.
Note: The FPA legislation is less complete than earlier (Industrial Relations Act 1973) regimes which specifically addressed in an orderly way, the role of employer representatives and also provided for central arbitration of employment conditions for an occupation or industry.
Term and Terms & Conditions
There are a range of specific types of terms and conditions that must be included in an FPA (e.g. hours of work, base pay, overtime, penal rates, leave).
The Term of an FPA must be between 3 and 5 years (cf CEA 1-3 years) and can differentiate wages and some other conditions by region (“district”).
Ratification and Arbitration
Ratification (by more than 50% of those who vote) of any proposed FPA is required by both employees and employers. Following two unsuccessful attempts at ratification, the FPA can be referred to the ERA to fix (determine) the agreement.
Mixed duties
The Act addresses the practicality of employees performing a mix of duties and sets a 25% threshold for coverage. If 25% or more of the employee work is covered then the FPA covers them If an employee’s work is covered by more than one FPA, the FPA covering the greater proportion will apply to all the employee’s work.
It is clear, there is a fair amount of practical administrative details to be sorted for this legislation to work in practice. None of this deals with the realities of businesses and jobs having evolved to a more complex mix of tasks and activities than the legislation is predicated on or with the removal of non-compete regimes that governed union behaviour under earlier legislation that appears to have influenced the authors of this legislation.