A race against time for fair pay agreements

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Will FPAs survive the 2023 General Election?

In late 2022 we wrote about fair pay agreements (FPAs) being passed into law – a change touted as being the one of the most significant to New Zealand employment relations in a generation.  17 months after bill became law, what has changed?  The answer is that while some FPA processes have commenced, the sword of Damocles is looming in the shape of a general election. And if the early polls are any indication, the significant work, time and resources invested into FPAs might be worthless.

The FPA system is designed to bring unions and employer associations in a specific industry or occupation together to bargain for minimum employment terms for all eligible employees in that particular industry or occupation. The fundamentals of this process seems sound but the details regarding coverage of an FPA and how to ensure the terms that are struck are universally applicable throughout the country and the industry have not been resolved.

Currently there are six applications for FPAs approved by the Ministry of Business Innovation and Employment but only one is at the bargaining stage. The remaining five are endeavouring to set up bargaining sides. The entity that is currently in the bargaining phase is a collection of bus drivers, coach drivers and bus cleaners but there is no evidence that actual bargaining has commenced. The five entities that are at the “approval to initiate bargaining” stage include industries involved in hospitality, grocery and supermarkets, security officers and guards, commercial cleaners and early childhood education.  

If any of these six entities are to conclude a FPA before the election we would expect to urgently see some advancement to bargaining, which typically takes months to conclude. Given that none of the entities have started bargaining, we’re unlikely to see bargaining resolved within the eight weeks we have remaining before the election. Even if the parties had previously agreed terms and subsequently ratified them, there remains a voting process whereby employers and employees need to consider the bargained FPA and both sides need to approve it with a 51% majority before the FPA becomes enforceable.

So what if, come 14 October 2023 there is a new National-led government? How will that impact upon the FPA regime?  Bearing in mind there is plenty of politicking going on, so take it with a grain of salt and a healthy degree of scepticism, but the National and Act parties have made it abundantly clear that they will move to repeal the Fair Pay Agreements Act which will bring an end to FPAs.

While National and Act’s opposition to FPA’s is not new – they have spoken about it since the Bill reached its third reading – their opposition has grown louder in recent times.  Paul Goldsmith, spokesperson for Workplace Relations for National, said in October 2022 “National will repeal Fair Pay Agreements”, and to Radio New Zealand he said “we’ll get rid of it as soon as we can.”

The future for FPAs is unclear but more importantly, there are thousands of employees (you need at least 1000 employees per entity to request an FPA) who have committed to a bargaining process who will be left in limbo and wondering how their terms of employment will be reviewed.

Only time will tell whether any FPA is concluded prior to the election and whether or not they are honoured post-election.  Will any new government scrap FPAs or will they fulfil their ideology and make them more employer friendly and easier to deliver?

In an upcoming article we will complete the trilogy on FPAs and look at other changes to employment and workplace relations post-October 2023.

How can we help?

WRMK Lawyers has Northland’s largest team of employment law specialists. If you need some help or guidance, please give one of us a call or contact your usual WRMK lawyer for advice. You can view our Employment Law team here.

Our thanks to David Grindle for writing this article, which was first published  in the Northern Advocate on 16 August 2023.

Every effort has been made to ensure accuracy in this article. However, the items are necessarily generalised and readers are urged to seek specific advice on particular matters and not rely solely on this text.

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