..

The Fair Pay Agreements Act 2022 (FPA Act) has been passed, and will come into effect quickly, on 1 December 2022. The new Act is the biggest change to employment law since the Employment Relations Act 2000.

What is a fair pay agreement?
A fair pay agreement is an agreement that applies to all workers across entire industries or occupations. It will provide minimum terms and conditions of employment for an industry as a whole, regardless of specific employers.
There are various matters that a fair pay agreement must cover.  These are:

• when the agreement will come into force and when it expires;
• the coverage of the agreement;
• normal hours of work;
• details of wages, including minimum base wage rates, overtime, and penalty rates;
• arrangements for training and development;
• leave entitlements;
• governance arrangements; and
• an agreed process for varying the terms of the agreement

Parties will also be required to discuss (but not required to agree on) other matters including:

• the objectives of the proposed agreement;
• health and safety requirements;
• arrangements relating to flexible working; and
• arrangements relating to any redundancy.

The fair pay agreement must apply for a minimum of three years and a maximum of five years.

A fair pay agreement may cover, and provide different entitlements for, different classes of employees, such as those who would be covered by a starting-out wage or a training wage. The agreement can also have different classes depending on the type of role, or the location of the employee.

Who could be covered by a fair pay agreement?
The FPA Act enables any eligible union to initiate bargaining for a fair pay agreement if it meets either a representation test or a public interest test.
The representation test is met if at least 1,000 employees or 10% of the employees who would be within the coverage of the proposed fair pay agreement support the application to initiate bargaining for the proposed fair pay agreement.

The public interest test is met if employees who would be within the coverage of the proposed fair pay agreement:

• receive low pay for their work; and
• meet one or more of the following criteria:
  o they have little bargaining power in their employment;
  o they have a lack of pay progression in their employment (for example, pay rates only increase to comply with minimum wage requirements);
  o they are not adequately paid, taking into account factors such as working long or unsocial hours (for example, working weekends, night shifts, or split shifts), and contractual uncertainty, including performing short-term seasonal work or working on an intermittent or irregular basis.

All employers of covered employees will be included in the fair pay agreement. For negotiation, the employers will be represented by an organisation; they will not be choosing one employer in an industry to negotiate on behalf of all employers in that industry.

How is the fair pay agreement reached?
The FPA Act creates a framework for bargaining for fair pay agreements by:

• setting out a general duty of good faith, and good faith obligations that apply to bargaining parties (within the same bargaining side and between bargaining sides);
• prescribing processes for initiating bargaining, carrying out bargaining, and finalising a fair pay agreement;
• providing processes to resolve disputes that may arise during bargaining for a fair pay agreement; and
• establishing regulation-making powers to give full effect to fair pay agreements bargained under the Bill.

Once an agreement is reached between the employee and employer bargaining sides, it must be submitted to the Employment Relations Authority and checked for compliance. The Authority may refuse to approve the fair pay agreement if it is not satisfied that the requirements of the FPA Act, employment standards, and any other employment law requirements are not met. There is no appeal from a refusal, although the parties may undertake additional bargaining and resubmit an agreement for approval.

Once a fair pay agreement is approved by the Authority as compliant, it must be ratified by covered employees and employers. If a fair pay agreement is ratified, then it will be validated by the Ministry of Business, Innovation and Employment and come into effect.
If a fair pay agreement cannot be ratified after two attempts (for example if employees or employers twice vote against the proposed agreement), the Employment Relations Authority will be empowered to fix the terms of the agreement,

When a fair pay agreement has been finalised, it applies to all employers within its coverage, regardless of whether they participated in the bargaining process. Likewise, all employees within coverage would receive the new minimum employment terms regardless of whether they are union members.  Employees and employers will still be able to negotiate their own agreements outside of the fair pay agreement, but only if the terms do not fall below those set out in the fair pay agreement.

To see the full article which is curtesy of Duncan Cotterill, click here

And to see their next article about what to think about now, click here.

MBIE HAVE A FAIR PAY AGREEMENTS DASHBOARD

The Fair Pay Agreements (FPA) dashboard provides an overview of all applications to initiate bargaining received by the Chief Executive (CE) of the Ministry of Business Innovation and Employment and their progress through the Fair Pay Agreements system.

On this page can be found:

• FPA application progress
• Current FPA application numbers
• Declined FPA application numbers
• Current FPA applications
• Enforced Fair Pay agreements
• Applications declined

The Fair Pay Agreements system brings together unions and employer associations within a sector to bargain minimum employment terms for all covered employees in an industry or occupation. Eligible unions and employer associations may apply to represent employees and employers during fair pay negotiations.

To see the full page, click here