The Government's Fair Pay Agreement bill is now law, which Cowley says is more bad news for employers. Photo / New Zealand Herald editorial cartoon / Daron Parton
The Government's Fair Pay Agreement bill is now law, which Cowley says is more bad news for employers. Photo / New Zealand Herald editorial cartoon / Daron Parton
OPINION:
In case you've been busy running your business and missed the news; the Government's Fair Pay Agreement bill is now law, which is more bad news for employers.
The NZ Chambers of Commerce made a joint submission against the bill, but it was always going to happen as fairpay agreements were part of the Labour Party's 2020 election manifesto, and it had the numbers to pass it into law.
It started off by targeting the key professions of cleaners, bus drivers, and security officers, but has ended up with an ambiguous scope covering any discipline and industry, including private, public, and not-for-profit employees.
As of December 1, 2022, the Fair Pay Agreement Act will be in play. Unions will be able to initiate mandatory bargaining by submitting a fair pay agreement proposal to the Ministry of Business, Innovation and Employment. The union just needs to either have 1000 employee signatures; prove it meets the 10 per cent representation test; or prove it meets the public interest test.
A Fair Pay Agreement covers more than just minimum pay rates. The parties must also discuss flexible working arrangements, superannuation, health and safety, training and development, and minimum leave entitlements.
Because of the dire worker shortages, employers are already bending over backwards to give employees competitive wages, greater flexibility, and additional benefits.
There is a risk that the standardised approach may adversely impact employees who already have a flexible agreement that suits their individual needs.
It's also a bad time in our economic cycle to be increasing wages. Unless New Zealand's wage inflation starts to decrease, the Reserve Bank of NZ will continue to increase borrowing rates – hurting first-home buyers and low-income households the most.
Tauranga Business Chamber chief executive Matt Cowley. Photo / Mead Norton
We all know that reaching these agreements is going to take time, money and resource. It's a new, complex, and comprehensive process likely to involve hundreds, if not thousands, of stakeholders.
While all parties are legally required to enter fair pay agreement discussions in good faith, the chances of everyone reaching an agreement are slim at best.
The process will likely be drawn out, and each agreement needs to be approved by the Employment Relations Authority (ERA), which already has a long backlog of cases in its pipeline.
The chances a fair pay agreement will be completed and ratified by the ERA before the next general election is, in my view, undoubtedly low. Meanwhile, National and Act have pledged they will revoke the Fair Pay Agreement Act if they're in Government after the 2023 elections – potentially making the next 12 months a complete waste of everyone's time and money.
The whole thing is ambiguous. Perhaps the Labour Government committed to too much major legislative reform in its recent three-year term, and it is now relying on the subsequent mediation and case law processes to sort out the detail and determine the right path forward for fair pay agreements.
As an employer, once a fair pay agreement has started in your industry, you will need to decide how much you want to be involved in the process, or whether you'll just accept what others agree on your behalf, whether you believe in them or not.
If you want to know more about this Act, Tauranga Business Chamber and Cooney Lees Morgan are holding a webinar on 23 November 2022, focusing on employers' rights and obligations. You can register for it on the Tauranga Chamber's events calendar on our website.
