News

The new legislation is intended to provide a framework to bring together unions and employer associations to bargain for minimum employment terms for all covered employees in an industry or occupation. It is very similar to Australia's Award/Enterprise Bargaining system and once in place for an industry it will mean all employers for that industry will need to comply to the industry's FPA.

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When does it start?

• 1 December 2022

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What is it about?

The Fair Pay Agreement (FPA) Bill was passed into law in New Zealand on 2019, which allows employees and employers to negotiate agreements that set minimum terms and conditions for pay and other employment issues for whole industries or occupations.

This Bill aims to improve wages and conditions for low-paid workers in a number of sectors, ensuring that employees receive fair pay and conditions, this will be done by allowing employees and employers to negotiate agreements that set minimum terms and conditions for pay and other employment issues for whole industries or occupations.

The legislation also established a process for making fair pay agreements, and a new body, the Fair Pay Agreement Working Group, to help with the process.

How does it operate?

The FPA law also established a new body, the Fair Pay Agreement Working Group (FPAWG), to help with the process. The FPAWG is responsible for assessing proposals for agreements, and for making recommendations to the Minister of Labour about whether agreements should be made. The FPAWG is also responsible for providing information and assistance to employees and employers about the process of making agreements.

The FPA process begins with a proposal for an agreement being submitted to the FPAWG. The proposal must be supported by a significant number of employees and employers within the industry or occupation it covers. The FPAWG assesses the proposal and, if it meets certain criteria, it is then taken to a vote by employees and employers within the industry or occupation. If a majority of employees and employers vote in favor, the FPAWG will recommend to the Minister of Labour that the agreement be made.

Once an agreement is made, it becomes legally binding on all employers and employees within the industry or occupation it covers. This means that all employers must comply with the minimum terms and conditions set out in the agreement, and all employees are entitled to receive them. Employers and employees are also required to follow the dispute resolution procedures set out in the agreement.

The FPA process allows employees and employers to come together to negotiate agreements that set minimum standards for pay and other employment conditions. This means that employees can be sure that they will receive fair pay and conditions, regardless of which employer they work for. It also means that employers can be confident that they are offering fair pay and conditions, which should help them to attract and retain employees.

What must be included in all Fair Pay Agreements?

The following items have to be agreed on and included in Fair Pay Agreements

• the date the agreement comes into force and when it expires
• the coverage of the agreement, written clearly enough that employers and employees can determine the work or type of work covered
• for each type of work covered, and for each class of covered employees, the standard hours during which the base pay is payable for work performed
• the minimum base wage rates, rates for overtime worked, penalty rates, and when these rates apply
• adjustments to the minimum base wage rates, rates for overtime worked and penalty rates over the term of the fair pay agreement
• training and development arrangements for covered employees
• how much leave a covered employee gets
• governance arrangements for the bargaining sides when the agreement is in force
• the process for bargaining sides to engage with each other if a variation is requested.

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Where can I get detailed information?

The guide on the employment.govt.nz website provides information on the process of creating an agreement, including the steps involved, the roles and responsibilities of different parties, and the criteria for determining fair pay. It also includes information on the rights and obligations of employers and employees under the agreement, as well as the role of the Employment Relations Authority in enforcing the agreement.

The guide is intended to assist employers and employees in understanding the process and participating effectively in the creation of a Fair Pay Agreement.

You can also see information on current Fair Pay Agreement applications (and their status) on the MBIE website.

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