Employers are warning that the Government's fair pay working group recommendations could bring risks to business and the economy.

BusinessNZ was one of three employer representatives on the working group who disagree with key recommendations of the report.

"Fair pay agreements would limit business flexibility, as a collective covering every business wouldn't be able to meet the needs of individual firms," said BusinessNZ CEO Kirk Hope.

"Businesses that wanted differently would have to negotiate separate agreements on top of their fair pay agreement, and this secondary bargaining would increase the risk of industrial action, as happened with similar rules in the 1970s.


"There would be risks to productivity because everyone would have to attend paid stop-work meetings to agree on their fair pay agreement. All employer representatives on the working group were concerned that about the consequences and costs of this."

The Government's fair pay working group has delivered 46 recommendations to the Government which it says will help see the end of the "race to the bottom" when it comes to wages.

The group, led by former National Prime Minister Jim Bolger, has reported back on the design of a Fair Pay Agreement system which it says would set minimum standards for industries or occupations.

Minimum standards protect employers offering workers fair pay and conditions from being undercut by employers who get ahead by driving down wages and other benefits.

The Minister of Workplace Relations Iain Lees-Galloway is now in the process of considering the group's recommendations, which address the initiation of bargaining, coverage of the agreements, scope and the bargaining process of negotiations.

One of the recommendations is around collective bargaining, with the group suggesting workers should be able to initiate a Fair Pay Agreement bargaining process if they can meet a minimum threshold of 1000 people, or 10 per cent of workers in the nominated sector or occupation, whichever is lower.

"We believe we have designed a Fair Pay Agreements system which will be most useful in sectors or occupations where competition is driving a 'race to the bottom' in terms of wages and conditions," Bolger said.

The report was already controversial before it was released, with National, who were leaked some of the report' recommendations, saying businesses and works should be worried and the recommendations from the group were radical, backwards and one size fits all.


But unions hit back, saying leaking aspects of the report before it was published was underhanded tactics by interest groups.

Prime Minister Jacinda Ardern said only a "handful" of Fair Pay Agreements were expected each year.

The group was asked by the Government in June to make recommendations on the design of a system of bargaining to set minimum terms and conditions of employment across industries or occupations.

The group looked at the criteria and process to initiate bargaining on a Fair Pay Agreement as well as how bargaining participants should be identified and selected.

It also assessed the ratification and enforcement of Fair Pay Agreements.

Lees-Galloway said the model that the group proposed would facilitate conversations not only about fair wage rates but about training pathways and opportunities to increase productivity and profit.

He said the report articulated the complexity of the policy challenges ahead.

The next step for the Government, he said, would require detailed policy consideration and consultation – "we will take the time to get it right".