Fair Pay Agreements Bill

General, Bill, Employment Law / 13 April 2022
Fair Pay Agreements Bill

The Fair Pay Agreements Bill (FPAB) has been introduced, proposing industry bargaining for minimum terms of employment.  Key aspects of the Bill include:

Initiating Fair Pay Agreement (FPA) bargaining:

  • Unions would initiate the process with support from 10% or 1000 workers (or meeting the public interest test)
  • Contractors are not included but the Government plans to begin work on incorporating them soon
  • Penalties will apply to employers trying to avoid FPA coverage

The bargaining process:

  • The Bill sets out the process and general good faith obligations for bargaining
  • FPAs must include certain topics like base wage rates, ordinary hours, overtime and penalty rates
  • Other topics such as redundancy, leave and health and safety must be discussed but don’t have to be agreed
  • FPAs can allow for exemptions for business if they are in significant financial hardship. FPA’s can set regional differences
  • FPAs can set preferential payment for union members up to a maximum value of their union membership fee

Required Support for Fair Pay Agreements

  • Supported by training and a government provided bargaining support person
  • Government will contribute up to $50,000 per bargaining side
  • Employers must allow employees to attend two two hour meetings during FPA bargaining
  • If there are difficulties, mediation will occur. The Employment Relations Authority (Authority) can also make recommendations and if a stalemate is reached then it can set terms by determination

Finalising a Fair Pay Agreement

  • The Authority will vet FPAs to ensure the terms are lawful before it goes to a vote and FPAs will be in force for three to five years.
  • Ratification will need a simple majority of both employee and employer voters
  • If a first ratification vote fails then parties go back to bargaining, if it fails a second time then the Authority will make a determination
  • Once finalised, MBIE will make secondary legislation bringing the FPA into force. Rights are then enforced through a dispute resolution process, and the Labour Inspectorate can enforce terms

Message for Employers

The Bill will now go through the full parliamentary process before it comes into force, likely in late 2022, signaling perhaps the most significant change to industrial relations in recent history.

For advice on how FPAs may impact your business, please contact our team.


Disclaimer: We remind you that while this article provides commentary on employment law, health and safety and immigration topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.


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