They're here... so what can Employers expect?
The Fair Pay Agreements Bill passed its third and final reading in Parliament earlier today and will be implemented effective 1 December 2022. This new Fair Pay Agreement system brings together unions and employer associations within a sector to bargain for minimum employment terms for all covered employees in an industry or occupation.
The Fair Pay Agreements system aims to:
Create sector-wide coordination
Increase bargaining power for employees
Ensure the minimum pay and employment terms are reflective of the needs of sectors covered by a Fair Pay Agreement
Incentivise businesses to invest in training
It is expected that Fair Pay Agreements will be long-term, stable frameworks with Agreements being valid for 3-5 years.
The proposed system will include support for bargaining parties to help them navigate the bargaining process and reach an outcome, as well as processes to ensure compliance. The workers who are likely to target Fair Pay Agreements are:
Security guards.
Cleaners.
Bus drivers.
Early childcare centre workers.
Hospitality workers.
Supermarket workers.
Forestry workers.
Fair Pay Agreements will enable unions to bargain for improvements in certain workplace conditions. These could include:
Minimum pay rates.
Pay scales for experience and qualifications.
Overtime rates and limits.
Allowances for difficult/unpleasant/shift work.
Penalty rates.
Compulsory training/skills development budgets.
Things will move swiftly, which means, for the above sectors at least, there is an urgent need to understand the legislation and establish a strategy to meet the inevitable demand for bargaining, with preparation and insight.
How will the Fair Pay Agreement process work?
In brief, the Fair Pay Agreement bargaining process looks a lot like traditional collective bargaining:
A union initiates the bargaining process for a particular group of employees (defined by occupation or industry)
Unions and employers appoint representatives
Bargaining occurs. The parties are able to use mediation (through MBIE's Mediation Service) and facilitation (through the Employment Relations Authority) to assist with any difficulties.
The Employment Relations Authority can set terms and conditions if no agreement can be reached or in the absence of a bargaining party representative (ie if there is none appointed/agreed to represent the employer side).
The final agreement reached is subject to a ratification process (addressed in more detail below, and more extensive than for traditional collective bargaining).
What might unions do?
The threshold for representation under Fair Pay Agreements is low (10 per cent representation of workers in the relevant sector), and employers will quickly face requests for access to the workplace by unions in order for them to deliver to the required 10 per cent threshold. This will be so even if there has historically been very little indication of union activity in the business.
Employers need to be mindful that membership in any union is voluntary, and requests from unions to attend workplaces cannot be unreasonably refused, even if the employer feels the union would not be welcomed by the employees.
Employers need to act quickly
With the Fair Pay Agreement process likely to move swiftly after 1 December 2022, it is important that employers be prepared.
A priority for employers will be talking to each other and keeping abreast of the latest developments within their industry sector. The responsibility will be entirely on each employer to find out how to engage with and participate in their industry or sector bargaining forum so that their voices can be heard. If employers fail to do so they are likely to be left with employment obligations that don’t work for them and which make their businesses more complicated and expensive to run, much like we have seen over the ditch.
Disclaimer
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.
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