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Equal Pay Act Amendment: An Overview

Published August 11, 2020 (last updated February 24, 2021) -
female employee gets pay rise under equal pay amendment act

Since the 1970s, it has been illegal to pay an employee less simply because they are female.  However, until recently, there was not a process to help employers and employees agree on what was equitable remuneration.

A recent amendment to the Equal Pay Act 1972 aims to close the gender pay gap in industries by improving the process for employees to raise, progress and resolve pay equity claims.

“Equal pay” in this context is the principle that women and men doing the same job should be paid the same.

“Pay equity” is the principle that work predominantly performed by women should receive the same remuneration as work of an equal value done by men (even if it is different work).  Value for work should instead be assessed in terms of skills, knowledge, responsibility, effort, working conditions and other relevant factors.

This article only provides a brief overview of the main issues. For further information, please contact Employsure.

What Is A Pay Equity Claim?

The new rules are intended to:

  • Provide a low threshold for an employee to raise a pay equity claim against their employer (while recognising that this does not predetermine the outcome of the claim); and
  • Provide a simple and accessible process to progress a pay equity claim.

A pay equity claim means a claim that the employer has breached the requirement to have no differentiation with remuneration for work that is exclusively or predominantly performed by female employees than the rate that would be paid to male employees who:

  • Have the same, or substantially similar skills, responsibilities and experience; and
  • Work under the same, or substantially similar, conditions and with the same, or substantially similar, degrees of effort.

If an employee raises a pay equity claim, there are strict requirements as follows.

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Who Can Make A Pay Equity Claim?

An employee (or group of employees who perform the same or substantially similar work) can raise a pay equity claim against their employer if they think they have an arguable claim.  However, if the employee is covered by a pay equity settlement, they are not able to raise a claim or take the matter further.

A pay equity claim is arguable if:

  • The claim relates to work that is, or was, predominantly performed by female employees; and
  • It is arguable that the work is currently or historically undervalued.

The Equal Pay Act 1972 has further guidance about what it means to be work “predominantly performed by female employees” and if work has been “undervalued.”

What Does an Employer Have To Do When They Receive A Claim?

If an employer receives a pay equity claim, there are strict requirements.  Seek specific advice as the rules are complex.

As an overview, an employer must acknowledge receipt of the claim within five working days.

The employer must also give notice to all their other employees who perform work that is the same, or substantially similar, to the work of the employee who made the claim and this notice must be made within 20 working days.  There are requirements about this notice, including that it must be in writing and keep the details of the claimant confidential if they have requested this.  It may be possible to extend this time limit, if there is a genuine reason and a set extension process is followed.

Within 45 working days, the employer needs to form a view about if the pay equity claim is arguable and notify the claimant about this decision.  It may be possible to extend this time limit, if there is a genuine reason and a set extension process is followed.  If the employer has not provided a response within 45 working days (or the extended timeframe), then the employer is deemed to have accepted that the claim is arguable.  If the employer accepts that the claim is arguable, there is a set pay equity bargaining process that must be followed in order to resolve the claim.

5 working days after receipt of claimAcknowledge receipt
20 working days of receipt of claimProvide notice to other employees doing same/similar work (or provide claimant with notice to extend time limit for notification)
45 working days of receipt of claimDecide if, in their view, the pay equity claim is arguable (unless they have issued a notice extending the time limit)
45 working days of receipt of claimNotify claimant about decision if claim arguable

What If an Employer Does Not Agree with the Claim?

the employer decides that the claim is not arguable, they must notify the employee(s) of this view within 45 working days.

There are requirements about what needs to be included in this notice, including the reasons for the decision and the options available to the employee if they wish to challenge the decision.

What If There Are Multiple Claimants?

Before settling a claim, if an employer has received more than one claim about the same or substantially similar work, the employer must treat the claims as a joint claim unless they have genuine reasons based on reasonable grounds not to do so.

The employer must notify all claimants about if the matter is being dealt with jointly or separately.

If 2 or more employers receive claims from employees who perform the same, or substantially similar work, the employers may agree to consolidate those claims for the purposes of the pay equity bargaining process.

About Employsure

Employsure is one of New Zealand’s largest workplace relations advisers to small and medium businesses, with over 5,500 clients. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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