The Fair Payment Agreements (FPA) Bill has now become law with significant amendments added to the version considered by Parliament’s Select Committee. Labour’s majority ensured it became law despite vigorous objections from the opposition parties. National, if elected to Government next year, has stated it will repeal the Fair Payment Agreements Act.
The FPA purpose, however, remains clear, namely to enable employment terms to be improved for employees by providing a framework for bargaining for fair pay agreements that specify industry- or occupation-wide minimum employment terms.
The fundamentals of the new Act are that FPA Bargaining is initiated by:
at least 1,000 employees who would be within the coverage of the proposed FPA supporting the application to initiate bargaining for the proposed FPA; or
at least 10% of all employees who would be within the coverage of the proposed FPA supporting the application to initiate bargaining for the proposed FPA or
the public interest test being satisfied.
The key elements to activate the public interest test are with the Chief Executive (of presumably MBIE) being satisfied with the portion of employees who would be within the coverage of the proposed FPA.
A particular focus for a public interest test approval is migrant workers where there is exploitation, systemic health and safety issues and a systemic failure to comply with minimum employment standards for employees, with the focus being on employers employing less than 20 workers. Under the public interest test none of the workers need to be members of unions.
The coverage of a proposed FPA must be described according to:
the occupation, including the work or the type of work, that the proposed FPA would cover (an occupation-based agreement); or
the industry and the occupations, including the work or the type of work within that industry, that the proposed FPA would cover (an industry-based agreement).
An occupation-based agreement must apply to:
all covered employees who are employed in the occupation covered by the agreement; and
all covered employers in relation to the agreement.
An industry-based agreement must apply to:
all covered employees who are employed in the occupation and industry covered by the agreement; and
all covered employers in relation to the agreement.
The coverage of a proposed FPA:
must be specified with sufficient clarity so that all employees and employers are able to determine whether they are within the coverage of the proposed FPA; and
must be specified in accordance with any regulations; and
must include any other information required by regulations.
The FPA Regulations have not as yet been made public.
One might look at it and say it is a move to a much greater unionised workforce across all sectors.
Data from Stats NZ shows more than 80% of workers aged between 15 and 34 are not in a union. With older workers the stats show between 5% and 10% more people are members of unions. Under the proposed Act, workers in a sector do not have to be members of a union for a union to bargain on their behalf.
A FPA can be negotiated for workers who are not members of a union and who may not want to be members of a union.
Unions competing to negotiate a FPA may cause confusion for both workers and employers.
FPAs designed to cover whole industries and occupations so the agreements may have to be individual sectors within sectors may well lead to complication, multiple and different agreements and general confusion.
An industry-wide FPA applies not only to workers with entry skills but to all workers in an industry, including highly paid roles.
Some employers may not be able to fund increases
There are thoughts that there are unintended consequences coming out of the Government’s and the Unions’ push for Fair Payment Agreements. And the question also to ask is, will the complexity and change in the FPAs achieve a tangible and workable outcome?
The Fair Pay Agreements Bill was introduced into Parliament on 29 March 2022 and received Royal Assent on 1 November 2022.
The Fair Pay Agreement system brings together employers and unions within a sector to bargain for minimum terms and conditions for all employees in that industry or occupation. The system includes support for bargaining parties to help them navigate the bargaining process and reach an outcome, as well as processes to ensure compliance.
