What employers need to know about Fair Pay Agreements

employers and • considering whether each bargaining side should include a person that represents the interests of

Māori employees or employers.

Employment terms that must be in a Fair Pay Agreement

A Fair Pay Agreement must include what work is covered by the Fair Pay Agreement, standard hours, minimum pay rates (including overtime rates and penalty rates), training and development, how much leave an employee can have and how long the Fair Pay Agreement applies for.

Bargaining, voting and the Fair Pay Agreement becoming law

It will take time for both bargaining sides to come to an agreement on a set of employment terms they both agree with. Once the bargaining sides agree and the proposed Fair Pay Agreement is confirmed to be compliant with the law, covered employees and employers in that sector will be able to vote on whether they agree with the terms or not. If a majority agrees from both bargaining sides, the voting process and result will be confirmed by MBIE (Ministry of Business, Innovation and Employment) and the Fair Pay Agreement will be finalised and set as law.

More information about the Fair Pay Agreement process

The Fair Pay Agreement system [PDF 249KB]

Overview of the Fair Pay Agreement process

Your rights as an employer – employer association representation

If you are a covered employer, you have rights in the Fair Pay Agreement process including being kept informed about what is happening and being represented.

While unions that are employee bargaining parties represent the employee side in bargaining, the employer bargaining side is made up of eligible employer associations that have been approved to be employer bargaining parties. The employer bargaining parties represent the interests of all employers covered in the proposed Fair Pay Agreement, including those that are not part of an employer association. The employer bargaining side may be made up of several employer associations or just one.

As an employer covered by a proposed Fair Pay Agreement you will be kept informed throughout the Fair Pay Agreement process. The employer bargaining side needs to use its best efforts to: provide regular updates to you if you are a covered employer give you the opportunity to provide feedback during the bargaining process make sure Māori employers are represented in the process. This includes getting and considering feedback from representatives of Māori employers and considering whether to include a representative of the interests of Māori employers on the bargaining side consider all interest groups of covered employers advise of any ratification vote.

Your rights as an employer – no employer representation

If, after three months from approval to initiate bargaining, no bargaining party for the employer side has stepped forward, then the law provides a ‘default bargaining party’ for the Fair Pay Agreement process. The default employer bargaining party will be given one month to decide if they want to become an employer bargaining party. If the default bargaining party doesn’t want to, any employee bargaining party can apply to the Employment Relations Authority (the Authority) to make a decision on the Fair Pay Agreement terms. Decisions by the Authority are called a determination.

If this happens, the Authority will set the terms of the Fair Pay Agreement without any bargaining.

Working with your employees in good faith

Timing: Throughout the bargaining process and when the Fair Pay Agreement is in force.

Responsibility: Like

all interactions with your employees, you need to communicate and work with them in good faith. This means that you can’t mislead them or act in a deceptive way. This also means you can’t influence them about joining or leaving a union or how they may choose to vote on the terms of a proposed Fair

Provide information to unions your employees are members of

Timing: Within 15 working days of the initiating union telling you they have been given approval to start bargaining for a new Fair Pay Agreement.

Responsibility: If your

employees covered by the proposed Fair Pay Agreement are members of a union not involved in bargaining, you must do your best to identify and inform those unions about the approval to initiate bargaining. You must also let them know where the notice from the Chief Executive of MBIE giving that approval can be found.

Provide information about the Fair Pay Agreement to your employees

Timing: You must give information to your employees as soon as possible, and no later than 30 working days after you received notice from the initiating union, or you were made aware of the approval to start bargaining in another way.

Responsibility: When

the initiating union (the union that applies to start bargaining for a new Fair Pay Agreement), or another union not involved in bargaining, lets you know that the initiating union has been approved to start bargaining, they need to give you certain information, including: • where to find the notice issued by the Chief Executive • a statement for you to provide to your covered employees

• an opt out form (see below).

The statement you need to provide to your employees must be in plain language, and include: • the fact that the initiating union has been approved to initiate bargaining • the name of the initiating union and how to contact them • how the proposed Fair Pay Agreement could affect your employee • where to find more information about the proposed Fair Pay Agreement and bargaining process.

It is your responsibility to pass on the information above, including the statement, to your employees.

If the union doesn’t provide this information to you, it is your responsibility to prepare this and provide it to your employees in writing. You can find the information needed on the initiating union’s website.

Share an opt out form

Timing: You must give the opt out form to your employees as soon as possible, and no later than 30 working days after either you received the notice from the initiating union or you were made aware of the approval to start bargaining in another way (for example, seeing it in

the newspaper).

Responsibility: The

union must also provide you with a form approved by MBIE to allow your employees to opt out of the Fair Pay Agreement process if they choose to. You must give this form to your employees.

If any of your employees complete the form and want to opt out, they need to give the form back to you. You need to keep all completed opt out forms as a record for the duration of the bargaining process. Covered employees that have opted out of the process will still be covered by the Fair Pay Agreement if it is passed into law.

Prepare and provide an electronic record of employee contact details

Timing: No later than 30 working days after giving the opt out forms to employees but no earlier than 20 working days.

Responsibility: You

must provide, in electronic form, to the initiating union the contact details of all your covered employees who have not opted out of the Fair Pay Agreement process.

You must make sure that you do not provide the details of anyone who has opted out of the process.

Allow employees to attend two 2-hour Fair Pay Agreement meetings

Timing: Two meetings no longer than 2 hours each during the bargaining process.

