Fair Pay Agreements cooking up big changes for hospitality but concerns some firms in the dark

Chand Sahrawat of Auckland’s Kol, Cassia and the French Café says the industry faces challenges but the FPA process is a chance to find common ground with staff. Photo / Michael Craig

Big changes await the hospitality industry but some people are worried busy and stressed-out operators still aren’t aware of the new fair pay agreements.

The sector has an estimated 19,000 businesses and 135,000 employees for whom the new FPA will apply.

The agreements will cover accommodation, cafes, restaurants, takeaways, pubs, event catering companies, casinos and cinemas, with a few exceptions.

Chand Sahrawat, co-owner and operations director of Auckland’s Kol, Cassia and the French Cafe, said the agreements were a chance for employers and staff to act in good faith.

“Both parties lay their cards on the table and negotiate from there,” Sahrawat said. “It’s always interesting to see what the workforce says.”

The new agreements will have to specify minimum wage rates, including overtime and penal rates.

Standard hours for paid work, training and development, available leave, health and safety requirements, and flexible working arrangements and redundancy will also be hammered out.

Sahrawat said probably not everyone in the sector was up to speed with the looming changes.

“A lot of employers in hospo are mom-and-pop businesses who put their heads down and keep working.”

She said the Restaurant Association was working to educate members about the new obligations.

The industry has faced challenges in recent months from the labour crisis, inflation and some supply chain issues.

“It might be making a few people nervous because there’ve been a few wage increases lately ... because of the shortage of workers,” Sahrawat said.

She said with wages, eventually a ceiling was reached after which further increases were not affordable.

“If a business isn’t profitable there are no jobs.”

Sahrawat said nobody in hospitality wanted dining out to become routinely viewed as a dispensable luxury.

Marisa Bidois, Restaurant Association chief executive, said many small businesses might be unaware of fair pay obligations.

“It’s a massive piece of legislation and it has a lot of detail in it.”

The Ministry of Business, Innovation and Employment approved Unite union’s application to begin bargaining for a fair pay agreement in late May.

Business owners will have to communicate with workers covered under the agreement to ascertain if they are part of a union and if so, notify those unions that FPA talks are under way.

They should also notify affected workers as soon as possible that FPA talks are under way and must do so by 30 working days after they have been notified by the initiating union.

The rules are mandatory and businesses failing to comply could be fined up to $40,000.

Unite national secretary John Crocker in May said any agreement would be complicated because it would cover a wide range of businesses and occupations.

He said hospo workers would, for the first time, be able to collectively negotiate the minimum terms and conditions, including pay, for the entire sector.

Union and non-union workers alike will be covered.

Unite has argued the new FPAs will ensure rogue employers don’t undercut good employers in hospitality.

Under the proposed rules, if a public interest test is met, or 10 per cent or at least 1000 workers in an industry or occupation decide to start a negotiation process with employers, negotiations must happen.

Minimum pay and working conditions will be ratified if a majority of both employers and employees in a sector agree to them.

Business NZ has opposed the deals, objecting to the compulsory nature of FPAs and saying the framework deprives smaller businesses of flexibility in negotiations.

Further details on the hospitality agreement fair pay agreement are at the MBIE website.

-Additional reporting by Damien Venuto

John Weekes is online business editor. He has covered politics, crime, courts and consumer affairs. He rejoined the Herald in 2020, previously working at Stuff and News Regional, Australia.