Further applications covering the supermarket and grocery industry, commercial cleaners, early childhood, and stevedoring are currently being assessed by MBIE.
Employers who employ people in these occupations and industries will need to keep an eye on developments over coming months.
Overview of the Act
The Act establishes a mandatory, sector-wide collective bargaining regime. Unions and employer associations will be required to negotiate minimum employment standards across occupations or industries and agree upon Fair Pay Agreements (FPA).
Only unions can initiate the process and act as employee bargaining parties. They will represent both union and non-union employees. Eligible employer associations will negotiate on behalf of employers, including those who are not association members.
In applying, a union must specify the coverage of the proposed FPA according to either:
• The occupation of employees (occupation-based agreement); or
• The occupation and industry of employees (industry-based agreement).
What does a FPA cover?
FPAs must cover essential terms such as work coverage, duration (which must be for a period of between three and five years), standard hours, minimum pay rates (including overtime and penalty rates), training and development opportunities, and leave entitlements.
If 25 percent of an employee’s work is covered by an FPA, that FPA must be applied to them.
The Process
Unions can apply for an FPA in two ways.
1. The representation test is satisfied if at least 10 percent of a given occupation or sector, or 1000 workers (whichever is less), support initiating bargaining for the proposed Fair Pay Agreement.
2. The public interest test considers relevant (usually vulnerable) employees who receive low pay and have limited bargaining power.
To date the applications have been supported by at least 1000 workers signing to confirm their support.
Negotiating a Fair Pay Agreement
The negotiation process will be complex, and will involve thousands of employees and employers.
Where the parties fail to reach an agreement, mediation assistance can be sought. If an FPA is not ratified after two attempts (by either the employees or employers), a Court will determine the final outcome.
The Employment Relations Authority (ERA) will make a binding determination on the terms and conditions that will be applied to that entire industry group or occupation. Employers will not have an option to opt-out.
Independent contractors are not currently covered by the Act, but indications are that this may change. There will be penalties for employers that attempt to avoid the FPA process by engaging workers as independent contractors when they are, in effect, employees.
Given the lengthy and complex process, it is unlikely that any FPA process will be completed before the general election on October 14, 2023. If there is a change of government, the FPA legislation will be abolished.
The months ahead will be historic and interesting.
■ Jannine O’Meara is a Business Central employment relations consultant for Hawke’s Bay and Gisborne. She has had extensive HR experience with Fletcher Challenge Forests and most recently with Wattie’s. Contact: jannine.omeara@businesscentral.org.nz or 022 454 1979
