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Government releases Fair Pay Agreement report

January 31, 2019

Contacts

Partners Phillipa Muir, John Rooney, Samantha Turner, Shan Wilson
Senior Associates Carl Blake, Bronwyn Heenan, Matthew Piper, Rebecca Rendle

Employment (inc Employment Relations Amendment Bill) Government reform and public policy

This morning the Government released the report and recommendations from the Fair Pay Agreement Working Group (chaired by former Prime Minister Jim Bolger). Fair Pay Agreements (FPAs) are large-scale collective agreements that set minimum standards for whole industries or occupations.

The Working Group has taken a particularly all-encompassing approach with respect to how FPAs should operate in practice. Under the suggested framework, FPAs would have compulsory coverage - all workers (not just employees) in the occupation or sector covered by the FPA would be included by default.

In a similar vein, the Working Group has recommended that the bar for triggering a FPA collective bargaining process be relatively low. The report suggests there be two options for initiating FPA bargaining:

  1. A ‘representativeness trigger’: in any sector or occupation, workers will be able to initiate a FPA bargaining process if they can meet a minimum threshold of 1000 or 10% of workers in the nominated sector or occupation, whichever is lower.

  2. A ‘public interest trigger’: where the representativeness threshold is not met, a FPA may still be initiated where there are “harmful labour market conditions in the nominated sector or occupation”, as decided by a dedicated independent body.

Unsurprisingly, BusinessNZ and other employer representatives are opposed to some of the Working Group’s recommendations. In particular, three employer representatives on the Working Group disagreed with the recommendation for a compulsory approach to FPAs. BusinessNZ is advocating for a “non-binding alternative approach”.

Minister Lees-Galloway said that the Working Group report “articulated the complexity of the policy challenges ahead.” He has promised that the Government will undertake detailed policy consideration and consultation as a next step: “we will take the time to get it right”.

We expect that the Government will introduce legislation establishing a FPA mechanism (in some form) later this year. Introducing FPAs remains part of Labour’s policy platform.

Contributors matt.bartlett@simpsongrierson.com