The Fair Pay Agreements Act 2022 has now passed and applications to initiate bargaining can be made from 1 December 2022.
The Fair Pay Agreements system brings together unions and employer associations within a sector to bargain for minimum employment terms for all covered employees in an industry or occupation. This means that these organisations will meet to discuss and agree on a set of employment terms for the work being done. In some situations, the Employment Relations Authority (the Authority) may determine what those minimum employment terms will be.
Fair Pay Agreement bargaining is between an employer bargaining side. Eligible unions that are approved to be an employee bargaining party bargain on the employee bargaining side. They will represent all covered employees, including employees that are not members of the union. If the work you perform is covered by the proposed Fair Pay Agreement, the union(s) will bargain on your behalf.
Eligible employer associations, including industry associations, approved to be an employer bargaining party, bargain on the employer bargaining side. These organisations must also bargain on behalf of employers that are not their members.
Both bargaining sides must use their best efforts to make sure Māori employees and employers are represented in the process. This includes by:
A Fair Pay Agreement must include what work is covered by the agreement and standard hours, minimum base rates (including overtime rates and penalty rates), training and development, how much leave an employee can have and how long the agreement applies for.
It will take time for both bargaining sides to come to an agreement on a set of employment terms they both agree with. Once the bargaining sides agree and the proposed Fair Pay Agreement is confirmed to be compliant with the law, covered employees and employers in that sector will be able to vote on whether they agree with the terms or not. If a majority agrees from both bargaining sides, the voting process and result will be confirmed by MBIE (the Ministry of Business, Innovation and Employment) and the Fair Pay Agreement will be finalised and be binding and enforceable.
The Authority has a range of roles under the Fair Pay Agreements Act, including:
The Authority also has an important role if there is no bargaining party on the side that did not initiate bargaining.
The Fair Pay Agreement system relies on employee and employer bargaining sides to bargain with each other. If there is no willing and suitable bargaining party on one side, bargaining may be held up.
Only a union can apply to initiate bargaining for a new proposed Fair Pay Agreement. If, after three months of getting approval to start bargaining, no eligible representative has stepped forward to be a bargaining party on the employer side, then a default bargaining party (defined in the law) will have one further month to decide whether they will bargain on the employer side. If the default bargaining party chooses not to be a bargaining party, an employee bargaining party can apply for the Authority to set the terms of the Fair Pay Agreement.
In addition, if during bargaining all the bargaining parties on the employer side stop being bargaining parties, the default bargaining party would have one month to decide whether to bargain. If they decide not to, then an employee bargaining party can apply for the Authority to set the terms of the Fair Pay Agreement.
If this happens, the Authority will fix the terms without any bargaining occurring.
If the initiating union does not apply to the Authority within three months from being notified that it can apply, the process to develop the proposed Fair Pay Agreement stops.
More detailed information about how the system works can be found on the Employment New Zealand website(external link)