Fair Pay Agreements - what they mean for New Zealand Employers

What's New

Working its way through Parliament, bearing the innocuous title of the Fair Pay Agreements Bill is legislation set to change the way employers and employees agree terms of employment in New Zealand.

In reality it is a return to compulsory sector wide bargaining where parties who negotiate terms may have little or no connection with employers and employees who are affected.

NZ law has minimum terms of employment. The Employment Relations Act mandates collective and individual employment agreement terms, the rights of unions, flexible working arrangements, breaks, closedown rights, trial period for organisations with <20 employees, employment protection in the case of the sale or transfer of a business. Personal grievance provisions ensure there are avenues for redress. All are governed by the principle of good faith.

What we have now in our bargaining environment, in addition to mandatory provisions, is the ability for employers and employees to agree terms. Terms can only be changed by agreement.

This will no longer be the norm.

Add FPA’s to an already difficult economic environment, inflation, supply chain constraints, labour shortages, ever increasing regulation, and we have an environment set to create a perfect storm.

The FPA legislation will affect each and every employer in New Zealand irrespective of whether the employer likes it or not.

There is no contracting out.

The legislation is highly prescriptive.

The Chief Executive of MBIE has numerous roles to play in what is a growing bureaucratic morass.

Some of the principal aspects of the Fair Pay Agreement legislation are:

• Whether you are part of the bargaining or not, you will be bound by the minimum conditions determined in a finalised Fair Pay Agreement.

• Bargaining for employers has to be through Employer Associations. You as the employer have no right to be at the bargaining table.

• Unions are given the power to negotiate on behalf of employees in the industry or enterprise whether employees are members of the union or not.

• As the employer you are obliged to provide certain personal information on each employee potentially covered by an FPA to the Union prior to bargaining commencing, so that the Union can contact them.

• An initial 2 hour meeting between the Union and the employees and a subsequent meeting (all to be paid meetings by the employer) are legislated.

• Individually agreed benefits will be retained in addition to Fair Pay Agreement terms.

• Penal rates are back on the table. For those of you who do not remember the wage rounds before the Employment Contracts Act 1990 came in, time worked on unsociable hours (like weekends or shifts) would attract penal rates of pay.

• Mandatory redundancy provisions are almost certain to be included with the Unions wanting compensation of 6 weeks for the first year and 2 weeks for each subsequent year in the case of redundancy.

Ashley Sharp, Knowhow’s Head of Legal, and I have extensive bargaining experience.

Knowhow Limited will take the necessary steps to become an employer association so we can provide this service to our clients.

In the first instance we will run a series of webinars on FPA’s. We are finalising content now and I will be in touch next week with details.

If you are keen to discuss planning and strategy for dealing with FPAs, please let me know at knowhow@knowhow.co.nz or 09 377 9891.

Referrals

We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters, including those difficult issues that arise with employees please pass on our contact details or let us know and we will contact them to outline what we do.

Kind regards.

Sylvia Wood
Director
Knowhow Limited

Information contained herein does not constitute a definitive or complete statement of law. "What's New" is designed to provide accurate and authoritative information on employment matters. "What's New" is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem. KNOWHOW LIMITED

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