Changes to Equal Pay law…What will this mean for employers and employees?

The Equal Pay Amendment Act came into force on 7 November 2020. The new law introduces a framework to ensure equal pay for employees that work in what was historically, or is still, considered a female-dominated area and where there is evidence that the work is, or was, under-valued.

An employee will be able to raise a pay equity claim with their employer if there is an arguable basis for such a claim.  This would be done in a similar way to raising a personal grievance.

At this point, the employer may either agree or disagree, within 45 days, whether there is an arguable claim.  Agreeing that there is an arguable claim does not necessarily mean agreeing to the full claim, only that there is an arguable case.

Should the employer agree that there is an arguable claim, the parties may proceed to the following steps:

1. The employer must notify all other employees that perform “substantially similar” work as the employee raising the claim that there is a pay equity claim, within 20 working days.
2. The parties then enter into a bargaining process which involves identifying whether there is a pay equity issue, and what remuneration would look like if gender was not taken into account.

If the employer does not agree to the claim, the claim will either come to an end, or the employee can challenge the employer’s decision by escalating their claim. This will begin with mediation, but if mediation does not resolve the issue, the dispute can be taken to the Employment Relations Authority.

A similar framework also applies to unions that raise a pay equity claim on behalf of their members.

The pay equity claim dispute resolution process has been designed so that it is similar to that of other employment issues, first attempting to reach resolution through mediation, before proceeding to the Authority.

When the changes come into effect, employees will have a new way to ensure that their employers are paying them fairly, and potentially be able to negotiate back-pay as well.

Employers will need to be aware of the new processes involved, and in keeping with their obligation of good faith, remain open and communicative with employees about pay equity claims.  Where an employer is unsure about how to proceed, they should seek legal advice to avoid costly personal grievances. 

Employees who are working in an industry that is, or was historically, female-dominated, and believe that they are, or have been, under-valued, would be wise to speak with a professional experienced in the area to help them put forward their claim to ensure the best chances of success.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

We are now available to assist you in person, on the phone, or via video call.