What is the Fair Pay Agreements Act?
The Fair Pay Agreements Act came into force on December 1, 2022.
It has now been law in New Zealand for over a year, so it’s important to know exactly what it entails and how it might affect your business.
If you haven’t already, now is the time to learn more about the act to ensure you know what it means and how you might get involved.
What is the Fair Pay Agreements Act about?
The Fair Pay Agreements Act is designed to ensure a basic set of minimum standards for all employees in low-wage occupations and industries. It does this by bringing together unions and employer associations within a sector to bargain for a number of minimum employment terms for all of the employees in that industry or occupation.
To start the bargaining process, a union must initiate the process by sending an application to the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE). This application much be approved to start negotiations for a Fair Pay Agreement.
To be approved, it must either have the support of 10% or 1,000 members of the workforce, OR it must meet a public interest test, which means that the employees it represents must be low paid or not have bargaining power of their own.
On approval, the bargaining process may begin.
The bargaining process will typically include:
- Overtime rates
- Penalty rates
- Leave entitlements
- Standard hours
- A minimum wage base rate
- Training and development
- Coverage of the agreement (whether it’s industry-based or by occupation)
Once both sides come to an agreement, it’s time for a vote. Eligible employees and employers can vote on whether they agree on the terms or not. To pass an agreement, the majority must be in favour on both sides.
Following a successful vote, the agreement will be set as law.
What do you need to know for your business?
For New Zealand businesses, the Fair Pay Agreements Act is a reminder to regularly check your remuneration packages for employees.
Are you paying current standard wages? Do you provide employees with fair overtime rates? What do leave entitlements look like in your business?
It’s also a good idea to network and stay in contact with others in the industry. Seek out employer associations to stay up to date on what’s standard in your sector, and to learn about potential agreement acts in the works.
Industry and employer associations can bargain on your behalf should a Fair Pay Agreement be on the table for bargaining, so it’s good to keep your finger on the button so you know what’s happening.
You can also check out the Fair Pay Agreement dashboard on the MBIE website. Even if you’re not in touch with any employer associations, you’ll be able to learn about potential Fair Pay Agreement applications on the dashboard so you can stay abreast of any news.
Get support from Hello Monday
If you’re unsure about the Fair Pay Agreement Act, or want advice on how to best represent your side as an employer for an agreement, don’t hesitate to get in touch with us either by email email@example.com or by phone 09 377 5200.
Our Human Resources experts can talk you through the process and let you know what your rights and how to implement these changes. We’re here to make HR easy, and we’re always on hand to help you sort out everything from growing pains to complicated HR challenges.
Contact us today to learn more.