Fair Pay Agreements will cause more issues for business owners

Published May 12, 2021 (last updated January 25, 2022) - [email protected]

New Zealand’s newly announced Fair Pay Agreement system will introduce increased costs for business owners, and create more issues than it hopes to solve.

According to the Government, the system, which is yet to be legislated, has been created to put a floor under wages by allowing unions to negotiate on an industry, or occupation-wide basis.

While it is not opposed to people earning a fair wage for work, Employsure, New Zealand’s largest workplace relations advisor, believes such a system will lead to unwarranted disputes between employers and their staff.

“Many of these systems are dependent on specifics, and there is always the question of whether the process will actually work in practice,” said Employsure Advice Services Team Leader Courtney Woods.

“Our consultations show the major fear amongst employers is the compulsory nature of the Fair Pay Agreements will lead to employers being effectively held to ransom by unions.

“You just have to look at Australia’s industrial relations system, which categorises occupations into one of more than 120 modern awards. When compulsory, nation-wide systems are introduced, it can lead to greater ambiguity, and cause confusion amongst employers. Australia’s system is one of the most complicated in the world, and it is something this country does not need.”

If passed, the bargaining process for a Fair Pay Agreement can be enacted if a union in the sector has the agreement of 1000 employees, or 10 per cent of a workforce. There is also a public interest trigger that can initiate talks, but such a test has not yet been set. If approved, bargaining between a union(s) and employer(s) can begin.

A resulting agreement would set conditions that would apply to that relevant industry, or occupation nationwide, including minimum ordinary wages, overtime, and penalty rates.

The Working Group report on Fair Pay Agreements states if a collective bargaining dialogue is introduced, it will help build relations between employers and workers. However, employer representatives who participated in the process advise they cannot support the compulsory nature of the system for employers as currently drafted.

“The wording of the system basically means employers would have to agree with the demands of unions during the bargaining process, regardless of the outcome,” continued Ms Woods.

“What we need to see is a fairer system that doesn’t turn the employer into a hostage during negotiations. If this system were to be passed as it is, the disputes between employers and workers would only grow.

“We do not want a system that will, at the least, result in higher wages, and at worst, prevent employers from employing people. This would result in a cut workforce which would lead to businesses closing down. The Government needs to continue discussions on this, to create a fairer system that doesn’t leave employers out to dry,” concluded Ms Woods.

Further enquiries:

Matthew Bridges

[email protected]

Have a question?

Have a question that hasn't been answered? Fill in the form below and one of our experts will contact you back.

  • This field is for validation purposes and should be left unchanged.

Call Now

0800 568 012

Live Chat

Click here