[DUNCAN COTTERILL] FAIR PAY AGREEMENTS ACT – WHAT EMPLOYERS NEED TO THINK ABOUT NOW
The Fair Pay Agreements Act 2022 has now come into force, representing the biggest change to employment law in 20 years.
In short, a fair pay agreement (FPA) will set minimum terms and conditions of employment for employees across whole industries or occupations, regardless of who they are employed by or whether they are members of a union.
We have previously published an article which provides an overview of the FPA system including what they will cover, and how they are bargained for. This time, we’ve focussed on some of the key things employers need to know or start thinking about to ensure they are prepared for FPA bargaining.
Who will bargain for your industry?
During FPA bargaining, employees are represented by unions, and employers will be represented by employer associations.
To be eligible to represent employers in FPA bargaining, an employer association must:
- Be an incorporated society;
- Have a constitution which enables the employer association to represent the collective interests of covered employers for the purposes of bargaining for a FPA;
- Have at least one employer member who is covered by the proposed FPA.
If there is no employer association who is willing or able to represent employers in FPA bargaining, Business New Zealand has the right to step in and represent employers as a ‘default bargaining party’. However, a potential complication is that Business New Zealand has, to date, made clear that it does not intend to be involved with FPA bargaining.
While it remains to be seen whether Business New Zealand will maintain this position going forward, there is presently the possibility that employers will have no representation. Should this occur, the union which initiated the bargaining will be able to apply directly to the Employment Relations Authority for the terms of the FPA to be fixed and imposed on the industry.
To avoid this type of scenario, employers should start thinking about whether there is an employer or industry association which can represent their interests in FPA bargaining, whether any such association needs to go through a process of modifying its constitution to enable it to participate in FPA bargaining, and whether it has the necessary resource and expertise to do so effectively.
Communicating about FPAs
One of the difficulties with FPA bargaining will be ensuring that all of the employers and employees who are potentially covered by a proposed FPA are kept appropriately informed at each stage. As a result, the FPA system expects employers and unions to play an active role in ensuring that this occurs.
In the first instance, the union who initiates the bargaining is required to use its best endeavours to identify and notify each union and employer which has employees that will be covered by the proposed FPA, that FPA bargaining has been initiated.
Once notified about FPA bargaining, each employer then has its own notification obligations it needs to comply with. Specifically:
- Within 15 working days of being notified that FPA bargaining has been initiated: An employer must notify all unions who have members who are employed by the employer and who are covered by the proposed FPA;
- Within 30 working days of being notified that FPA bargaining has been initiated: An employer must notify all of its employees who are covered by the proposed FPA. As part of this employers are required to provide employees with a form that allows them to opt out of having their name and contact details shared with the union;
- Between 20 and 30 working days after employees are given opt out form: An employer must provide the union who initiated FPA bargaining with an electronic list of the names and contact details of its employees who are covered by the proposed FPA (excluding any employees who have decided to opt out).
Depending on the size of the employer and the number of unions it deals with, discharging these notification obligations may involve a reasonable amount of work. Where employers don’t meet their responsibilities in this regard, including missing the relevant deadlines, there is the possibility of financial penalties being imposed. It is therefore important for employers to ensure that their staff lists and contact information for employees and the unions they deal with are up to date, so that they can quickly and confidently meet their FPA notification obligations.
To see the full article, click here
[EMPLOYMENTNZ] THE FAIR PAY AGREEMENT SYSTEM IS UP AND RUNNING
The Fair Pay Agreements system comes into effect on 1 December, which means eligible unions can start the process to initiate a Fair Pay Agreement.
They will need to apply to the Chief Executive of MBIE for approval to
begin bargaining for a specific occupation or industry.
Fair Pay Agreements aim to bring together employer associations and unions within a sector to bargain for minimum employment terms on behalf of all employers and employees in an industry or occupation.
Unions must include key information and evidence in their application. This includes evidence of meeting either a representation or public interest test. The representation test is met when the Chief Executive of MBIE is satisfied that at least 1,000 employees who would be covered by the proposed Fair Pay Agreement or, at least 10% of all employees who would be covered by it, support the application to initiate bargaining.
Bargaining cannot commence until the application to initiate bargaining is approved by MBIE and bargaining sides have formed.
Eligible employer associations can apply to be a bargaining party for the employer bargaining side that represents employers of the occupation or industry, of a proposed Fair Pay Agreement. Other eligible unions, beyond the initiating union, can apply to be a bargaining party for the employee bargaining side.
Further information about Fair Pay Agreements and the process is available on the Employment New Zealand website. This information includes specific guidance for employers, employees and bargaining sides.
People can check the status of a proposed Fair Pay Agreement and who the bargaining parties are, via a Fair Pay Agreement dashboard on the MBIE website. This information will include who to contact on each bargaining side, for information and support during the bargaining process.
[MBIE] FAIR PAY AGREEMENTS DASHBOARD
The Fair Pay Agreements (FPA) dashboard provides an overview of all applications to initiate bargaining received by the Chief Executive (CE) of the Ministry of Business Innovation and Employment and their progress through the Fair Pay Agreements system.
On this page can be found:
- FPA application progress
- Current FPA application numbers
- Declined FPA application numbers
- Current FPA applications
- Enforced Fair Pay agreements
- Applications declined
The Fair Pay Agreements system brings together unions and employer associations within a sector to bargain minimum employment terms for all covered employees in an industry or occupation. Eligible unions and employer associations may apply to represent employees and employers during fair pay negotiations.
To see the full page, click here