Is pay equity on the horizon?

Wednesday 2 September, 2020

Does your business operate in an industry that has traditionally been female dominated? You might be affected by new equal pay legislation. The Equal Pay Amendment Act will come into force in late October 2020. It will allow workers to make a pay equity claim using the existing bargaining framework instead of having to go to court.

What is pay equity?

The new Act focuses on pay equity: the right of women to be paid the same as men for doing a similar type of job. It doesn’t change the law on pay equality: the right of women to be paid the same for doing the same job as a man. The Act intends to address historical pay discrimination, whereby wages were kept lower for certain occupations because the work is, or was, mainly performed by women. This means that the current market rate for these occupations might not be a fair rate, but rather a lower rate arising from historical pay discrimination.

Framework for raising pay equity claims

New Zealand’s equal pay laws say that women and men should be paid the same wages for jobs of equal value, even if the jobs aren’t the same, but until now the only way to raise a pay equity claim has been to go to court. The new Act allows individuals or unions to raise pay equity claims directly with an employer. The employer has 45 working days to decide if there is an arguable pay equity claim.

If the employer agrees there is, the employer must notify all employees who perform similar work and the parties will work through the pay equity bargaining process. If they reach an impasse, they enter the disputes resolution process, with the options of mediation, facilitation or determination by the Employment Relations Authority (ERA) of the issues in dispute. The parties can be referred back to bargaining at any stage. If the parties cannot reach agreement, the ERA can fix the remuneration, at which stage bargaining is no longer available. If the employer doesn’t agree that there is a pay equity issue, and the employee or union challenges this decision, the parties proceed directly to the dispute resolution process.

At the end of the process, the parties will reach a pay equity outcome, which could be a settlement, with new wages and possibly new terms and conditions of employment, or an agreed pay equity review process, or an agreement or determination that pay equity doesn’t exist. The parties can also discuss back pay as part of the bargaining process.

The purpose of the new Act is to make it easier for workers to initiate pay equity claims, so the number of pay equity claims is likely to increase from November onwards.

If you want to know more or have questions about how the Equal Pay Amendment Act might affect your business, our Employment Team can help.