Fair Pay Agreements: what are they and how will they work?

The Fair Pay Agreements  law is in effect from 1 December 2022. The law allows unions to negotiate with employers for minimum employment standards in a particular industry or occupation. These minimum standards will cover every worker in the specified group. They can include things like wages, overtime rates, leave, holiday pay and health and safety. 

The law prioritises bargaining power for employees and promotes fair rights, particularly surrounding pay. The advantage of an FPA is that it allows unions to negotiate within industries or occupations as a whole, rather than with specific employers.

In order to negotiate an FPA, one of two tests must be satisfied. The first is that the union must gain support from either 10% or 1000 employees in the industry or occupation.

If that test is not satisfied, the union can rely on the public interest test. This might be satisfied if there are particularly unfair pay rates or rights in an industry or occupation. This is to be assessed by the Ministry of Business, Innovation and Employment.

Once either of the tests for an FPA is satisfied, unions and employers can begin their negotiations.  

The representatives of each group must decide what they want to be covered by the FPA, and notify as many workers in the industry or occupation as possible. Negotiators must include the needs of non-members and ensure that Māori interests are represented.

If there is no one to represent a group, the Employment Relations Authority may step in to help negotiate terms.

Once representatives from both groups have agreed on the proposed terms of the FPA, the Employment Relations Authority will ensure that all terms are legal and it can then be voted on by members of the respective groups.

If the agreement is supported by a majority, the agreement will be ratified. If not, the parties may wish to renegotiate more favourable terms.

Where an FPA is successful, it will be supported by legislation enacted by the Ministry of Business, Innovation and Employment. This will make the agreement enforceable across the industry or occupation.

There are certain minimum rights that you are entitled to as an employee. If you are confused about these, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price 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.