New framework for pay equity claims a step closer

Monday 20 May 2019

Authors: Liz Coats and Tim Clarke

​​​Last week the Select Committee issued its report (the Committee Report) on the Equal Pay Amendment Bill (the Bill). The Committee Report sets out several suggested changes intended to ensure that the pay equity framework in the Bill is workable for all parties. However, it does not recommend any significant changes to the framework proposed in the first reading of the Bill.

The Committee Report paves the way for the second reading of the Bill. It is an important step towards legislation that will define how pay equity claims can be raised and resolved in a number of different occupations and workforces in New Zealand.

What is pay equity?

"Pay equity" means women and men who perform work of the same value are paid the same, even though the actual jobs performed may be different. It is different to "equal pay", which means that men and women are paid the same for performing the same job.

"Pay equity" claims are particularly relevant for occupations or workforces that are or have traditionally been predominantly performed by women, and where that has resulted in under-valuation of the work.

Proposed approach to resolving pay inequity

The intent behind the Bill is to make it easier for workers to raise a pay equity claim, by replacing a court-based approach with an accessible process that uses the existing bargaining framework under the Employment Relations Act 2000 (ERA).

At a very high level, the basic steps in the process proposed in the Bill will be as follows:

  1. An employee or group of employees in a female-dominated occupation raises a pay equity claim with their employer, using information to support their view that their occupation is undervalued because it was historically predominantly performed by women.

  2. The employer must notify other employees who perform the same or substantially similar work as the claimant within 20 days.

  3. The employer must decide within 65 days whether they agree that the pay equity claim is arguable. (The Select Committee has recommended changing this timeframe to 45 working days, for clarity).

  4. If the employer agrees there is an arguable pay equity claim, the employer and employees enter bargaining for pay equity, using established principles under the ERA and considering appropriate comparator occupations (that are not undervalued based on gender), with a view to reaching agreement.

  5. If the employer does not agree that there is an arguable pay equity claim, the employee may challenge that decision using the dispute resolution process (mediation, facilitation, or proceedings in the courts). The dispute resolution process can also be used if disputes arise during bargaining.

Possible outcomes of this process may include a settlement with new wages, or an agreement or determination that there is no pay inequity.

In relation to back pay, the parties can discuss this as part of their bargaining. The courts can also exercise their discretion in relation to back pay, based on criteria set out in the Bill. Usually, any back pay award will be restricted to the date when the back pay claim was first raised.

What changes has the Committee suggested?

The Committee has recommended a number of changes to the Bill in order to make the system more workable for all parties. These changes include:

  • Providing clarity on the threshold for making an arguable pay equity claim, by clarifying 'predominantly female' is a workforce that is, or historically was, approximately 60 per cent or more female.

  • Removing the requirement to undergo facilitation before seeking a determination in disputes, to maintain a low threshold to commence bargaining and provide the Courts with greater discretion.

  • Requiring all settlements and determinations to be subject to a review process, to ensure ongoing pay equity.

Employers should start preparing now

At the same time that the Committee Report was published, the Government announced a $1 million Budget 2019 investment in pay equity guidance, tools and data. These resources will improve the understanding of the pay equity regime, and people's ability to make and consider claims.

The Bill is expected to pass into law in the coming months. The pay equity guidance, tools and data will be delivered by MBIE.

It is important that employers whose workforces include roles that are or have been predominantly performed by women consider the implications of the Bill, and the potential for pay equity claims once it becomes law. We will continue to provide updates on the progress of the Bill, and are available to provide more detailed practical advice as its introduction gets closer.

Please contact your usual Bell Gully advisor or any of the contacts listed if you would like any advice or assistance on matters addressed in this update.​


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Liz Coats

    Partner Auckland
  • Tim Clarke

    Partner Auckland
  • Rachael Brown

    Partner Wellington
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