Responsibility: During

the bargaining process, employee bargaining party representatives may need to meet with your employees that are within the cover of the proposed Fair Pay Agreement. You must allow your employees to attend these meetings and pay them for that time if the meeting occurs during work time.

The employee bargaining party is required to give you at least 14 days’ notice of the date and time of the meeting and work with you to make sure your business can continue to operate during that time.

Allow a representative of an employee bargaining party access to your workplace

Timing: Throughout the Fair Pay Agreement process.

Unless you have a certificate of exemption, a representative of an employee bargaining party can access your workplace without your consent if the primary purpose for their visit is to do with the Fair Pay Agreement. The representative must comply with any health, safety, and security processes in place at your workplace.

Exemption on religious grounds

You can apply for a certificate of exemption on the grounds that you are a practising member of a religious society or order, and your beliefs preclude membership of anyone outside that religious society or order.

Related information

Information about employers’ rights and obligations under the Fair Pay Agreement Law is also available in information sheet form:

Understanding Fair Pay Agreements – A quick guide for employers [PDF 267KB]

When a Fair Pay Agreement is in force

Once a Fair Pay Agreement is finalised and set as law, all employers covered must make sure their covered employees have terms that are the same as, or better, than those in the Fair Pay Agreement. 111222

Industry leader in soft fall protection on construction sites

Massey University rigorously tested all elements of the Safety Nets NZ system

With the enactment of the Health and Safety at Work Act (2015) it became apparent that there was a need to assure customers that they comply the requirements of the Act in safety measures for fall arrest.

“We needed to have our system independently analysed, engineered and ultimately certified. This meant that not only did the individual components of the safety net fall arrest system have to be tested, the performance of the safety fall arrest system as a whole also needed to be studied,” says General Manager Craig Daly.

A team at the School of Engineering and Technology at Massey University tested a variety of drop heights and weights, different bracket centres, various net sizes and points where the load strikes the net.

“It even tested nets of different ages and repaired nets, with the results being collated and analysed to effectively confirm that our safety fall arrest system works,” says Daly.

“This enables PCBU’s to discharge their responsibilities in regard to the requirements of the in the use of a system that is without risk to the health and safety of it’s workforce.”

When the nets have been installed and inspected by a Safety Nets NZ team and a handover certificate completed by our certified rigger, the client can then commence works above the safe area of the net.

“All of our safety documentation has been produced in such a format as to ensure that it complements the overall site safety policy and manual that the Principal Contractor is required to establish on all projects,” says Daly.

Click here to read inspection guidelines

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Pay cuts and redundancies – how a company lost $280k

Four employees who were terminated by the management of a large oil and gas company in Taranaki have been awarded almost $280,000 in lost wages, reimbursements and compensation by the Employment Relations Authority (ERA)

In a determination released mid-May, the ERA found the oil and gas company guilty of breaching good faith as an employer, after it made the four employees redundant “out of blue” after it claimed it was in a dire financial position due to falling oil prices and the outbreak of the Covid pandemic in 2020.

The four employees initially took pay cuts – which was a breach of their employment agreements – believing if they did so, their jobs would remain. The ERA found that the decision to deduct 30% from each of the employees’ salaries was done without the informed consent of any of them.

What followed soon after the pay cuts was their roles were made redundant without any consultation, leaving them collectively feeling hurt and humiliated with a loss of their dignity. The four former employees argued that their dismissals were unjustified and the process – or lack of it – unjustifiably disadvantaged them because they were not given a chance to consult on the redundancies.

Failure to follow the correct employment process resulted in a combined Hurt & Humiliation compensation order for the hurt caused of $74,000. The ERA also ordered compensation for lost wages and reimbursement of the pay that was cut prior to the terminations to be paid to a collective total of $278,589.

All four employees expressed shock at their terminations with no apparent indication redundancy was going to occur. To add insult to injury, one of the employees was required to spend a week training another colleague on their role prior to their employment officially ending.

A representative of the oil and gas employer advised the ERA urgent steps were needed to reduce costs and losses, and redundancies were “absolutely necessary” to restructure the business as a result of the Covid pandemic and financial challenges.

The company justified the redundancies because it believed consultation was not necessary because of an “exceptional circumstances provision” in the employment agreements.

However, the legislation this employer believed it was acting under had long been changed in 2004 and the ERA determined the employer did not consult. It scolded them for not consulting in such a process, noting consultation in any proposed restructuring was mandatory in New Zealand.

The ERA determined it was possible the employees might have been dismissed on the basis of wrong information when consultation might have corrected that, and the resulting outcome was that all four employees had been unjustifiably dismissed.

Further – in a damning decision around process, the ERA found the oil and gas company guilty of breaching good faith as an employer.

Employer Learnings

• Any variations to an employee’s terms and conditions cannot be done unilaterally – they must be made with both party’s agreement • An employer must have a genuine commercial reason for restructuring • In the event of a restructuring situation, consultation is compulsory • If an employee raises a personal grievance in respect of the restructure or any resulting redundancy, the employer’s consultation process, decision making process and reasons for undertaking the restructure will all come under scrutiny • Ignorance of employment law changes (dating back to 2004!) does not protect an employer

This case is a timely reminder for employers to ensure they have appropriate Individual Employment Agreements and relevant HR Policies in place for their workplaces, or at the very least, a fit-for-purpose redundancy clause in their Individual Employment Agreements.

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