“Fair Pay” Agreements are coming.
They will likely affect your business.


The Government is introducing a new law requiring “Fair Pay” Agreements (FPAs), which comes into effect later this year. These will be sector or occupational collective agreements that set minimum terms and standards for all workers in their relevant job or industry. It will be mandatory for all employers in an affected sector or occupation to apply FPAs, whether or not their employees are members of a union , and Retail NZ will be negotiating on behalf of retail employers. FPAs are likely to mean: higher wage costs and less flexibility for your business.

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Frequently Asked Questions

Employer associations (like Retail NZ) and employee representatives (unions) will negotiate on behalf of their sectors.

Any eligible union can initiate the FPA process, which is then compulsory. To do so, a union needs to have:

  • the support of 1,000 workers (or 10 per cent of the affected workforce, whichever is smaller); or
  • satisfied a ‘public interest test’ based on specific criteria, for example low pay, or a history of poor pay progression.

All FPAs will need to include the following conditions:

  • base wage rates
  • ordinary hours
  • overtime and penalty rates.

Some other topics must be discussed, but don’t have to be agreed, like redundancy, leave provisions and health and safety conditions. Other employment terms can be included if both bargaining sides agree.

It’s not clear at present what sectors will have “Fair Pay” Agreements, but it is likely that retail will be covered. 

Retail NZ opposes the Government’s proposals. The new legislation is hugely complicated, will drive significant costs for business, will remove flexibility for employers to set terms and conditions as they see fit (based on the current minimum employment standards) and will overall lead to reduced employment opportunities in the retail sector. However, the legislation is likely to be passed into law later this year. 

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If you’d like to know more about “Fair Pay” Agreements please email [email protected].

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