A brief summary of the Fair Pay Agreements Bill

The Fair Pay Agreements Bill has been drafted with the intention of providing a framework for collective bargaining for fair pay agreements across all industries and occupations, rather than just between unions and particular employers. It was introduced on 29 March 2022 and is currently at the Select Committee stage.

The Fair Pay Agreements Bill allows for unions and employer associations to set standards for all other employees in an industry. The standards that can be negotiated are base pay rates, working hours and rates for work completed outside of working hours. Once a minimum standard has been set, employers and employees will be able to negotiate above this standard, but employees cannot legally be paid less that what the Fair Pay Agreement has set as the standard rate. The current layout of the Bill allows for the terms of the agreement to be valid for three years with renegotiation possible after this period.

Fair Pay Agreement negotiations are triggered by either a union beginning to bargain if they have the agreement of either 10% of a workforce or 1000 employees, or unions can meet a “public interest test”. Unions can agree to either an occupational Fair Pay Agreement or an industry one.

Fair Pay Agreement bargaining will receive a government provided bargaining support person, as well as training. The government also will contribute up to $50,000 per bargaining side, which has been calculated based on four Fair Pay Agreements a year. Unions will directly update employees, while employers must allow employees to attend two 2-hour paid meetings for Fair Pay Agreement bargaining.

The Employment Relations Authority will review a Fair Pay Agreement to ensure everything is lawful before it is taken to a vote. In order for a proposed Fair Pay Agreement to be ratified, it will need the support from the majority of both employees and employers. Employers will be given one vote per employee; however, a higher vote weight will be given to those employers with fewer than 20 employees. Once the vote has been carried out, MBIE will create secondary legislation to enact the Fair Pay Agreement so that it can cover all employees in an industry or occupation.

As the Bill is currently at the Select Committee stage, amendments to the Bill will be considered with the Select Committee due to report to Parliament early October 2022. Once the Bill has passed, it is anticipated that the Fair Pay Agreement process will commence at the end of 2022.

By way of introducing Fair Pay Agreements, the wages of those on low to medium incomes will be lifted, working conditions will be set at a better standard, and those working overtime, overnight and on public holidays will be able to negotiate fairer terms for doing so.