Speaking up for you

“Fair Pay”

What are “Fair Pay” Agreements?

The Government is planning to introduce a new law requiring “Fair Pay” Agreements (FPAs) .  If the law passes, these will be sector or occupational level collective agreements that set minimum terms and standards for workers in their relevant job or industry.  It will be mandatory for all employers in a sector or occupation to apply FPAs, whether or not their employees are members of a union.

How are “Fair Pay” Agreements created?

The agreements will be developed through a bargaining process between employer associations (like Retail NZ) and employee representatives (unions).

Any eligible union can initiate the FPA process. To do so, they will need to provide proof of an industry-wide or occupation-wide coverage by:

  • Obtaining support from least 1,000 people or 10% of employees in the proposed coverage; or
  • Satisfying a ‘public interest test’ based on specific criteria, for example low pay, or a history of poor pay progression.

What conditions will be set by “Fair Pay” Agreements?

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.

What sectors are likely to have “Fair Pay” Agreements?

It’s not clear at present what sectors will have Fair Pay Agreements, although the government has signalled that they will be prioritised for occupations with currently perceived ‘tougher’ terms and conditions. 

What does Retail NZ think of the Government’s proposal?

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. 

The bill is currently going through the full parliamentary process. It is now at the Select Committee stage, with submissions open until 19 May 2022. We encourage you to make your own submissions on this proposed legislation. 

Retail NZ will also be putting in our own submission on behalf of the sector – do share your views with us here.

If you have any questions, please get in touch with our Advice Service at [email protected] or phone 0800 472 472 (1800 128 086 from Australia).


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