Fair Pay Agreements Regulations Released as Act Comes into Force
On the eve of the Fair Pay Agreements Act 2022 (Act) coming into force on 1 December 2022, supporting regulations to help guide the process have just been introduced.
The Fair Pay Agreements Regulations (Regulations) were issued on 30 November 2022, and the key elements are summarised below.
Public Interest Test Criteria
Relating to the crucial first step of initiation, the Regulations define the 4 elements of the public interest test that must be satisfied where a representation threshold of support from 10% or 1,000 workers in coverage is not being relied upon. These are that:
- Employees are low paid;
- Employees have low bargaining power;
- Employees lack pay progression;
- Employees are inadequately paid for working long or unsocial hours.
An initiating union must satisfy the first and one of the other 3 elements when submitting their application should they wish to rely upon the public interest test.
Somewhat unhelpfully, while these definitions are expressed as formulas, they allow for approximations in making those calculations. This uncertainty in wording is likely to create confusion with determining proposed coverage and assessing eligibility to initiate bargaining. Not only will this process likely require additional resources, but could extend the timeline of bargaining for a fair pay agreement.
Coverage Must Be Specified
An application to initiate barraging must specify the coverage of a proposed fair pay agreement by referencing either the Australian and New Zealand Standard Classification of Occupations 2006 (ANZSCO) or the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC) depending on whether the proposed agreement will cover an occupation or industry. Being from 2006, it is possible these codes may not accurately describe the occupation or industry a fair pay agreement aims to cover. Even so, an initiating union must include the closest approximation in their application.
Default Bargaining Parties
Despite BusinessNZ's public reluctance to participate in the fair pay agreement process, it has now been confirmed as the default employer bargaining party alongside NZCTU for the employee side. BusinessNZ have expressed that while they will not participate as a matter of course, they may help employers on a case-by-case basis.
For employers who consider they might be affected by a fair pay agreement, MBIE have recently updated their website to include a Fair Pay Agreements Dashboard. This page keeps a clear track of fair pay agreement applications and their status. This will be a very useful tool as the first round of applications are submitted. However, it will be to the employer to determine whether any of the proposed agreements may impact them if they are not notified otherwise.
For any questions you have on this new legislation or assistance you need, please reach out to one of the authors.